Gold Hoarding

the accumulation of gold as treasure by private individuals in precapitalist formations and under capitalism. “Gold hoarding” does not refer to the accumulation of state gold reserves for, among other things, international payments, the formation of strategic reserves, and the strengthening of the system of money circulation.

For many centuries—until World War II—the hoarding of gold for everyday and ceremonial needs was widespread in the East, including India, China, and Egypt. In the developed capitalist countries, gold hoarding is especially common during wartime and postwar economic dislocation, economic crisis, and periods of inflation; its purpose is to safeguard monetary capital and to protect against the devaluation of paper money. According to the League of Nations and several foreign sources, more than 5,000 tons of gold were hoarded in the 20-year period between 1914 and 1933. During and immediately after World War II, hoarding was not widespread, since most of the belligerents had kept strict control over currency, since gold mining in the major producing countries (the USA and the countries in the British sphere of influence) decreased markedly, since all of the metal mined was handed over to the state, and since private trading in gold was for all practical purposes prohibited. After the resumption of unrestricted trading in gold in the 1950’s under the impact of monetary crisis, the hoarding of gold grew rapidly. Between 1956 and 1966, according to the International Monetary Fund (IMF), 4,800 tons of gold were hoarded—or, according to the Bank for International Settlements (BIS), 6,500 tons. (The IMF figure includes gold bullion and coins; the BIS figure also includes simple jewelry made of gold.)

The largest private accumulations of gold are concentrated in France and India. According to Pick Publishing, a US firm that publishes a world currency report, of the estimated total world gold production of approximately 77,000 tons (excluding production in the USSR after 1917 and in the other socialist countries after World War II) between the discovery of America in 1492 and 1975, 24,000 tons of gold have been hoarded. By late 1974, France accounted for 4,600 tons of hoarded gold; of the 5,000 tons of gold hoarded in the countries of Asia, most is in India.