As discussions about Bitcoin (BTC) and gold as strategic reserve assets gain traction among U.S. presidential candidates, and the BRICS bloc explores the possibility of a gold-backed currency, Taiwan is making a definitive statement on gold’s role. The Central Bank of the Republic of China (Taiwan) has announced that its substantial gold reserves play a crucial role in backing the New Taiwan dollar (TWD).
According to the Taipei Times, Taiwan holds 422 tonnes of gold in reserve, managed by its central bank. Of this total, 410 tonnes are specifically allocated to support the TWD, while the remaining gold is reserved for minting commemorative coins for the inauguration of Taiwan’s new president and vice president every four years.
The central bank revealed that its gold reserves are matched by equivalent liquid assets in the form of foreign exchange and gold, intended to stabilize and guarantee the value of the TWD. The bank emphasized that gold continues to be a significant element in the international monetary system, serving as a key risk management tool during crises and providing a safeguard against unforeseen events such as wars and financial instability.
In response to the recent record high in gold prices, the central bank stated it is not altering its gold holdings, neither increasing nor decreasing its reserves.
According to the World Gold Council’s rankings from August 2, Taiwan is ranked 12th globally in gold reserves as of Q1 2024. The U.S., Germany, and Italy hold the top three positions. Most of Taiwan’s gold was acquired in the 1970s, when prices were under $400 per ounce, aimed at balancing the trade surplus between Taiwan and the United States. Due to the TWD’s depreciation, Taiwan’s unrealized gains on its gold holdings have surged to nearly NT$900 billion (approximately $28.2 billion).
Globally, central banks have been increasing their gold acquisitions amid a trend away from the U.S. dollar as a reserve currency. In 2023, central banks purchased a total of 1,030 tonnes of gold, following a record 1,082 tonnes in 2022. The trend continued into 2024, with 183 tonnes purchased in Q2, marking a 6% increase year-on-year.
China’s central bank reported holding 2,264 tonnes of gold by the end of June, reflecting a 16.3% increase since November 2022, following 18 consecutive months of gold accumulation. India also significantly boosted its gold reserves, increasing holdings by 30% from July 2023 to July 2024, now valued at $57.6 billion. Other nations, including Singapore and the Philippines, have similarly expanded their gold reserves as part of the broader move away from fiat currencies, including the USD and yuan.
