Bundesbank President Nagel Explains: Why Central Banks Are Buying Gold Again
October 12, 2026
863 tonnes.
That is how much gold the world's central banks bought net in 2025 alone.
In the first half of 2026, according to estimates by the World Gold Council, an additional:
were added. World Gold Council
One could simply summarize this development in one sentence:
Central banks are buying gold.
But Bundesbank President Joachim Nagel has just explained why.
And this part is significantly more interesting.
On October 5, Nagel appeared at the London Bullion Market Association's Global Precious Metals Conference in Sorrento.
The topic of his keynote speech:
Geopolitics.
Monetary policy.
And:
Nagel's starting point initially sounds like classic central bank language.
Central banks require reserves.
These are intended to provide three things:
Liquidity.
Safety.
Return. Bundesbank
But then he comes to a fundamental difference.
Foreign exchange reserves typically consist to a significant extent of:
Government bonds,
Bank deposits,
Central bank balances
and other claims.
This means:
On the other side is someone who must fulfill an obligation.
A state must service its bond.
A bank must repay the deposit.
Nagel describes the difference to gold very precisely:
Physical gold does not depend on an issuer or business partner fulfilling a payment obligation. Bundesbank
That sounds technical.
But it is a fundamental difference.
Precisely for this reason, gold can diversify a reserve portfolio.
For several years, central banks have rediscovered a problem that seemed less important during the decades of globalization.
An asset can be economically sound.
And yet:
Nagel formulates it clearly.
Foreign securities and deposits can be frozen as part of sanctions.
With physical gold held by a central bank in its own country, this specific risk does not exist. Bundesbank
And suddenly the question:
Where are my assets located?
takes on a completely different meaning.
This was not always the case.
In 1950, according to Nagel's presentation, gold accounted for almost:
70%
of global central bank reserves at market values at the time.
After the end of Bretton Woods and with growing globalization, this changed.
Government bonds offered attractive returns.
Capital markets became more international.
Political cooperation increased.
Foreign exchange reserves grew.
Gold lost relative importance.
By 2009, its share had fallen to approximately:
At that time, gold seemed almost like a relic of the old monetary system.
Then the world changed again.
After the global financial crisis, central banks began buying gold net again.
Particularly:
China.
Russia.
Later, numerous other emerging markets followed.
Nagel cites several reasons for this.
Low bond yields reduced the opportunity costs of gold.
Geopolitical risks increased.
And sanctions changed the assessment of foreign exchange reserves. Bundesbank
This suddenly made an old question relevant again:
Since then, gold has gained enormous weight in central bank balance sheets.
2023:
around 14% of global reserves.
2025:
nearly 25%. Bundesbank
At first glance, one might think:
Central banks have nearly doubled their gold positions.
But this is exactly where Nagel's speech becomes particularly interesting.
Because he corrects this interpretation himself.
Nagel calculates:
If the gold price had not risen since 2023, gold's share of reserves would not have risen to 25 percent.
But rather to:
That is a remarkable figure.
Because it shows:
The enormous change in the reserve share is largely:
Not just a volume effect.
One must clearly distinguish between the two.
2025:
863 tonnes net.
While demand was below the more than 1,000 tonnes in each of the three previous years.
It was still almost twice as high as the longer-term average from 2010 to 2021 of:
473 tonnes per year. World Gold Council
And in 2026, the story continues.
First half of the year:
345 tonnes.
Second quarter alone:
289 tonnes. World Gold Council
In August, according to already published national data, an additional:
39 tonnes of net purchases
were added. World Gold Council
This is not a theoretical interest in gold.
It is physical demand.
And Nagel speaks about this as well.
Gold pays:
It incurs:
And its positive return depends on its market price rising.
Precisely for this reason, government bonds were particularly attractive compared to gold during the 1980s and 1990s. Bundesbank
These disadvantages have not disappeared.
On the contrary:
Today's higher bond yields improve the relative attractiveness of bonds again.
And yet Nagel believes that gold will likely remain in demand as a reserve.
Why?
The higher the national debt rises, the more relevant another question becomes:
A government bond can pay five percent interest.
But this five percent exists because someone on the other side has taken on debt.
Gold pays nothing.
But:
No one owes a gold bar its repayment.
That is the decisive contrast.
Both fulfill different tasks.
Government bonds can:
provide ongoing income,
be highly liquid,
serve as collateral,
and in many situations be exceptionally stable in value.
Gold, on the other hand, can:
pay no coupon,
fluctuate significantly in price,
and incur storage costs.
Therefore, the interesting term is not:
But rather:
Despite higher bond yields again.
Despite gold price fluctuations.
Despite storage costs.
His conclusion is:
"Overall, there is still much to be said for further diversification towards gold." Bundesbank
This is not a buy recommendation for private investors.
But it is a very clear statement about the function of gold in a reserve portfolio.
The World Gold Council surveyed central bank reserve managers in 2026.
The result:
expect global central bank gold reserves to increase over the next twelve months.
And a record-high:
expect higher gold holdings at their own institution. World Gold Council
This is particularly noteworthy because gold prices were already exceptionally high.
So central banks are not just buying when gold appears cheap.
They are obviously following a more strategic consideration.
Incidentally, there is an error in the BÖRSE ONLINE article.
More than 3,500 tonnes are mentioned there.
The official figures from the Bundesbank are:
Of this, at the end of 2025, there were:
1,710 tonnes in Frankfurt
1,236 tonnes in New York
404 tonnes in London. Bundesbank Publications
The market value of these gold reserves at the end of 2025 was approximately:
395 billion euros.
This also shows the dimension.
One should not simply copy central banks.
Their tasks differ fundamentally from those of a private household.
A central bank must:
manage currency reserves,
provide liquidity,
manage crises,
and intervene in the foreign exchange market if necessary.
A private investor has different goals.
But the underlying question is surprisingly similar:
A stock depends on a company.
A bond on a debtor.
A bank balance on a bank and the corresponding legal framework.
A property on a piece of land, a legal system, and a location.
Physical gold:
on its own physical existence and market value.
Not:
Everything in gold.
But rather:
Physical gold fulfills a different function than:
an ETF,
a government bond,
a stock,
a bank account.
And it is precisely this difference that can make diversification valuable.
Nagel is not talking abstractly about some gold price.
He explicitly speaks about:
Because the argument of the lack of issuer or counterparty risk only works completely if physical metal is actually present and the ownership and custody structure is clear.
A mere claim on gold is, in turn:
a claim.
And that brings us to one of the central principles of Spargold:
Not:
"Gold is rising."
Not:
"Central banks are buying."
And also not:
"The dollar is disappearing."
But rather:
This is not a contradiction.
It is risk management.
And perhaps that explains better than any gold price forecast why gold still lies in the vaults of modern central banks after thousands of years.
Gold does not have to promise anything.
It only has to:
Stay farsighted.
Yours,
Helge Peter Ippensen
