(Kitco News) - The new governor of the Czech National Bank (CNB), Aleš Michl, said he plans to increase the institution’s gold holdings almost tenfold from the current 11 tonnes to 100 tonnes. Michl also said he will ask the bank’s foreign exchange reserves management team to invest in stocks.
The CNB hopes to increase its precious metal holdings from the current 11 tonnes to 100 tonnes or even more. However, this will be done gradually, the incoming governor noted.
With this plan, which sees the bank’s gold holdings grow by almost ten times, the new CNB boss, as one report noted, is seemingly following in the footsteps of other European central banks that have either repatriated or bought more tonnes of gold. For instance, the Hungarian central bank revealed in 2018 that it had grown its gold holdings tenfold, while the Polish central bank is reported to have done the same in 2019.
Michl said, “Yes, yield volatility would then be higher – that’s the risk. But the expected return, in the long run, would also be higher. Together with our CNB colleagues Michal Škoda and Tomáš Adam, we are trying to calculate this risk as part of a research project. My vision is to have a long-term profitable CNB.”
Gold is trading at around $1850/oz at the start of the week. Over the last three weeks or so, the price has been in a pretty sideways trend. The yellow metal has moved into the middle of the consolidation area, which was established between 3rd August 2020 and 8th March 2021 between $2075.14/oz and $1676.91/oz.