Czech Republic to boost gold reserves 1,000%

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The Czech Central Bank has announced that it will raise holdings to over 100 tonnes from the current 11 tonnes. This still only represents 0.3% of the Czech National Bank’s assets. They join a growing cohort of Europeans nations repatriating or purchasing gold at a rapid rate. Hungary and Poland have increased their gold reserves as a percentage of total holdings to 17% and 8% respectively with Russia and Turkey well over 20%.

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Czech Republic to boost gold reserves 1,000%

Incoming Czech National Bank governor Ales Michl argues that: “Gold is good for diversification, it has zero correlation with stocks.” Michl expects peak inflation in the Central European nation to peak at 15% by July, before retracing to the 2% target rate within two years. Since last summer, Czech’s central bank has increased official rates by 550 basis points to 5.75%. With outgoing Governor Jiri Rusnok’s final policy meeting coming later this month, there is a one 25 basis point raise expected. The Czechs, sitting outside the 19 member Euro currency bloc, are moving more aggressively than the ECB which, in the face of 8.1% inflation, are still debating how much to lift rates for the first time in a decade off their famously negative 0.5% deposit rate.

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