Bank of Finland Lags Behind Some Nordic Neighbours with Only 49 Tonnes of Gold
According to an analysis from the Bank of Finland, gold investments offer a robust hedge against inflation. The precious metal’s significance is underscored by the Bank of Finland’s own holdings—totalling around 49 tonnes, as per the latest figures provided by Jukka Lähdemäki, a Senior Market Analyst at the institution.
The allure of gold has only intensified over the last two decades, reflecting a price surge that situates the commodity at its highest valuation in over ten years since the dawn of April. This elevation in price corroborates the current worth of Finland’s gold reserves at approximately 3.4 billion euros. Such an increase, about 30 percent since 2022, underscores the substantial yet fluctuating valuation of gold, Lähdemäki notes.
“It’s a significant amount,” said Lähdemäki. However, when the reserves are juxtaposed with those of Finland’s neighbours, a different picture is painted. Sweden, for instance, is in possession of a staggering 125 tonnes of gold, dwarfing Finland’s holdings. Denmark’s coffers contain approximately 66 tonnes, while Norway stands out for its zero gold reserves, having liquidated its holdings in 2004 in favour of foreign investments.
In central banks, gold is typically stored in bullion—or bars and coins—with each bar weighing around 12.5 kilograms and valued at about 900,000 euros. Lähdemäki reveals that a minimal portion of Finland’s gold is secured within the nation’s borders. The remaining is safeguarded across various international sites, including central banks in Sweden, the United States, England, and Switzerland.
This global dispersion of Finland’s gold reserves serves a practical purpose. As Lähdemäki has conveyed, trading gold is more seamless with the Bank of England because London harbours the principal international gold market. The physical relocation of gold is essential for transactions, underscoring the logistical rationale for its geographic distribution.
The impetus for holding gold transcends practicality; it is also rooted in historical precedent. Previously, the value of paper currency was directly correlated with precious metals, imbuing gold with inherent historical significance. Moreover, gold’s steadfast value retention, even amidst tumultuous periods, renders it an advantageous inflation hedge.
“Gold has traditionally been seen as a good safe haven for investments,” Lähdemäki says, highlighting its appeal beyond the conventional vulnerabilities associated with equities or corporate bonds. Unlike companies, which can falter and dissolve, leading to potential losses for investors, “Gold itself is not going anywhere,” providing a semblance of permanence and reliability in an otherwise volatile market.
In summary, while Finland may not lead in gold reserves compared to some of its Nordic counterparts, the strategic value and security gold offers, particularly as an inflation hedge, continue to make it a cornerstone of the nation’s investment strategy.
