Bringing transparency to sovereign wealth fund gold holdings

Goldhub blog

Bringing transparency to sovereign wealth fund gold holdings

Kurtulus Taskale Diamondopoulos
Director Central Banks & Public Policy
World Gold Council


The primary mission of central bank reserve management is to ensure that reserves are adequate and available during times of need. Therefore, safety and liquidity are key investment factors. Sovereign wealth funds (SWFs), on the other hand, focus more on return as their mission is to invest revenues from government surpluses to generate wealth for present and future generations. Therefore, SWFs’ investment guidelines are more flexible, letting them take more risk and invest in a broader range of asset classes to obtain higher returns. Since the Global Financial Crisis, where low and negative interest rates have become the new normal, this flexibility has made SWFs more important for their country’s wealth management.

While central banks voluntarily report their international reserves including gold to the International Monetary Fund each month, SWFs have no global reporting obligations. However, some funds comply with the Santiago Principles, a set of voluntary guidelines that aim to promote transparency.1 As a result, SWFs differ greatly in the disclosure and level of detail of their investment activities. This is true for their gold holdings as well. Unique among SWFs is the State Oil Fund of Republic of Azerbaijan (SOFAZ) because it not only publishes its audited financial statements in its annual report but also reports all other relevant financial information including gold holdings every quarter on its website. SOFAZ also clearly states its policy on gold investments in its website.2

SOFAZ began buying physical gold – London Good Delivery bars – in 2012, in accordance with the amendments made to the Investment Policy of the Fund for the purposes of diversification. After a four-year hiatus, SOFAZ resumed its gold accumulation in Q2 2018, followed by an amendment to its 2019 investment policy to extend the gold allocation limit from 5% to 10%, along with maximum upper deviation of 3%. As of Q2 2020 the amount of gold included into SOFAZ's investment portfolio has reached 101.8 tons or 13.6 % of total AUM.


Our central bank statistics capture data directly from the IMF’s International Financial Statistics (IFS) and, when not available, directly from respective central bank websites. There are many nuances to sovereign gold holdings, and in order to provide the most consistent and comparable data we have made it our policy to only report on gold holdings classified as monetary gold held by the central bank.

But, despite a general belief that SWFs do not invest in gold, our engagement with these institutions in recent years has increasingly shown that many SWFs do incorporate gold in their portfolios for diversification, capital preservation, and other factors.

Because of this, we have now decided to offer similar reporting facilities to SWFs for their gold holdings if they comply with certain reporting requirements. The most important requirement is the regular availability of public data, released at least every quarter, on their financial statements. Any SWF data that we publish will be included in our existing files.

This reporting will start with our next data release, when we will add SOFAZ’s gold holdings to the OTHER section of the World Official Gold Holdings report. If more SWFs are willing to disclose their gold holdings, we may consider creating a separate report just for this sector.

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