Poland, like other central banks around the world, has gone on a gold buying frenzy in recent years, increasing its gold reserves dramatically. However, not everyone is happy about some of the language being used by the National Bank of Poland about the precious metal.
“The National Bank of Poland boasts about its gold purchases, which are supposed to increase the security and financial credibility of the country. However, the tone of the central bank’s campaign is that the precious metal is an excellent investment in uncertain times. Some Poles may perceive such a message as investment advice,” warns commentary from the Polish financial news site Money.pl.
The National Bank of Poland, under the presidency of Prof. Adam Glapiński, has increased the gold resources in the central bank’s reserves almost fivefold under his governance.
The bank purchased 30 tons alone just last month, February, and this huge purchase amounted to the most gold bought since June 2019. Now, the official reserve gold capacity of the Polish bank is just over 480 tons, with gold reserves now exceeding 19 percent of total reserves, while in 2019, this figure was only 5 percent. Other reserves include dollars, euros, and other assets. Poland has even surpassed other countries, like the United Kingdom, in terms of its overall gold holdings
The president of Poland’s central bank has never been shy that he wants to boost the country’s gold reserves, and set a target of 20 percent years ago, which Poland is fast approaching.
In fact, Glapiński appears to not be able to say enough good things to say about the asset, and Money.pl complains that he talks about the central bank’s gold purchases constantly in radio, newspapers and on social media. In fact, the paper argues, it could be that Glapiński’s praise of gold is being perceived as investment advice to Poles.
“Poland is consistently building its gold reserves. The National Bank of Poland, under the leadership of Prof. Adam Glapiński, is implementing a long-term strategy to increase the share of this precious metal in foreign exchange reserves. The Polish central bank already has over 450 tons of gold,” reads a sponsored article from the bank, published in February on the website of one of the largest national dailies.
In the article, the NBP wrote that gold “is the foundation of financial security, a guarantor of stability in international exchange and a safeguard for all Poles in the event of extraordinary circumstances.”
The article goes on to list the merits of gold, including its lack of credit risk, since it is not associated with any institution or government. It is also “durable and liquid,” making it a valuable safeguard for Poland in times of crisis.
The article also stated that gold helps earn money, as it has a better rate of return than American bonds.
“In the long term, gold effectively protects the real value of assets,” says the article.
“Examples from recent decades, such as the subprime crisis, the COVID-19 pandemic or the war in Ukraine, show that gold brings a positive return regardless of the situation in the stock or bond market,” the article continues.
Money.pl writes: “These sentences look as if they were copied from an advertising brochure of companies trading in investment gold. And in one of the spots on YouTube, CEO Glapiński, like an experienced sales representative, assures that ‘gold always gains value in the long term.'”
While Money.pl may have some valid criticisms, it is true that over the long-term, gold’s value has always risen. Furthermore, Glapiński is far from the only central bank chief purchasing gold at high levels, as global stability appears to be going through a rather shaky period, with many countries racing to purchase gold at a near record clip.
