Nigeria Reclaims Gold Reserves as World Shifts Away from U.S. Finance

Written by Samuel Johnson.

Nigeria is making headlines by repatriating 21 tons of gold from the United States and the United Kingdom. This move comes as global confidence in Western financial systems wanes, driven by economic instability and geopolitical tensions. With inflation soaring and debt levels climbing, Nigerian policymakers are increasingly wary of the U.S. financial system’s reliability.

Economist Fatima Abubakar calls this a “strategic decision” and one of many “proactive measures” Nigeria is taking to protect its wealth. By bringing its gold reserves back home, Nigeria not only gains greater control over its financial assets but also demonstrates prudence in managing economic risks amidst global uncertainties.

This shift reflects a broader trend. Many countries are reevaluating the safety of keeping their reserves in Western nations. The move underscores a growing distrust in Western financial institutions and a push towards self-reliance.

Growing Distrust in Western Financial Systems

Nigeria isn’t alone in its quest for financial security. India recently repatriated 100 tons of gold from the UK. This decision highlights a significant shift as non-Western countries increasingly question the West’s grip on global finance. Many are waking up to the reality of the West’s gold and dollar reserves being used as tools of foreign policy control.

A 2023 World Gold Council (WGC) survey revealed that a substantial share of central banks are anxious about the future. After the U.S. and other Western nations froze about half of Russia’s $650 billion gold and foreign exchange holdings following the Ukraine invasion, central banks worldwide are rethinking their strategies. According to the survey, 68 percent of banks now prefer to keep their gold holdings within their own borders. Before the COVID-19 pandemic, only 45 percent of central banks felt this way.

Rod Ringrow, Invesco’s head of formal institutions, summed it up well: “‘If it’s my gold, then I want it in my country,’ has been the mantra we have seen in the last year or so.”

The Federal Reserve’s Opaque Gold Holdings

Amid these global shifts, the Federal Reserve’s secrecy about its gold holdings raises further concerns. The Federal Reserve has consistently refused to provide information about the amount of gold in its vaults. In March, Federal Reserve Chairman Jerome Powell evaded questions about it, adding to the mystery.

Even more troubling, the Fed has not complied with a Freedom of Information Act (FOIA) request for records on gold holdings, filed by Headline USA. This lack of transparency fuels speculation that there might be little to no gold left in the vaults. The FOIA request sought details about the gold amounts before Russia’s military actions in Ukraine, but the Fed declined to provide any information.

This secrecy isn’t new. In 2019, before the COVID-19 pandemic and the Russia-Ukraine conflict, Poland, Hungary, and Romania repatriated substantial amounts of gold. Germany brought back about half of its gold reserves in 2017, and Australia took similar steps two years earlier.

Our Take

The move by countries like Nigeria to repatriate their gold reserves signals a lack of trust in Western financial systems. This trend is concerning as it highlights the instability and potential decline of Western economic dominance. By holding onto their gold, these nations are safeguarding their wealth against the unpredictability of the global financial landscape. This shift away from Western financial institutions could lead to further economic fragmentation and instability, undermining the already fragile global economy. It’s a stark reminder of the need for greater transparency and stability in international finance.

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