Nigeria plans to bring Gold reserves home to minimize risk

Nigeria is bringing its gold reserves home to keep it safe.

According to a report by The Star, Nigerian officials decided to repatriate the country’s gold in April “to mitigate risks associated with the weakening U.S. economy.”

“Economic indicators such as rising inflation, escalating debt levels, and geopolitical tensions have raised apprehensions among Nigerian policymakers about the stability of the U.S. financial system.”

Nigeria holds about 21 tons of gold in its reserves.

Economist Fatima Abubakar called the gold repatriation plan “a strategic decision,” and that the country was taking “proactive measures to safeguard its wealth and strengthen its financial resilience."

Nigerian officials also said bringing gold home would reflect the country’s self-reliance.

“By bringing its gold reserves back within its borders, Nigeria not only asserts greater control over its financial assets but also demonstrates prudence in managing economic risks amidst global uncertainties.”

Nigeria isn’t alone in wanting to control its gold reserves and bring them home. India recently repatriated 100 tons of gold from vaults in the U.K.

Many countries have expressed concern about the U.S. and Western powers using gold and dollar reserves as a foreign policy weapon.

According to a World Gold Council survey in 2023, a “substantial share” of central banks expressed concern about potential sanctions after the U.S. and other Western countries froze almost half of Russia’s $650 billion gold and forex reserves in the wake of its invasion of Ukraine. According to the WGC, 68 percent of the banks surveyed said they plan to keep their gold reserves within their country’s borders. That was up from 50 percent in 2020.

One anonymously quoted central bank official told Reuters, “We did have it [gold] held in London… but now we’ve transferred it back to our country to hold as a safe haven asset and to keep it safe.”

Invesco head of official institutions Rod Ringrow told Reuters this reflects a widely held view.

"‘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.”

There has been speculation that countries have been moving gold and other assets out of the U.S. in the wake of economic sanctions on Russia, but it has been difficult to confirm because the Federal Reserve refuses to release information about the amount of gold in its vaults.

In March, Federal Reserve Chairman Jerome Powell dodged Rep. Alex Mooney’s (R-W.Va) questions about the central bank’s foreign gold holdings. Fed officials also refused to comply with a Freedom of Information Act request for records about such holdings.

As investigative reporter Ken Silva wrote, Headline USA filed a FOIA request with the Fed for records reflecting how much gold the Federal Reserve Bank of New York currently holds in its vault, as well as records reflecting the ownership stake that each of FRBNY’s central bank/government clients have in that gold following Powell’s evasive response. The FOIA request also sought records about the Fed’s gold holdings prior to Russia’s February 2022 invasion of Ukraine.

The Fed denied the request.

The gold repatriation trend started long before the West slapped sanctions on Russia. In 2019, Poland brought home 100 tons of gold. Hungary and Romania also repatriated some of their gold reserves around that same time. In the summer of 2017, Germany completed a project returning roughly half of its gold reserves back inside its borders. In 2015, Australia launched efforts to bring half of its reserves home. The Netherlands and Belgium have also initiated repatriation programs.

This gold repatriation trend underscores the importance of holding physical gold free from counterparty risk. 

If you store your gold and silver with a third party, you could lose your metal through theft, fraud, or an act of God. Of course, you could lose silver and gold stored in your home the same way (except for fraud), so you have to weigh the risk of using third-party storage and keeping large amounts of silver and gold at home.