Taiwan’s gold reserves valued at US$26.9 billion: Legislator suggests “sell high, buy low”

A legislator suggested that Taiwan’s central bank should sell some of its gold reserve while the price is high, as the market price reached close to US$2,000 per ounce yesterday, April 13.

The Russia-Ukraine war, and rampant global inflation has driven up the price of gold, with prices of over US$2,050 seen in early march, and the price reaching US$1,973 yesterday. At the time of writing the gold price was hovering slightly below US$1,970.

Taiwan’s central bank (Central Bank of the Republic of China) currently holds 13.62 million ounces (423.6 metric tons) of gold, stored as more than 10,000 gold bars at the Wenyuan Vault in Xindian District, New Taipei City. Taiwan’s gold reserve is the 11th largest of any country in the world. The current market value of the reserve totals US$26.8 billion.

Legislator Lin Te-fu suggested the central bank should take advantage of the current price and set aside a portion of the reserve to “sell high, and buy when low.” Central Bank Governor Yang Chin-long (楊金龍) said he would study the issue.

Lin and other legislators from the Legislative Yuan’s Finance Committee visited the Wanyuan Vault in Xindian District to inspect the reserve, making sure that the amount had not changed, and that security was being adequately maintained.

Reports pointed out that converted at an exchange rate of NT$29, the book value of the reserve stands at NT$779.3 billion (US$26.87), and that the central bank’s purchase price was less than US$300 per ounce. After deducting costs, the net interest would be calculated at more than NT$620 billion (US$21.8 billion).

Lin said that some of the gold should be sold while the price is high, otherwise 423.77 tons of gold is just stored in the vault and inactive; It would be a pity. Lin suggested that a portion, such as one-third, could by used and operated like a foreign exchange reserve, selling high and buying low. The profits could contribute to the treasury surplus, and through such operations the central bank could replenish and increase the gold reserve.

Reports said that most of the gold was purchased in 1977 and 1978 when Taiwan had a large trade surplus with the United States. In order to improve the trade deficit, Taiwan purchased a large amount of gold from the US.

A retired central bank official involved in the transportation of the gold from the United States to Taiwan recalled that batches of gold weighing 12.5 kilograms each were strapped to airplane seats to distribute the weight evenly across the aircraft.

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