Skip Ribbon Commands
Skip to main content
South African Reserve Bank
 
 
     
 
 

Management of Gold Reserves 

The SARB has managed and held gold reserves since 1925 and purchased nearly all the local gold production.  This involvement with gold has, of course evolved.  Currently, the SARB’s activities in gold are much more akin (by design) to those of other central banks.
Following the announcement by the Minister of Finance on 12 December 1997, South African gold producers can elect to sell all of their output themselves to approved counterparties.  This dispensation was granted provided that the SARB (on behalf of the Minister of Finance) gave the necessary exemption from the provisions of the Exchange Control Regulations.
Although the SARB’s transactions in the gold market have been drastically curtailed by this arrangement, the SARB still monitors the gold market closely since its opinion in respect of the gold market is still required and valued.  Moreover, the SARB currently holds some 4 million fine ounces of gold in its reserves.  A very large percentage of these gold reserves are held in the vaults of official sector institutions.
The SARB’s Financial Markets Department may, from time to time, place small amounts of gold on deposit with approved counterparties provided the interest earned is sufficiently attractive.  Any such deposits will be explicitly reflected in the SARB’s monthly statement of its assets and liabilities.
In an effort to support the local jewellery manufacturing industry, gold is also lent to commercial banks at a market related interest rate, who then on-lend the gold to the jewellery manufacturers.  This gold loan however, is only extended to the commercial bank once collateral, in the form of government securities whose values exceed the value of the gold loan, has been placed with the Johannesburg Branch of the SARB. 
These loans are granted for a maximum period of six months.  On maturity, the loan can be repaid in either gold or the rand equivalent thereof.  When repaid in rand, the loan is considered a gold sale.
The SARB is obliged by the South African Reserve Bank Act, 1989 (Act No. 90 of 1989), to exchange legal-tender gold coins for South African rand at its branches at a market-related price.
 
 
     
 
 
Sign In
Management of Gold Reserves Help (new window)