International gold prices, gold reserves of central banks and debt stocks relationship: Analysis among G8 countries

Gold is a commodity that has been used to protect the wealth of not only people but also organizations and states from past to present. For this reason, countries prefer to keep some of their reserves as gold through their central banks.

At the financial macroeconomic level, the primary goal of countries is to sustain a healthy economic growth. However, when the economies of developed countries are examined, especially when the economic growth rate of the G8 countries, which are called the strongest countries class, is examined, it is seen that the public debt ratio is very high, which increases the risk levels of the countries. Therefore, it is expected that the gold reserve demands of these countries will be in a causal relationship with international gold prices. In this study, the causality relationship between the public debt stock of countries, international gold prices and gold reserve of countries is investigated based on this question.

The country sample is based on the quarter between 2008 and 2020 of the G8 country group. The analysis method has been utilized by econometric methods and the relationship between variables has been examined with panel granger causality analysis.

As a result, a unidirectional causality relationship has been found between the debt stock of countries and international gold prices, and between gold reservoirs and debt stock.