BRICS Central Banks Cut LBMA Out

Mineral Wars: Global Reserve Strategy Evolves Toward Domestic Sourcing

Central Banks Shift to Local Mines

This type of supply chain action will put the LBMA out of business or at least cripple Western access to physical gold going forward. We will have contextual implications for LBMA, The West, and how this is part of a much bigger strategy to secure all resource supply chains in a global mineral war. What the Brics are doing in Gold, they are doing in everything. Gold is the tip of the economic spear out of BRICS nations.

Central banks are increasingly bypassing international markets to purchase domestically mined gold in local currencies, a move that supports local economies, reduces costs, and protects foreign reserves. According to the World Gold Council (WGC), 19 out of 36 surveyed central banks are now sourcing gold directly from small-scale or artisanal domestic producers—up from 14 last year. An additional four banks are actively considering the approach.

This shift reflects a broader trend among gold-producing nations, especially in Africa, Latin America, and Asia. Central banks in Ghana, Tanzania, Zambia, Colombia, Mongolia, and the Philippines are already engaging in such purchases. Ghana’s Gold Board secured agreements with local miners to acquire 20% of output, while Tanzania mandated a similar minimum sale quota to its central bank in 2023.

“You’re able to grow your reserves using local currency and therefore not sacrifice another reserve asset [like the U.S. dollar],” said Shaokai Fan, Head of Central Banks at the WGC.

Traditionally, central banks have relied on the global over-the-counter market—primarily London—to acquire London Good Delivery (LGD) bars. But as spot prices near $3,330/oz (up ~27% YTD per LSEG), the appeal of local sourcing has grown. Buying domestically reduces reliance on volatile currency markets, avoids shipping and intermediary fees, and can be done at slight discounts to international benchmarks.

However, refining remains a challenge. Countries without accredited LGD refineries—like Ghana or Zambia—must export raw gold for processing, which offsets some savings. Others, like the Philippines and Kazakhstan, already meet international standards domestically.

The policy also serves as a form of industrial policy. Buying from small-scale miners offers economic support to informal mining communities while improving supply chain traceability. The WGC argues that central banks’ institutional presence could formalize and regulate artisanal gold sectors, which are often linked to smuggling and poor labor conditions.

“Having a credible, large-scale buyer like the central bank gives small-scale miners a legal and fair outlet to sell their gold,” Fan added.

With 95% of central banks expecting global peers to increase gold reserves in the next year, this domestic-sourcing model is likely to expand. The trend reflects a desire for monetary flexibility amid rising global debt, geopolitical risk, and growing distrust of fiat assets.