Central banks are unwise to sell their gold: ECB president Mario Draghi

Central bank gold is a reserve of safety, providing "fairly good protection against fluctuations of the dollar and risk diversification," according to President of the European Central Bank, Mario "The Dragon" Draghi, responding to a question from Tekoa Da Silva at Harvard University.

"Central banks which had started a program of selling gold a few years ago, substantially stopped – by and large they are not selling any longer. Also the experience of some central banks that have liquidated the whole stock about ten years ago was not considered to be terribly successful from a purely money viewpoint."

Tekoa Da Silva is the publisher of BullMarketThinking.com and a regular contributor to MINING.com.

Draghi used to head the Bank of Italy, the fourth largest holder of gold in the world.

Canada, by contrast, began selling its gold in the 1980s and by the 2000s had become the only G7 country without bullion reserves. Canada's gold reserves are still negligible, representing only a 0.2% share of the country's total foreign-exchange reserves.

Here are the world's Top 10 gold-loving central banks (stats from July, 2013):

10. India – 557.7 tonnes. India continues to tighten its grip on the country's gold trade, hiking the import tax from 2% to 6% over the past year. Gold is India's number two import item in terms of value after crude oil and the government has been trying to curb imports to reduce the country's chronic balance of payments problem.

9. Netherlands – 612.5 tonnes. The Dutch central bank has thus far failed in its attempt to sell off 300 tonnes of gold.

8. Japan – 765.2 tonnes.  The Bank of Japan (BOJ), perhaps better known for its excessive money printing during Prime Minister Shinzo Abe's second stint in power, was slow to gold accumulation, with only 6 tonnes in 1950. The BOJ sold off large amounts of bullion to help finance recovery of the 2011 Fukushima disaster.

7. Russia – 976.9 tonnes. The Central Bank of Russia has been beefing up its reserves by buying domestically produced bullion.

6. Switzerland – 1,040.1 tonnes, equivalent to 10% of its foreign reserves.

5. China – 1,054.1 tonnes. Domestic production was up 10% in 2012. Gold is big business in China: roughly two thirds of the 10 million Chinese brides in 2013 are expected to receive golden presents. China is set to overtake India in domestic gold consumption as a result of domestic demand and India's import tariffs.

4. France – 2,435.4 tonnes, almost 70% of its foreign reserves.

3. Italy – 2,451.8 tonnes, equivalent to 72% percent of its foreign reserves.

2. Germany – 3,391.3 tonnes. Germany's central bank was often in the news earlier this year when they decided to recall $180 billion of its gold bullion stored in vaults around the world. In January the Bundesbank shipped home 374 tonnes it had stored with the Banque de France in Paris, as well as 300 tonnes held in Manhattan by the US Federal Reserve.

1. United States – 8,133.5 tonnes, equivalent to 75.1 percent of its foreign reserves. Until recently, the New York Federal Reserve had rejected calls to conduct audits of its gold supply, leading to suspicion about the gold's whereabouts. Rumours of secret government deals, dramatic looting heists and gold-painted bars have crept into media coverage of the massive trove of gold held 5 stories underneath Manhattan's streets. Unfortunately for the NY Fed, their gold audit has neither satisfied critics nor laid to rest certain theories.