A STANDARD STUDY OF GOLD RESERVE DEVELOPMENT IN IRAQI CENTRAL BANK AND ITS RELATION TO ASSETS

Abstract

This work investigates the time trajectory of the Iraqi Central Bank's gold holdings and their correlation to their total assets from 2005 to 2017 by applying time-series regression techniques. The study employs three mathematical forms linear, quadratic, and cubic regression models—and contrasts them to determine the trajectory of gold reserve expansion. The empirical work applies officially published datasets by the Central Bank of Iraq to determine the functional form that appropriately embodies the dynamics of gold reserve build-up. The empirical outcomes indicate a steady increase in gold reserves throughout the study period. Specifically, the linear regression model estimates an average annual growth of 412,712 ounces and accounts for 83.3% of the variance in reserve levels, as reflected by an R-squared value of 0.833. The inclusion of a quadratic term substantially enhances the model’s performance, raising the R-squared to 0.915. Further refinement through the cubic model elevates explanatory power to 0.939. The findings suggest that gold reserve growth follows an acceleration, nonlinear rather than a constant linear course, which translates to an increasingly stronger strategic priority on gold hoarding. The comparison shows that higher-degree polynomial models have improved gold reserve trend predictions, and the cubic specification achieves the greatest explanatory capability. The revealed acceleration in the growth rate of reserves from the quadratic and cubic estimates finds evidence on an evolving policy towards reserve holdings by the Iraqi Central Bank, which was presumably brought on by increasing regional economic turbulence and geopolitical threats.