Central Bank Gold Hoarding Hits 50-Year High

Monday, December 30, 2019
By Paul Martin

By Jamie Redman
DECEMBER 30, 2019

While dozens of the world’s economic leaders participate in extreme monetary easing policy, central banks have also been hoarding gold. Central banks accumulated over 668 tons in gold purchases this year, which is more than 2018’s record numbers. In fact, the key drivers in gold demand this year stemmed from central bank purchases, most of which were bought (390 tons) during the first two quarters of 2019.

Central Bank Gold Purchases in 2019 Surpass Last Year’s 50-Year Milestone

During the last few months of 2019, economists have been warning of worldwide economic calamity. Moreover, at least 37 developed central banks have participated in significant monetary easing practices like large-scale overnight repos and slashing interest rates. Every time one of the banks cuts a nation’s interest rate or fuels the country’s private banks with stimulus, they cite a weak economy, lack of liquidity, and rising inflation. However, most people don’t know that while central planners are toying with the global economy, they’re also purchasing gold in mass quantity. Despite gold bug Peter Schiff’s recent opinion, BTC prices outshined gold gains this year. Still, gold had a very good year touching an all-time high at $1,542 per ounce and gained more than 10% this year. One of the biggest reasons for gold’s significant rise was due to central bank purchases.

In 2018, gold touched a 50-year record, as far as central bank demand for the precious metal is concerned. Data shows that 2019’s gold purchases are up 17 tons more than the 651.5 metric tons purchased the previous year. Some of the biggest central bank gold purchases this year came from places like Kazakhstan, Russia, and Turkey. A variety of newer gold buyers also appeared in 2019, surprising a few economists. For example, in February, the Reserve Bank of India increased buying by 40 tons and the country hadn’t increased in over a decade. Poland increased gold purchases as well, seeing a 25% rise year-over-year (YoY) with an increase of 25 tons. In 2019, Hungary bought more gold than it has in the last 30 years. A number of market observers have different opinions on why the world’s central banks are stockpiling gold reserves. Investment Analyst Sebastian Sienkiewicz believes it’s because gold is a reliable safe-haven asset.

“Central Banks’ gold purchases are on track to set a 50-year high,” Sienkiewicz tweeted. “Main Reasons? [It’s a] safe-haven asset, reserves/portfolio effective diversification, gold’s ability to improve risk-adjusted returns, [and it’s] valuable collateral.”

Gold is already becoming a growing portion of central banks’ reserves. While the dollar still predominates, official gold holdings are up, in part because of politics, as with Russia dumping dollars to protest U.S…. https://t.co/YiFibSeeFp

— peter lutrario (@peterlutrario2) December 29, 2019

Private and Domestic Demand for Gold Rises While Germany Drops Limit to Buy Gold Anonymously

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