If Central Banks Believe in Paper Money Why Are They Loading Up On Gold?

Friday, July 8, 2011
By Paul Martin

by Phoenix Capital Research
ZeroHedge.com
07/08/2011

’ve been warning for years that an inflationary storm was coming. I’ve recently tailored my forecast to allow for a resurgence in deflation based on QE 2 ending and the economy diving, but my long-term forecast remains the same: inflation WILL be exploding in the years to come.

Indeed, even the biggest proponents of paper money (central banks) have begun to realize that their grand experiment is coming to an end. Central banks officially became net buyers of Gold last year. And we now find that they have acquired the most Gold in over a decade.

The Financial Times reports:

Central banks have pulled 635 tonnes of gold from the Bank for International Settlements in the past year, the largest withdrawal in more than a decade.

The move, disclosed in the BIS’s annual report, marks a sharp reversal from the previous year, when central banks added to deposits of gold at the so-called “bank for central banks” rather than lending it directly to the private sector amid growing concerns over counterparty risk.

Let’s consider this. If you’re a central bank and you actually believe in the value of paper money and your ability to create wealth by printing it…why would you be loading up on Gold?

The answer is simple: you see the writing on the wall.

The Rest…HERE

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