Central Banks and Gold

Posted | 28/07/2014 / Views | 2401
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As the world grapples with multiple wars and the issuer of its global reserve currency, the US, printing nearly $4t since the GFC and holding interest rates to near zero, central banks are clearly preparing for the worst… they are buying gold.  By the end of 2013 the world’s central banks held 30,500 tonnes of gold or nearly a fifth of all the gold ever mined.  From the time we left the gold standard in 1971 central banks began to sell their gold.  When the penny dropped with the GFC that this new global economic experiment wasn’t working, and the US Fed’s response to fixing it was actually making it worse, they all started buying up gold again and have done so continuously since the GFC.  We are in a world now seemingly perilously close to either an easy money bubble or war triggered financial collapse.  And ‘war’ may not be the usual guns and bombs, it could be economic as Russia's ambassador to the U.K. said last week - "sanctions would not serve the interests of the countries concerned, including the U.S., and would trigger a long-anticipated endgame of the present global crisis."

If you think investing in physical gold and silver is speculative, Central Bankers are by repute some of the most conservative investors around as they are charged with protecting their respective country’s wealth.