Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Now Is Not a Normal Time: Central Banks Buying Piles of Gold

  by    0   2

These are not normal economic times.

Interest rates have remained artificially low, plunging into negative territory in many places. Central banks continue to inflate the money supply with quantitative easing. Some policy-makers have even floated the idea of helicopter money. Worldwide money printing is reportedly approaching $100 trillion.

There is no end to this crazy monetary policy in sight. This led billionaire investor Stanley Druckenmiller to recommend selling US stocks to buy gold. Well-known hedge fund manager Paul Singer said the recent surge in gold is just the beginning. And Bank of America said gold is entering a new and long bull market.

900x506xCentral-Bank-Gold.jpg.pagespeed.ic.QNzcwKipf2

Chart Provided by Bullion Management Group.

Ironically, their own policies are driving some some central bankers to do what they generally scorn – buy gold. In fact, many central banks are piling into the yellow metal.

Overall demand for gold continues to surge, hitting 1,290 tons in the first quarter of this year. It was the second-largest quarterly demand spike on record. Investors have led the charge. According to data gathered by Bloomberg, holdings of the yellow metal in exchange traded funds have increased to 1,823.3 tons, the most since December 2013. In just the past two week, ETF gold holdings swelled 63.2 tons.

Why?

As Bloomberg put it, investors are buying gold due to “rising concern about central bank policy-making worldwide.” Bernard Aw, a strategist at IG Asia Pte, also pointed to central bank policies as a prime driver of the surging gold market.

Firstly, the negative interest rate environment and quantitative-easing policies are reducing the pool of suitable investment options, and making gold less costly to hold. Second, lingering fears of competitive currency devaluations and potentially fresh bouts of market volatility encourage safe-haven demand.”

Even while continuing to implement policies driving gold demand skyward, central banks themselves are buying gold, with China, Russia, and Kazakhstan leading the pack. According to the World Gold Council, central banks added 109 tons to their reserves in the first quarter of this year. It was the 21st consecutive month central banks have been net purchasers of gold. Central banks accounted for about 14% of the world’s gold demand last year. Gold purchases by central banks have moved from less than 2% of world demand for gold in 2009 to over 14% in 2015.

Free Download: Classic Gold Scams And How To Avoid Getting Ripped Off

World Gold Council analysts said they expect banks to accumulate another 400 to 600 tons of gold in 2016, as they continue to diversify away from the US dollar. Capital Economics researchers explained it this way:

The primary driver of central banks’ gold buying continues to be diversification away from the US dollar with some also looking for a hedge against currency volatility more generally. Indeed, historically gold is negatively correlated with the US dollar, the main asset held by central banks across the world, making it an effective hedge against future dollar weakness. What’s more, gold tends to have little or no correlation to other traditional or alternative reserve assets, like government bonds.”

The Daily Bell provides some interesting analysis on this central bank gold hoarding trend, especially considering the countries most aggressively accumulating the yellow metal. As they put it, “now is not a normal time.”

Ordinarily central banks are more apt to shed gold than buy it. The Canadian central bank has recently sold all its reserves. But now is not a normal time. We’ve argued that the world’s financial controllers, the bankers and globalists, have embarked on an aggressive campaign to create a new, international currency. As part of this strategy, they are raising the value of the non-dollar currencies. Eventually, the dollar itself may be lose serious value on the world’s markets. As currencies grow more unstable, central banks will seek a ‘bridge’ that holds value in the midst of currency volatility. That bridge seems to be gold.”

Central bankers won’t be the only ones to feel the impact of a devaluing dollar and economic instability. That’s why everyday investors are buying gold. That’s why you should too.

Get Peter Schiff’s most important Gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning more about physical gold and silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

What Are Gold Stocks Telling Us About the Gold Market?

The price of gold is up by about 2.7% so far in 2020. But gold stocks are down on the year. Why is this happening and what is this telling us? When we talk about gold stocks, we’re referring generally to stock in companies involved in gold mining and exploration. The valuation of these stocks […]

READ MORE →

The Dawn of the Dead on Wall Street

It’s like Dawn of the Dead on Wall Street. Zombies are everywhere. Even as stocks continue to push to new highs, the number of money-losing companies listed on US stock markets has ballooned to levels not seen since the dot-com bubble of the late 1990s. According to a recent Wall Street Journal article, nearly 40% […]

READ MORE →

Bridgewater: Gold Could Push Above $2,000 as Fed Ignores Inflation

Peter Schiff has been saying the Federal Reserve is going to let the inflation monster loose and this is going to be good for gold. Some people in the mainstream are starting to pick up on this theme. During a recent interview with the Financial Times, Bridgewater Associates co-chief investment officer Greg Jensen said gold […]

READ MORE →

Are Consumers Nearing the End of Their Road of Debt?

Are consumers getting close to the end of their road of debt? There are some indications that they might be and that’s not good news for an economy built on consumers spending money they don’t have.

READ MORE →

The Outlook for Gold in 2020 Remains Bullish

Gold had a strong year in 2019 and a World Gold Council report says the outlook for 2020 remains bullish. We expect that many of the global dynamics seeded over the past few years will remain generally supportive for gold in 2020.” Gold charted its best year since 2010 last year. The price increased by […]

READ MORE →

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Call Now