Tuesday, September 20, 2016

MarketWatch: Central Banks Have Been Buying Gold With a Vengeance

David Marsh writes at MarketWatch, a Dow Jones company:
[I]t is significant that central banks are turning back to annual gold purchases in line with a century of practice between 1870 and 1970. This appears to be restoring gold as a central element of monetary management after four decades of attempted demonetization, according to reserve statistics compiled by the Official Monetary and Financial Institutions Forum, the financial research group.

Annual net gold purchases of 350 tons a year by world central banks over the past eight years have returned to the 100-year average up to 1970 — reflecting gold’s renewed attractiveness as a safe-haven asset in an environment of uncertainty and low or negative interest rates....

The latest “Rebuilding” Period VII has been under way since the financial crisis in 2008. In these eight years, central banks in both developed and developing countries have shown a new fondness for gold, rebuilding its importance as a bedrock of most countries’ foreign reserves.

Central banks have been net bullion buyers every year since 2008, adding more than 2,800 tons or 9.4% to reserves. Developed countries (accounting for the lion’s share of total official holdings) have been conserving stocks, while developing countries led by China and Russia have been building them up.

This is the longest protracted spell of gold accruals since 1950-65, when central banks and treasuries acquired a net total of more than 7,000 tons during the economic recovery after the Second World War....there has been a big shift over the past 70 years in the distribution of gold away from former near-monopoly holder the U.S. Treasury towards European countries and, latterly, developing nations – symbolizing the growth of a multipolar world economy.
I have written several times in the EPJ Daily Alert that during the next major spike up in gold, it is going to be common to see gold climb on any given day by as much as $100 per ounce.



  1. Publicly they "despise" gold (wink wink). Privately they know their currencies are always capable of destruction, especially if they borrow-and-spend high relative to production. Attitudes toward gold prove how effective propaganda is. Well, so did Mao, Hitler and Uncle Joe, among many others.

  2. A ridiculous article - 90%+ of the Central Bank gold buying was China, Russia and Kazakstan. The other top central bank holders US Germany France, Italy, Netherlands, India Switzerland havent added any gold to their reserves for years or decades

    1. http://www.zerohedge.com/news/2016-01-27/germany-has-repatriated-over-366-tonnes-gold-new-york-and-paris

      Im sorry, you were saying?

    2. Repatriating gold is not the same as ADDING gold

    3. It is, considering the rule "If you dont hold it, you dont own it." ;)

    4. Separate points!
      Yes it is important for the central banks to hold the gold they own but its not the same as ADDING more gold as the article states
      The countries like germnay repatriating gold are just trying to get back what is already theirs

    5. "what is already theirs"

      Not while its in the U.S.'s possession ;)