Why are central banks buying gold? A simple question with a simple answer:
Central banks are expanding reserves due to concerns about the dollar, euro, sterling and all fiat currencies.
There is an increasing realisation amongst central bankers that gold is a less risky alternative to most paper currencies and a recent survey showed that the majority of central bank reserves managers were favourable towards gold.
If we accept the above reason for the increased demand for gold, we then have two issues to address:
- If demand is up, why has the price dropped 0.99% in the past month?
- Since China is buying Iranian oil with gold (along with India), is this an attempt to avoid US sanctions (doubtful) or an attempt to replace the USD as the world’s reserve currency?
Russia and Mexico Both Buy Nearly $1 Billion Worth of Gold in March
Changes to Gold Holdings in IMF (March) – Reuters Global Gold Forum
Other creditor nations with large foreign exchange reserves and exposure to the dollar and the euro including Turkey and Kazakhstan also increased their holdings of gold according to the International Monetary Fund data.
Mexico raised its reserves to 122.6 tons last month when gold averaged $1,676.67 an ounce.
Turkey added 11.5 tons, Kazakhstan 4.3 tons, Ukraine 1.2 tons, Tajikistan 0.4 ton, and Belarus 0.1 tonnes, according to the IMF.
Ukraine, Czech Republic and Belarus also had modest increases in their gold reserves.
Central banks are expanding reserves due to concerns about the dollar, euro, sterling and all fiat currencies.
There is an increasing realisation amongst central bankers that gold is a less risky alternative to most paper currencies and a recent survey showed that that majority of central bank reserves managers were favourable towards gold.
Signifying the mood of caution among the world’s central bankers, 71% of those polled said gold was a more attractive investment than it had been at the start of last year.
Central banks added 439.7 tons last year, the most in almost five decades, and may buy a similar amount if not more in 2012, the World Gold Council and many analysts believe.
Turkey’s central bank increased the proportion of required reserves that commercial banks can deposit in gold last year. The changes have increased the amount of bullion the country, which owns 209.6 tons, declares in its official reserves.
Managed manipulation is what is going on right now. World govs are doing what they can to prepare by getting as much gold as possible. I think it’s amazing what China is doing with Iran in buying oil with gold. They’ve definitely but gold back on the map as a currency and a currency of last resort at that.
Is there an official info regarding China paying gold for iranian oil -- apart from the acceptance of the National Iran Bank that it will accept gold? I mean, on the China part is there any real news or just speculation?
I document my articles with embedded links concerning “facts”. In this article, the link to China goes to:
http://www.morgangold.com/news/20120424-china-buys-iranian-oil-using-gold-avoiding-us-sanctions.html
I put facts in quotes because even reputable news services are not verifying their reports. We should all question everything we read. I saw read because I very rarely watch television.