Hidden motive behind central bank gold buying

6.8.23 - Hidden motive behind central bank gold buying

Gold last traded at $1,963 an ounce. Silver at $24.27 an ounce.

Gold revaluation & the hidden motive behind central banks' gold buying -Mining.com

It's no secret that central banks around the world are buying up gold.

In the first three months of the year, central banks bought a combined 228 tonnes, the most ever seen in a first quarter, World Gold Council data revealed.

This follows up on what was already a record year in 2022, during which 1,136 tonnes of gold worth some $70 billion were added to the banks' reserves. Compared to the 450 tonnes bought during 2021, that represents a whopping 152% year-on-year increase!

The pace and consistency at which central banks are now accumulating gold, as far as we can tell, is unprecedented, given they've mostly been sellers throughout history. But the recent transactional trend, in particular over the past 30 years, illustrates a dramatic shift in the official attitude towards gold.

Back in the early 1990s and 2000s, central banks were continuously selling off gold as strong economic growth during that time rendered bullion less attractive than currencies in many places. Some, such as those in Western Europe, were even selling hundreds of tonnes a year!

Then the 2007-08 financial crisis came, triggering a complete 180 in the official banks' approach to gold. From 2010 onwards, central banks have been net buyers on an annual basis. About 80% of the central banks currently hold gold as part of their international reserves.