Central Banks Double Down on Gold Buying

The comments below are an edited and abridged synopsis of an article by ZeroHedge

For the first two months of 2023, net central bank gold purchases came in at 125 tons. This is the strongest start to a year since 2010.

Central Banks Double Down on Gold Buying - bullionBuzz - Nick's Top Six
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China was the biggest buyer in February. It increased gold holdings by a reported 24.9 tons. It was the fourth consecutive month of reported Chinese gold purchases. In that time, China’s official gold reserves have grown by 102 tons.

China accumulated 1,448 tons of gold between 2002 and 2019, and then went silent until November 2022. Many speculate that China continued to add gold during those years.

There is speculation that China holds far more gold than it reports, that it keeps several thousand tons of gold in the State Administration for Foreign Exchange (SAFE).

Other countries accumulating gold are Russia, Turkey, India, Singapore, Uzbekistan and Mexico.

The World Gold Council expects net central bank gold buying to continue through 2023. According to the WGC, emerging market banks remain relatively under-allocated to gold.

Overall, expect further buying, with EM banks at the forefront of this trend as they continue to redress the imbalance in gold allocations with their developed market peers.

Total central bank gold buying in 2022 came in at 1,136 tons. It was the highest level of net purchases on record dating back to 1950. It was the 13th straight year of net central bank gold purchases.

There are two main drivers behind central bank gold accumulation: Gold’s performance during times of crisis and its role as a long-term store of value.

The WGC recently said that the big purchases underscore the fact that gold remains an important asset in the global monetary system.

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