Central Banks Go On Gold Buying Spree Over Dollar Worries
The comments below are an edited and abridged synopsis of an article by Simon Constable
The world’s central banks are on a gold-buying spree that has lasted more than a decade. That’s the longest period of consistent gold acquisition by the so-called official sector in more than half a century.
But this time the motivations of the buyers are different than they were back in the 1950s, and they are worrying. That’s why investors should take note, including anyone who owns the SPDR Gold Shares (GLD) exchange-traded fund, which holds bars of solid bullion.
In the past, central banks had to buy gold because of its vital role in the global financial system. Now they are choosing to do so because they are worried about the dollar. In other words, they’ve been scared into this bullion buying binge.
Constable provides the details, including the long-gone historical role; Nixon nixing gold; the crisis that led central bank demand; Russia leading the pack; and the trend continuing.