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Why do central banks hold gold?

jmski52jmski52 Posts: 22,899 ✭✭✭✭✭
edited November 29, 2020 3:58AM in Precious Metals

It seems to me that central banks tend to discount gold and always talk it down. It's to their advantage to be able to create money out of thin air with no accountability, and to exercise fractional reserve lending as a means to accumulate capital from their own customers.

So, why do they bother to own gold? Asking for a friend. ;)

Q: Are You Printing Money? Bernanke: Not Literally

I knew it would happen.

Comments

  • blitzdudeblitzdude Posts: 5,959 ✭✭✭✭✭

    Insurance, just in case.

    The whole worlds off its rocker, buy Gold™.
    BOOMIN!™

  • derrybderryb Posts: 36,941 ✭✭✭✭✭
    edited November 29, 2020 8:28AM

    for the very reason I have always advocated a stacker to hold it: fiat (dollar) insurance

    When central banks transact with one another, gold is a payment of last resort.

    The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong

  • Miami1025Miami1025 Posts: 6 ✭

    If your friend wants deeper explanations. Try Richard J. Maybury’s a uncle Eric books on personal finance and money mystery. I recommend just getting the whole set for the discount , once you read one you’ll get the others. In short it’s a hedge, when government fiat money becomes worthless what are you gonna trade for food. It’ll be anything ppl. Need that can’t be created outta thin air.

  • drei3reedrei3ree Posts: 3,430 ✭✭✭✭

    @Miami1025 said:
    If your friend wants deeper explanations. Try Richard J. Maybury’s a uncle Eric books on personal finance and money mystery. I recommend just getting the whole set for the discount , once you read one you’ll get the others. In short it’s a hedge, when government fiat money becomes worthless what are you gonna trade for food. It’ll be anything ppl. Need that can’t be created outta thin air.

    Thanks Richard! ;)

  • jmski52jmski52 Posts: 22,899 ✭✭✭✭✭
    edited November 30, 2020 3:10AM

    In short it’s a hedge, when government fiat money becomes worthless what are you gonna trade for food. It’ll be anything ppl. Need that can’t be created outta thin air.

    Are you telling me that Central Banks own gold as a hedge for food against the policies of the Central Banks that print money out of thin air - is that what you think this Maybury guy is saying? You think Central Banks are planning to hoard food now?

    Clearly, I have no idea, but it sure does seem like that might be the case. The banks, and the people who own them are not really our pals.

    If Central Banks own gold as insurance - insurance against what?

    We know that IMF now considers gold a Tier 1 Asset. Why not just call it money, because isn't that what gold really is? Why the charade? Aren't we concerned with honesty and accountability?

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • rickoricko Posts: 98,724 ✭✭✭✭✭

    Gold is money.... and banks hold it for that very reason. Cheers, RickO

  • TwoSides2aCoinTwoSides2aCoin Posts: 44,364 ✭✭✭✭✭
    edited December 2, 2020 10:03AM

    ...In case of fire, pull wool over eyes.

  • GoldenageGoldenage Posts: 3,278 ✭✭✭✭✭

    There is a certain portion of the population that believes that bitcoin is money. If they had their way, they’d get everyone off dollars and gold so they could be in full control.

    Central banks own gold because it can be traded for dollars. Central banks could be buying Michael Jordan rookie cards as they have value as well. They can buy whatever they feel has value. Land, gold, yachts, oil, etc.

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