Central Banks are now the No. 1 Buyer of Gold in the World
jmski52
Posts: 22,798 ✭✭✭✭✭
Doesn't this mean that the Central Banks are betting against their own currencies?
(credit - Gregory Mannarino)
The Central Banks are destroying the value of people's savings - and they know it, but they're buying gold - to save their own skins when the market crashes.
They are betting against their own debt-based system. Ain't that peculiar? 
Q: Are You Printing Money? Bernanke: Not Literally
I knew it would happen.
I knew it would happen.
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Comments
they prefer you call it a hedge. LOL
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Wouldn't a definition of "corruption" be the act of saying one thing, while doing the exact opposite?
I knew it would happen.
Sounds more like the definition of "hypocrisy".
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
I always thought PerryHall was the #1 buyer of gold
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They're hedging (or betting against if you prefer) the U.S. dollar which they hold as reserves.
Do they fear devaluation or theft of those reserves? Or both?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I participated in an economics discussion forum for a long time during the 2000s and we had discussed this matter in great detail. At the time of the discussions, it was concluded that gold is held as a hedge against monetary chaos; i.e., the U.S. dollar rapidly losing a tremendous amount of purchasing power. There were various countries that were on friendly-ish terms with the U.S. who hedged their holdings of U.S. dollars and U.S. Treasuries with gold. Some nations seemed to follow some sort of formula where a certain percentage of their central bank reserves were denominated in gold bullion. I believe that percentage was 2% or 4% and the nation I tracked which seemed to follow that formula relatively closely was Singapore.
With the U.S. weaponizing SWIFT and foreign holdings of U.S. Treasuries, countries that are on the outs with the U.S. are increasing their gold reserves to protect themselves against asset seizures (without due process) and loss of purchasing power. For those countries that are less economically isolated from the U.S. such as China, they still maintain a fair amount of U.S. Treasuries holdings.
For the time being, there is still no single economy outside the U.S. that is large enough, liquid enough, trustworthy enough, and free enough (convertability) to be able to issue enough currency and bonds to serve as a primary reserve asset for a global economy. There is no such thing as a Euro bond (you have German bonds, French bonds, Italian bonds, Spanish bonds, etc.); China's yuan is not convertible; and the other economies are not large enough to supplant the U.S.
However, economic blocs such as BRICS are perhaps trying to create an alternative to the U.S. dollar system. The success of such a system and mass adoption by countries that are considered U.S. allies would have serious ramifications on the purchasing power of the U.S. dollar. It is perhaps the primary reason that the U.S. still has roughly 8,333 metric tons of gold bullion even though Ben Bernanke once said it's only kept for purposes of "tradition."
No, it's kept as a monetary/economic fire extinguisher encased in a glass housing. If hyperinflation breaks out, break glass and immediately tie the U.S. dollar to the gold the country possesses either on a full or fractional basis. A hyperinflationary spiral should immediately be stopped by such an action.
IMF classified gold as the only other Tier 1 asset besides US Treasuries about 5 years ago. The handwriting was already on the wall then, and the reason was the uncontrollable expansion of debt in the world economy.
I knew it would happen.