Posted on 01/31/2023 9:51:11 AM PST by FarCenter
TOKYO -- Gold buying by central banks reached its highest level in 55 years, data released Tuesday shows, as the freezing of Russia's dollar assets spurred countries to seek alternatives less vulnerable to economic sanctions.
Net purchases of the metal by central banks in 2022 totaled 1,135 tonnes in 2022, according to a report from the World Gold Council, an industry group. This was the highest since 1967, when European banks bought gold en masse as U.S. deficits and the devaluation of the British pound began to undermine the link between gold and the dollar.
Last year's buying spree is believed to have been sparked by sanctions imposed on Russia over its invasion of Ukraine.
Moscow's clash with the West "drove home the point that assets from the 'Western' economic sphere, like dollars, are risky to hold," said financial and precious metals analyst Koichiro Kamei.
China was the standout buyer. The year brought its first reported increase in gold reserves in three years, with a total of 62 tonnes added in November and December. Its actual purchases may have been even larger, given the roughly 20% drop in its holdings of U.S. debt over the year through November. This came as Beijing has taken steps to move away from the dollar, including buying oil in yuan.
Other central banks that made major gold purchases include inflation-hit Turkey with 148 tonnes; India with 33 tonnes; Qatar with 35 tonnes; and Uzbekistan with 34 tonnes.
The council looks at gold holdings reported to the International Monetary Fund. Reliable information from other sources on purchases that have not been reported to the IMF are included in the global total without being attributed to a specific country.
While the council does not disclose detailed information on its methods, Russia, which stopped releasing information on its foreign currency reserves after its invasion of Ukraine, is believed to have been a big gold buyer in 2022.
"Russia is a gold-producing country, and likely added domestically produced gold to its foreign exchange reserves," said market analyst Itsuo Toshima.
Gold buying by central banks worldwide gained steam last decade, after the global financial crisis.
An analysis of gold holdings with assistance from Satoru Yoshida of Rakuten Securities found that Russia's grew the most in the decade through 2022, more than doubling to 2,298 tonnes, followed by China with a roughly 950-tonne increase. The share of gold in Russia's foreign exchange reserves rose to roughly 20% from around 10%. Venezuela went from just over 10% to more than 80%.
Roulette wheel about to land on a color. Someone is going to make more money when dollar hyperinflates.
In normal times, civilians could buy 1 ounce gold coins by paying premiums of around $25 above spot price for gold.
It is 5 times that right now. To get your gold coin you have to pay around $120 above spot price.
This is a dramatic illustration of 1) a shortage caused by central banks’ buying the metal up, and 2) central banks short-selling the paper (futures) contracts.
This way the central banks 1) protect themselves from their own worth-less-and-less currencies while 2) disguising the true comparison between metal and paper money.
This is a confidence game which will have an end to it. But when it comes, the central banks will come out OK (while John Q Public takes it in the shorts.
we’re entering a 1970’s and 2000’s style bull market for gold.
Yikes
John Williams of Shadowstats is recommending to buy physical gold as well. In fairness, so is William Devane…
“...the freezing of Russia’s dollar assets spurred countries to seek alternatives less vulnerable to economic sanctions.”
To the extent the rise of BRICS is to neuter US sanction capabilities, this is correct. But only 1/2 the story.
The decoupling of the US dollar from petroleum is the wind behind these sails. When that happens, all that paper with dead presidents under your bed will be good to wipe with, but not much more.
That appears to be the message.
Well not only that paper currencies about to go bust because the governments particularly in the west can’t afford to operating any longer and their in the process of printing dollars to stay afloat or whatever their paper currency is.so the other central banks are prepared to come out with a new currency back by gold because nobody is gonna trust paper money anymore
Not gold certificates but actual gold coins.
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