Why are gold reserves needed? Central banks give an answer

Global InterGold

 

Average reading time — 3 minutes

 

The World Gold Council* published the results of a survey conducted among the central banks of different countries. The data obtained demonstrate how gold is treated in institutions that control the monetary policy of states.

 

They bought it, they still buy it, they will continue buying it

Gold reserves are held by about 80% of central banks to date.

68% of survey participants confirmed that the stocks of the precious metal in their organizations had expanded over the past five years.

52% believe that the aggregate gold reserves of the world’s central banks will increase in the next 12 months.

 

What motivates to build up stocks?

Central banks continue to highly value the advantages of gold, especially its positive price dynamics during crises. This merit of the yellow metal is becoming more and more evident against the backdrop of a protracted pandemic. 79% of those surveyed emphasize that resilience to the crisis is one of the most important reasons for stocking up on gold.

Other significant drivers:

  • the historical role of gold;

  • the ability to retain value in the long term;

  • efficiency as a diversification* tool;

  • lack of political risks;

  • high liquidity*.

 

Everyone is afraid of uncertainty

84% of respondents say their reserves management strategy is being influenced by unclear prospects of economic recovery post-COVID-19. Other key factors include negative interest rates and the rising threat of inflation.

It is worth mentioning here the Hungarian National Bank that attributed the purchase of 63 tons of gold in March this year to the new risks associated with the coronavirus pandemic.

A similar opinion is shared by the Bank of Zambia, the governor of which, Christopher Mvunga, stated the following: “During periods of market stress — when assets would be losing value — gold would be adding value, thereby shielding the whole portfolio from large losses.”

In the chart: the largest monthly gold purchases made by central banks since 2012. The most impressive of these purchases have been made over the past three years, confirming the growing interest in gold on a global scale.

As of July 5, 2021, the price of an ounce is $1,785.

 

Unambiguous conclusion

So, according to experts from different parts of the globe, the world economy is in a difficult situation, which will not be easy to cope with. Therefore, it is in the interests of every country, nation and individual to take care of their own Financial Security. The best way to do this is to prepare a gold stock for the protection of savings.

The GIG-OS online platform helps its clients to purchase investment gold bars conveniently, profitably and safely. We are continuously developing and implementing innovations to make the noble metal even more accessible to every inhabitant of the Earth, even more accessible to you personally!

 

Apply the strategy of central banks — strengthen your positions with the help of gold!

 

TOWARDS FINANCIAL SECURITY!

 

Glossary:

*The World Gold Council — the market development organization, founded by the world’s leading gold producers to stimulate demand for gold.

*Diversification — investing in various assets with the aim of reducing risks.

*Liquidity — the ability to quickly sell a product at its market price.

 

Published: 05.07.2021
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