Global central banks have further accelerated their pace of acquiring gold reserves. How to explain this rush towards the yellow metal and what does it indicate?
Central banks are hoarding gold at a frenetic pace
By 2022, central banks had already broken their gold accumulation record, and it looks set to be broken in 2023. According to data shared by the World Gold Council, eight central banks added 50 tonnes of gold to their reserves in June.
It was Poland that was the most fond of gold, as the country added 19 tonnes of gold to its reserves. Behind it, China continued its massive purchases for the seventh consecutive month. She got her hands on 16 tons of the yellow metal. Other buyers include Singapore (4 tonnes), Russia (3 tonnes), India (2 tonnes) and Kyrgyzstan (2 tonnes). Turkey, in great difficulty economically, has chosen to sell part of its gold reserves. This is also the case for Uzbekistan and Kazakhstan.
The gold rush should also continue. According to a study by the World Gold Council, almost a quarter of central banks intends to continue to buy gold over the next twelve months. How to explain this accumulation?
👉 To go further – How to buy gold using the blockchain in 2023?
The reasons for this new gold rush
Gold is the reserve asset par excellence, the one to which the world’s central banks turn in times of economic instability. This yellow metal rush is therefore an indicator of the macro economic environment, particularly uncertain since the Covid-19 crisis. It must also be seen as a direct consequence of the war in Ukraine, and of the progressive “de-dollarization” of the world.
Russia’s invasion of Ukraine triggered significant sanctions from the international community. With a particularly clear highlight: the current system, which is based on the dollar and private banks, leaves central banks vulnerable to sanctions. Since then, calls for “de-dollarization” have multiplied, and recourse to the USD is tending to decrease. A trend also highlighted by the World Gold Council report:
“Views of central banks regarding the future of the US dollar are more pessimistic than in previous polls.»
Half of them estimate that the percentage of reserves in USD will reach 40 to 50% within 5 years.
👉 Also read – “Bitcoin is digital gold” according to BlackRock CEO
Buy crypto on eToro
Gold and cryptos: the future of finance?
This interest is also found in conjunction with the cryptocurrency sector, which seems to be becoming one of the pillars of dedollarization. Last January, Russia and Iran – both heavily sanctioned economically – confirmed their desire to create a gold-backed stablecoin. Same scenario for Zimbabwe, where the issuance of a gold-backed central bank digital currency (MNBC) was confirmed in April. Proof of this growing interest, the capitalization of gold-backed stablecoins has exploded in recent times. It thus exceeded one billion dollars in the fall.
As in all historical periods of economic uncertainty, gold is therefore doing well. But this time, it seems that the evolution of financial technologies allows it to be associated with innovative active ingredients. And central bank forecasts show that this is an underlying trend.
👉 Listen to this article and all other crypto news on Spotify
Confused and overwhelmed by cryptocurrencies? 🤔
Spot opportunities and make informed investment decisions 🔎
Source: Gold.org
Newsletter 🍞
Receive a summary of crypto news every Monday by email 👌
What you need to know about affiliate links. This page may feature investment-related assets, products or services. Some links in this article may be affiliated. This means that if you buy a product or register on a site from this article, our partner pays us a commission. This allows us to continue to offer you original and useful content. There is no impact on you and you can even get a bonus by using our links.
Investments in cryptocurrencies are risky. Cryptoast is not responsible for the quality of the products or services presented on this page and could not be held responsible, directly or indirectly, for any damage or loss caused following the use of a good or service highlighted in this article. Investments related to crypto-assets are risky by nature, readers should do their own research before taking any action and only invest within the limits of their financial capabilities. This article does not constitute investment advice.
AMF recommendations. There is no guaranteed high return, a product with high return potential involves high risk. This risk-taking must be in line with your project, your investment horizon and your ability to lose part of this savings. Do not invest if you are not ready to lose all or part of your capital.
To go further, read our Financial Situation, Media Transparency and Legal Notices pages.
Journalist at Cryptoast, I fell into the pot of cryptocurrencies a few years ago. I am passionate about the innovative technologies that stem from the blockchain and I like to find the most crispy information to share with you.
Marine Debelloir
2472 items
