Central Bank Gold Investing is Increasing
Thu Oct 24 2024
Gold IRA owners are keeping a close eye on what has proven to be an important investment indicator this year: the performance of gold and the reason central banks are buying it up recently—not only that but the bankers are also sharing their philosophy on it, which is almost unheard of.
As for gold’s performance, the metrics are phenomenal and experts seem to believe there is no end in sight at this time. As of the middle of October, gold had risen about 30% year over year to nearly $2,700 per ounce. That made it one of the best performing assets of the year.[1]
From January of 2022 through mid-October 2024, gold climbed nearly 48%. This is surprising with the persistent rate-tightening of the Federal Reserve, which raised the benchmark federal funds rate more than 500 points from spring 2022 through the summer of 2023.[2]
It’s unusual for gold to perform this well under these conditions, so many are asking what exactly is going on. Numerous analysts point out that the strongest base drivers of gold amount to “uncertainty —-mostly economic, fiscal, and geopolitical issues.[3]
It’s understandable that people are turning to this asset in times of uncertainty. Gold is physical/tangible, highly portable, not subject to credit or counterparty risk, and has inherent value that can’t be debased like currency can. And because it is basically uncorrelated with traditional assets, it often doesn’t suffer when traditional markets and currencies (like the U.S. dollar) are down—and it has even been known to appreciate during unsettling times.[4]
These are benefits sought strategically not only by individual investors but by central banks and other of the world’s largest investors.
Demand by central banks has been moving at or near an all-time record pace for 2½ years.[5] Plus, central banks have been net purchasers of gold every year since the financial crisis (2010).[5]
Through history, central banks haven’t shared much about their strategies and reasons. For one thing, they haven’t wanted to unduly influence the market, which makes sense.
But they’ve recently started opening up about it, and it is eye-opening.
Source: https://www.jpost.com/