The global central bank is buying gold wildly, the main purpose is to "de-dollarization"?
Recently, the price of gold has been relatively strong, the international gold price has remained at a high level of $1817/oz, and the international demand for gold has reached the highest level since 2016.
Central banks around the world are buying gold like crazy
Why is the price of gold still rising when the economy is in recession and demand for assets is sluggish? The main purpose is still related to needs. Today we will talk about why the whole world is "crazy buying gold"? The codeword is not easy, welcome to like, forward, and bookmark.
Why is the world buying gold like crazy?
Why is the whole world buying gold like crazy? There are mainly two reasons.
The first reason lies in the so-called "buying gold in troubled times".
The world is facing a huge problem in 2022, that is inflation, large developing countries like developed countries and China purchasing power of currency is still relatively strong,but for inflation in Turkey , Argentina In countries where the rate is close to 100%, the purchasing power of banknotes has really fallen very quickly.
Turkey’s inflation rate is as high as 70% or more
So for residents of these countries, buying gold and other precious metal assets has become a must, because gold is regarded as the safest asset, better than the declining US dollar many. In addition, some special countries have a greater demand for gold, such as Russia.
In Russia, the demand for gold by ordinary residents is about 5 times that of last year, Because Russia has been subject to economic and trade sanctions by the United States. At this time, residents hold gold in their hands, and their sense of security is not comparable to that of rubles or even dollars. , after all, gold can be exchanged for U.S. dollars at any time, but U.S. dollars may not be able to buy gold.
The United States sanctioned Russia, and Russia suffered a double kill of stocks and debts!
In addition, 2023 is the year of recession recognized by economists and research institutions in many countries, and the economic recession next year will basically become a definite fact, which will further increase the global demand for gold . There are no good investment opportunities in the world, and buying gold for safety and capital preservation has become an investment choice for ordinary residents.
The second reason is that the central bank is buying gold aggressively in pursuit of de-dollarization.
In recent decades, countries and central banks around the world have been under the threat of dollar hegemony. However, although the United States used the dollar hegemony to punish many small countries like North Korea and Iran, it never used the dollar against big countries. Hegemonic weapons.
But since the beginning of this year, as the United States has adopted dollar hegemony over Russia, Russia’s foreign exchange reserves of hundreds of billions of dollars have been blocked, and the country’s wealth has been blocked by the United States with just a click of a mouse.
Russian central bank is sanctioned by US dollar weapons
Many countries and central banks are thinking , since even Russia, a big country with nuclear weapons will be sanctioned by US dollar hegemony, will I be punished one day because of disagreements with the US What about the same sanctions in the United States?
So why would I spend all my money on dollars? Wouldn't it be safer to reserve a little currency from other countries?
This has given rise to the global central bank's demand for "de-dollarization" . Central banks need to reserve an asset that cannot be blocked from the perspective of national security.
After much deliberation, only one asset is more suitable, and that is gold.
In the third quarter of this year, the central bank of Turkey bought 31 tons of gold, accounting for nearly 30% of its total gold reserves, followed by Uzbekistan and Qatar, who also bought a large amount of gold as reserves. In addition, the central bank of Japan and China also Varying amounts of gold were purchased.
Turkey's central bank announced a large number of purchasesBuying gold
Judging from the data, the global central bank’s gold purchases in the third quarter of this year have reached 399.3 tons, which is about 5 times that of the same period last year. It has exceeded the maximum value of since the historical record in 1967.
Simply put, the lower the credit level of the U.S. dollar as a currency, the more people worry about the "thunderstorm" of U.S. dollar hegemony, and the greater the purchase and demand for gold.
Issuing currency indiscriminately, sanctioning other countries at will, leading to the gradual collapse of the US dollar’s reputation
And gold, as an asset without an issuing entity, , is naturally "no international currency". Reserve assets threatened by dollar hegemony.
Experts from precious metal investment institutions said that in 2023, global central banks may continue to buy gold as a reserve, because everyone's reputation for the US dollar is gradually being lost.
Summary
In general, 2022 and 2023 are not ordinary years. The conflict between Russia and Ukraine has caused the global central banks to "fear" the hegemony of the dollar, and countries have voted with their feet.
Countries are selling US US debt while accelerating the purchase of US dollars. Especially in the third quarter when the Federal Reserve raised interest rates most ferociously, the number of gold purchases by global central banks increased significantly and even hit a historical record.
In addition, buying gold is also a good investment variety that can maintain and increase value in the past two years, because under the background of global economic recession, the property of precious metals has attracted the attention of many investors.
Europe and the United States are still in an inflation crisis
For some countries in the inflation crisis, gold is also an indispensable store of value. You must know that even now, inflation in Europe has exceeded 10%, and the United States It is around 7.1%.
Experts predict that the price of gold will remain high in 2023, so next year, will you consider buying gold? (This article does not constitute any investment advice)
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