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Central Bank Gold Purchases Surged 74% in 2018

CommissarJones
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Central Bank Gold Purchases Surged 74% in 2018

#199188

Postby CommissarJones » February 5th, 2019, 11:02 pm

The annual total of 651.5 tons was the highest since the US ended the dollar's convertibility into gold in 1971, and the second-highest on record, according to the World Gold Council. (1967 was the peak year.)

https://www.gold.org/goldhub/research/g ... stitutions

Link to full report:

https://www.gold.org/goldhub/research/g ... -year-2018

Nemo
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Re: Central Bank Gold Purchases Surged 74% in 2018

#207602

Postby Nemo » March 14th, 2019, 9:20 am

I read similar a few times and just wonder why the price of gold doesn't rise very much

It has long been suspected (and sometimes proved) that the banks are manipulating gold prices, but there is only so much that they can do with such bulk buying

youfoolishboy
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Re: Central Bank Gold Purchases Surged 74% in 2018

#210975

Postby youfoolishboy » March 28th, 2019, 9:21 am

You may wish to read this article...

https://nomadcapitalist.com/2018/08/30/ ... -currency/
'The underreported headline in all of this is that Russia and China were creating a framework to eventually clear transactions in gold, bypassing the dollar entirely. The countries aim to make more of their transactions in gold. That’s notable because both Russia and China have been accumulating gold reserves at a rapid pace compared to other countries, and the BRICS nations are gold producers.'

The idea has been around a few years that that is the end game of some countries and I tend to believe it as the US, especially under Trump, is throwing its weight about too much using the $ to punish countries they don't like via sanctions. It is a very strong weapon in global trade sanctions and even the larger powers of Europe are getting sick of it as they have been talking with Iran to find ways to avoid trading in $s.

Another reason for holding gold is the banking world in general is moving towards it as a safe asset class in times of crisis...

https://bmg-group.com/gold-zero-risk-monetary-asset/
'The status of gold as a risk-free asset in Basel III will certainly have a positive effect on the price of gold, as I am sure the gold Shariah standard, which was adopted at the end of 2016, will also have. Gold was accepted for the first time as an investment in Islamic finance after the group that sets standards for the industry adopted Shariah-compliant rules for trading gold. The rules approved allow gold to be used in the $1.88 trillion Islamic finance business.
The world banking sector will take a little longer to abandon its false anti-gold indoctrination, but it will. Gold is already a de facto zero-risk asset and has been for thousands of years. As it stands, Basel III, according to LBMA and other industry bodies, makes funding gold transactions for commercial banks difficult and increases the cost of doing business. But as the reset of the international monetary system approaches, gold will be adopted even by the banking establishment, irrespective of Basel rules, as the only riskless asset, as the Chinese and Indians are already doing.'

All this however is driving me towards buying gold mines, rather than physical gold, as they provide a dividend unlike gold itself.
Anyone got any alternative views on my current strategy?

richfool
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Re: Central Bank Gold Purchases Surged 74% in 2018

#210986

Postby richfool » March 28th, 2019, 9:39 am

I added some gold by way of an ETF during 2018/19, because of political, financial and economic uncertainties. Whilst agreed gold miners pay dividends, which is an attraction, my concerns there were around the possibility of political disruption and labour disputes affecting the companies' mining operations in the countries concerned.

youfoolishboy
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Re: Central Bank Gold Purchases Surged 74% in 2018

#210989

Postby youfoolishboy » March 28th, 2019, 9:51 am

I agree with the big goldminers political and labour risk in Africa but I have been recently buying AAZ, they are in Azerbaijan. They have only just started to pay dividends, they are a very conservatively run outfit in a stable country albeit they are an AIM company. There is a possible rerating in the pipeline as they prove up other assets near their main mine so a bit of an upside as well. Not a recommendation but it ticks the boxes I am looking for.

dspp
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Re: Central Bank Gold Purchases Surged 74% in 2018

#210990

Postby dspp » March 28th, 2019, 9:51 am

I fully agree that the more the US seeks to weaponise its existing position in the global finance system, the more other blocs will seek to create more and more joined-up workarounds which ultimately threaten the US's privileged position. Whether gold will be all or part of that workaround is less obvious. I watch with interest.

regards, dspp

youfoolishboy
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Re: Central Bank Gold Purchases Surged 74% in 2018

#210997

Postby youfoolishboy » March 28th, 2019, 10:11 am

dspp
I am working on the principle that any change from the $ will invovle a lot of instability hence gold may prove a popular chioce while things settle down. The loss of the $ as the world's trading currency will practically bankrupt the US as all that debt in $s may prove difficult to service if the $ falls heavily, which it will if people stop buying it to do trade. All very unstable world conditions. Maybe I am feeling a bit too bearish though so counter arguments welcome.

dspp
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Re: Central Bank Gold Purchases Surged 74% in 2018

#211021

Postby dspp » March 28th, 2019, 11:14 am

youfoolishboy wrote:dspp
I am working on the principle that any change from the $ will invovle a lot of instability hence gold may prove a popular chioce while things settle down. The loss of the $ as the world's trading currency will practically bankrupt the US as all that debt in $s may prove difficult to service if the $ falls heavily, which it will if people stop buying it to do trade. All very unstable world conditions. Maybe I am feeling a bit too bearish though so counter arguments welcome.


I think that the instability - if it happens - will favour the yuan and unfavour (!) the dollar. It need not spill much more widely than that, though the practical reality is that the euro will likely also be favoured in a move towards a tripolar currency system.

https://en.wikipedia.org/wiki/File:Glob ... encies.png (sorry but this won't insert as an image)

In my export dealings in my day job we are now mostly EUR except, ironically enough, to China where we are often USD. All it takes is for China to start moving across to EUR and that would tend to reduce USD dominance. Of course one reason they don't do that is because of their accumulated T-bill holdings. However as China becomes a money importer (it is now running a current account deficit https://www.cfr.org/blog/will-chinas-currency-hit-wall ) that may unwind naturally.

Bottom line is that I think payment systems that bypass the US nexus are inevitable and coming, but I don't think that gold will have anything more than a partial role in that. Nevertheless I could be wrong so I watch with interest, from the sidelines. Actually not entirely from the sidelines as there are some areas where my business is directly impacted by the US extraterritorial use of its nexus position.

regards, dspp

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Re: Central Bank Gold Purchases Surged 74% in 2018

#211075

Postby youfoolishboy » March 28th, 2019, 1:16 pm

I tend to agree a multi currency world is more likely I am just betting on instability driving people to gold I dont think it will be the next currency of the world. Plus there is the threat of a turndown in the world due to trade wars at the moment so again always a good time for gold.

richfool
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Re: Central Bank Gold Purchases Surged 74% in 2018

#211113

Postby richfool » March 28th, 2019, 4:29 pm

HL's assessment of the best ways to invest in Gold is here:

https://www.hl.co.uk/news/articles/best ... st-in-gold


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