“Long term, gold is the most significant guardian and guarantor of protection against inflationary and other forms of financial risks.”
We have said that sort of thing many times. But this time it is a quote from a European government. The more we hear foreign heads of state and central bankers talking like this, the more clear it is that the paper money illusion that gripped the world after World War II is beginning to fade.
The assessment of gold’s significance comes from the president of Serbia, Aleksander Vucic, as he announced that the National Bank of Serbia is ramping up its gold holdings from 36.3 to 50 tons. That is an increase of 440,00 troy ounces. Serbia has a population of fewer than 7 million people.
Much of the attention on foreign gold buying as protection from the US dollar in recent years has been focused on larger nation-states, with Russia and China leading the way. But now, other smaller countries are lining up to add gold to their national reserves.
Last month we reported that the Hungarian central bank announced it had tripled its gold reserves with a purchase of 63 metric tons of gold in March. Thailand is reported to have purchased 9o tons of gold in April and May.
The first half of 2021 also saw the announcement from Russia that henceforth its sovereign wealth fund – the entity that collects profits from Russian-state oil production – will no longer hold US dollars. Gold represents a part of the fund’s diversification plans.
The coronavirus pandemic slowed global economic conditions and accordingly the ability of central banks to maintain higher rates of gold acquisition. Now plans are being reinstituted.
“Central banks from Serbia to Thailand have been adding to gold holdings and Ghana recently announced plans for purchases, as the specter of accelerating inflation looms and a recovery in global trade provides the firepower to make purchases.”
Higher oil prices “are also boosting bullion purchases by oil exporters, including Kazakhstan,” according to a Bloomberg source.
A World Gold Council survey finds that 1 in five central banks intends to add to their gold reserves over the next year.
We recommend that our friends and clients do the same.