Central bank gold buying at record levels
They're buying at the fastest pace in 55 years - what are the implications?
We learn this week from the World Gold Council (WGC) that central banks bought 399 tonnes of gold ($20bn) in the third quarter of 2022. That is the most gold they have bought in any quarter this century. And by quite some margin too. The previous record was 241 tonnes in Q3 2018.
Purchases for the year to September now amount to 673 tonnes, which is more than the total purchases in any full year since 1967. This is significant. In 1967 the London Gold Pool was starting to fall apart in the lead up to the Nixon Shock of 1971.
Who is buying?
Turkey was the biggest buyer (31 tonnes), bring its total to 489 tonnes (29% of forexreserves). In 2022 so far it has bought 95 tonnes.
Next we have Uzbekistan (26 tonnes), Qatar (15 tonnes - it’s largest monthly purchase ever) and India (13 tonnes - as part of its long-standing gold accumulation strategy).
I can’t help noting that Uzbekistan and India are both members of the Shanghai Cooperation Organisation, while Turkey has stated it wants to join. Call it confirmation bias (it is), but it seems my long-standing argument - that many nations west of Japan and east of Ukraine are de-dollarizing, that a new international currency is being designed and that gold may have a role to play in it - still holds water.
If you’re interested in buying gold, my full guide is below. My preferred dealer is the Pure Gold Company, with whom I have an affiliation deal.
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Interesting moves on Friday in PMs.
I am still waiting for gold/silver ratio to hit 30 (and Uranium $80) for sell signals! I hope this 52 y old lives to see this! I dunno if u always read these Dominic - but do u do voice overs on Times Radio? I think I keep hearing your voice...
So in 2 years gold's gone from $2000 to $1600 (20% down)
Meanwhile inflation's about 10%p/a.
So to keep pace over 24 months gold should be $2400.
Better portfolio plays are available!
I have no idea what's gonna happen, but gold seems narrative-immune. "have some gold and hope you don't ever need it" seems apt. I'm too optimistic to ever buy any gold though. And quasi pessimistic, in that if I do 'need gold', everything will be so f***ed I won't even care about it, and I'd probably just resort to theft, threats, and violence to feed my family.