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Yesterday was the 20th of the month and you know what that means. New gold data from the Central Bank of Russia! They bought 31.1 tons in February, bringing total to 2,149 tons. Washington is finally noticing; part of the reason I was there Wednesday. This is the new Great Game. pic.twitter.com/HjzVZ0RagK
— Jim Rickards (@JamesGRickards) March 21, 2019
Hungary’s central bank purchased gold en-masse in October 2018, for a total of 28.4 tons. That’s nearly ten times its collective gold stockpile. Alongside Hungary is Poland, bringing its gold reserves up to more than 110 tons. It remains to be seen if these countries will begin stockpiling digital currency as well.
Why Is Russia Expanding Its Gold Stockpile?
Gold is traditionally used to hedge against economic uncertainty. As sanctions fall into place and the screws tighten on other nations, the U.S. dollar loses power within the world economy.
Russia is not alone in seeking to diversify out of U.S. debt holdings and transfer wealth into precious metals. Per the World Gold Reserve report cited above:
Gross purchases of 48 tonnes (t) and gross sales of 13t led to global gold reserves rising by 35 tonnes on a net basis in January, with sizable increases from nine central banks. This is the largest January increase in gold reserves in our records (back to 2002) and illustrates the recent strength in gold accumulation.
When countries like Russia stock up on gold, it’s usually because they’re unsure of future economic prospects. | Source: Shutterstock
Is Gold Buying Expected To Continue?
The primary factor cited in gold purchases seems to be global economic uncertainty. If sanctions grow tighter and more numerous, the global economy will continue to shutter. The stage is ready for gold transfers in the hundreds of tons this year, with several countries building growing gold stockpiles.
After seeing China’s private sector’s response to debt collapse, loss of position in the top five gold-holding countries and trade sanctions, it remains to be seen how other central banks will handle gold. Nasdaq has identified this period as a “Golden Cross” that while a mixed bag, can help indicate buying patterns when FED and other monetary policies are weighed in buying decisions.
About The Author
Matthew Proffitt
Matthew is a startup coach, full-time freelance consultant, and fractional executive. He has helped clients raise more than $100 million in the ICO space since 2016. His expertise includes marketing, community building, and executive coaching. He has a passion for knowledge and all things finance. Matthew is currently working toward his Financial Modeling and Valuation Analyst certification.
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