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World’s central banks scooping up gold

World’s central banks scooping up gold

 

Bloomberg has reported this week that the world’s central banks are snatching up gold in record amounts, with China, Russia and India leading the bullion demand surge. Capital Economics’ Ross Strachen is quoted by Bloomberg as saying that the move to scoop up record gold holdings is part of a wider trend which is seeing developing economies diversify their assets and move away from purely US dollars for the foreign exchange reserves.

India is thought to currently have a record 609 tonnes of gold in reserves, according to International Monetary Fund data. Russia and China are also on gold buying sprees with Citigroup predictions suggesting that Iran and Turkey along with Kazakhstan are also using gold to diversify their reserves with safer and more liquid assets.

Why is this important for those considering their own gold investment? Oversea-Chinese Banking Corp economist Howard Lee says, “…central banks tend to increase gold reserves when the global macroeconomic environment is uncertain. It’s no coincidence that one of the biggest buyers of gold in recent months was China, which is in the midst of trade tensions with the U.S. and may have been seeking to diversify its trillions of dollar reserves.”

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