Central Banks Love Gold… and You Should Too!

The World Gold Council just released its Gold Demand Trends report for the 2^nd Quarter of 2024. A month ago, they released their 2024 Central Bank Gold Survey.

Neither report was a surprise, but both reports should be taken seriously by any investor who wishes to preserve purchasing power going forward… to Keep What’s Yours!

Central Bank gold demand continues at a feverish pace. Central Banks have very real concerns that are driving their record-setting purchases. You should share the very same concerns. You should be buying gold feverishly here as well.

Some Numbers to Paint the Picture
Gold hit a new all-time price high of $2,427 per ounce in May. The gold price averaged $2,338 per ounce last quarter. But that did not dissuade demand.

Demand was up four percent in the second quarter of 2024 versus the second quarter of 2023.

Despite a nineteen percent drop in jewelry demand, a seven-ton decline in global gold exchange-traded funds (ETF) holdings, and a 5% drop in retail bar and coin investment, gold demand increased. This was largely due to an eleven percent increase in gold used in technology (primarily fueled by the trend toward artificial intelligence) and a six percent increase in Central Bank gold purchases.

There was some news in the second quarter that China was absent from the Central Bank gold market in May and June. Yet, Central Bank gold purchases still exceeded those made in the second quarter of 2023. Further, the belief is that the Peoples Bank of China – the Chinese Central Bank – continued buying, but the purchases were not officially reported.

Here is more on that from our good friend, Chuck Butler, founder and author of The Daily Pfennig…

“For What It's Worth... Well, longtime readers will recognize the article's author as someone that I've quoted for years now... He once went under a different name, Koos Jansen... But now goes as: Jan Nieuwenhuijs, and you can find his article about Central Bank Gold buying here: Chinese Central Bank (PBoC) Did Not Stop Buying Gold in May (gainesvillecoins.com)

Or here's your snippet: "This article is an analysis of how the Chinese central bank (PBoC) buys gold in London from Western bullion banks. Because the bullion banks take care of the gold transport for the PBoC, the shipments from London to Beijing are disclosed in UK customs data. The customs data reveals that the PBoC continued to buy gold in May—when it communicated to the market it discontinued buying—at a rate of 53 tonnes. The PBoC stated it stopped buying to dampen the gold price so it could acquire more gold.

Several months ago, I discovered that supply in the Chinese gold market was outstripping demand. During my investigation of this anomaly, I found circumstantial evidence that led me to conclude the surplus is imported in 400-ounce bars from the United Kingdom, and surreptitiously procured by the PBoC.

Let’s go through some of the mechanics of the global gold market before we can stitch it all together.

PBoC Gold Buying Hidden in Plain Sight

In global customs data—officially called International Merchandise Trade Statistics (IMTS)—all gold disclosed is “non-monetary,” meaning not owned by a monetary authority such as a central bank. In the United Nations IMTS rulebook, it reads that customs data excludes monetary gold:

Since monetary gold is treated as a financial asset rather than a good, transactions pertaining to it should be excluded from international merchandise trade statistics.

Though, someone familiar with the matter but who prefers to stay anonymous, shared with me that gold import and export data can relate to monetary gold. Commonly, central banks will buy gold from Western bullion banks that arrange transportation and insurance of the metal. The moment these banks ship the gold from the UK it is thus non-monetary bullion, but when it arrives in China it is monetized (changes ownership) and brought to vaults of the central bank, supposedly in Beijing."

Chuck again... This is a very long article, so if you want to know more, click on the link above... Before I head to the Big Finish today, I wanted to point out something regarding Central Bank Gold buying... I've said this before, and that is that if Central Banks are lining up to buy physical Gold, what does that tell you about how nervous they are about the future?  I'm just saying...”

And Chuck’s final comment there is where I wanted to go next with this…

Why are Central Banks Buying?
According to the World Gold Council…

Central banks expect to decrease the percentage of their foreign exchange reserves in U.S. dollars, and they expect to increase their percentage holdings of gold.

When it comes to making decisions regarding foreign exchange reserve allocations, Central Banks consider several key factors…

• The Gold Medal goes to Interest Rate Levels.
• The Silver Medal goes to Inflation Concerns.
• The Bronze Medal goes to Geopolitical Instability.

When asked why Central Banks chose to add gold to their reserve portfolios, here is what they said…

• The Gold Medal goes to Long Term Store of Value / Inflation Hedge.
• The Silver Medal goes to Performance During Times of Crisis.
• The Bronze Medal goes to Effective Portfolio Diversifier.

And… just missing the podium was No Default Risk.

It is also important to note that Central Banks also were worried about a few other factors the past two years that never even popped up on the radar a decade or more ago…

• Concerns about sanctions
• Anticipated damage to the international monetary system
• Part of de-dollarization policy

I have covered all these topics in depth over the past few years.

What Should You Do?
I urge you to actively listen to what the Central Banks are telling us. Their real-world concerns about the state of the world’s currencies and economies should be our real-world concerns as well.

Central Banks are clearly shedding U.S. dollars and buying gold in its place as a solution to the problems they see.

You should be following their lead. You should become your own Central Bank.

Earlier this month, an attendee at the Rule Natural Resource Symposium came up to me after my presentation to say, Central Banks are printing money, and they are buying gold. I corrected him.

Central Banks are buying gold because they are printing money.

You know what to do. We are here to help.

Call us at (800) 831-0007 or email us to get started today.