The recent manoeuvres by central banks, shifting away from U.S. Treasuries and into gold, including repatriating their gold reserves from foreign depositories, have significant implications for the value of our gold-backed tokens, Gold Standard (AUS) and Silver Standard (AGS). These actions may offer insight into the expectations of the very architects of the global economic landscape and underscore the stability and value of investing in precious metals.
Take India, for example. The Reserve Bank of India has purchased 24 tonnes of gold in just four months this year, 1.5 times more than its total gold purchases for all of 2023. Additionally, India has quietly repatriated over 100 tonnes of its gold reserves from London back home, a move not seen since 1991. This repatriation now positions India to hold most of its gold reserves within its vaults. This action mirrors Germany's decision years ago to bring its gold holdings back from New York.
Last year, Invesco Global Sovereign Asset Management surveyed 85 sovereign wealth funds and 57 central banks. The survey revealed that many were increasing their gold holdings and repatriating reserves in response to the U.S. weaponising the USD and seizing assets linked to the Ukraine invasion. While such actions by the U.S. are not new, the realisation seems to have taken hold this time. According to Reuters:
“The survey showed a 'substantial share' of central banks were concerned by the precedent that had been set. Almost 60% of respondents said it had made gold more attractive, while 68% were keeping reserves at home compared to 50% in 2020.
One central bank, quoted anonymously, said: 'We did have it (gold) held in London... but now we've transferred it back to own country to hold as a safe haven asset and to keep it safe.'
Rod Ringrow, Invesco's head of official institutions, who oversaw the report, said that is a broadly held view. 'If it's my gold then I want it in my country' (has) been the mantra we have seen in the last year or so," he said.
We recently discussed the extensive central bank buy-up of gold and the latest "In Gold We Trust" report emphasises this trend as a significant factor supporting higher gold prices:
“Amid one of the most challenging geopolitical tensions in decades, there is a return to gold as a neutral reserve asset. This is particularly evident in the record gold purchases by central banks. In the 'In Gold We Trust' report 2022, 'Stagflation 2.0,' we pointed out that the sanctioning of Russian currency reserves by the U.S. and the EU would 'go down in monetary history.' And furthermore, that 'gold, as a neutral monetary reserve, will emerge as one of the beneficiaries of the troubling conflict between East and West.' As expected, one of the consequences of the momentous sanctions decision of February 26, 2022, is that international central banks have massively accelerated their gold purchases.”
The chart below clearly illustrates both the trend and its historical potential:
The World Gold Council's Demand Trends report for Q1 2024 highlighted that 2022 was a record year for central bank gold purchases. While 2023 purchases seemed to slightly ease off from that record high, this was largely due to massive sales from Türkiye around the election period, as Erdogan attempted to prop up the lira. Without these sales, 2023 would have marked an all-time record for gold purchases. Metals Focus, which prepares the WGC data, indicates that in terms of gross purchases, last year almost certainly was an all-time record.
The following chart critically brings together the runoff of U.S. Treasuries and the ramping up of gold holdings:
As we have been writing for years – Don’t Do as they Say, Do as They Do! The actions of central banks in diversifying and securing their reserves by turning to gold should serve as a crucial lesson for all investors. This trend highlights the enduring value of gold, making our Gold Standard (AUS) and Silver Standard (AGS) tokens a prudent choice for those looking to preserve their wealth in a volatile economic landscape. By investing in our tokens, you are essentially following the same strategies as the world's central banks, ensuring that your wealth is anchored in a stable and historically proven asset.
Experience the Future of Precious Metals Investment with Gold Standard (AUS) & Silver Standard (AGS):
Available on platforms like Ainslie Crypto, CoinSpot, and MRHB DeFi, AUS and AGS offer a solid foundation for your digital currency investments.
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