This past week the World Gold Council revealed that recent central bank purchases of gold bullion have reached a point not witnessed since year 2008 in middle of the Global Financial Crisis. This happened in January and February of 2019.
Global central banks net bought an additional 90 tons of gold for the year’s first two months, per the most recent report of the World Gold Council. Compare this amount of the yellow metal to only 56 tons in the two first months of 2018 and you start to understand why it is a big deal. This chart below shows the significance graphically:
It was also the greatest gold purchase growth rate dating back to 2008.
In February alone, the world central banks added an impressive 51 tons of gold. Compare this to gross gold sales of central banks in February to a mere .2 tons. This month’s purchases represented the biggest net gain in the gold reserves of central bank since October of 2018. Clearly the global central banks know something.
The World Gold Council calls this drive to diversify reserves a key mover behind the recent motivation of central banks to accumulate more gold, with:
“Diversification remains the key motivation for central banks to buy gold, as ongoing geopolitical and economic uncertainty continue to cast a shadow over the future.”
The central bank gold buying was broad based too. It was not only the usual suspects Russia and China buying this time around, as nine central banks all made substantial gold purchases for the month.
Russia and China led still, with 31.1 tons and 10 tons respectively. Qatar bought 3.1 tons, Kazakhstan purchased three tons, India grabbed 1.7 tons, Turkey one ton, Columbia bought .7 tons, Ukraine acquired .3 tons, and the Kyrgyz Republic took .2 tons.
This January and February central bank gold buying trend extended the one seen back in 2018. For last year, the global central banking cabal bought a net 651.5 tons of gold. Year 2018 had represented the greatest amount of net annual central bank gold buying dating back to the dollar convertibility suspension in 1971. This made it the second greatest yearly purchased total ever.
This is not the end of the trend either, according to the World Gold Council. In their Gold Demand Trends Full Year and Q4 2018 Report they revealed that they anticipate this high level of central bank purchases to continue for the balance of year 2019.
For example, China extended its gold buying binge to another 11.2 tons for March, exceeding its purchases in February. When the central banking crowds in Russia and China discuss diversification, they are using a euphemism for de-dollarization. Russia has been the biggest case study for this process over the last several years. They sold off almost all of their U.S. Treasuries and bought gold in 2018. It enabled them to grow gold reserves by 274.3 tons for the year, while slashing their dollar reserves from 46 percent to 22 percent in 2018.
Is Your Retirement Portfolio Prepared for the Central Bank Shift from Dollars into Gold?
The Russians and other central banks are sending clear warning signals that you need to pay attention to today. They no longer find security in large dollar and Treasuries holdings in their national central reserves. Instead, they are turning to the only true internationally accepted currency— gold bullion.
This is no accident either. Gold has thousands of years of track record in safeguarding investments and money. When you add gold to your IRA, you will gain peace of mind to help you sleep well at night, whatever the financial markets are doing on a day to day basis.
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