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Geopolitical shift and currency<\/strong><\/p>\r\n\r\n\r\n\r\n The trend reflects a growing sentiment that the dollar’s global influence needs to decline as the global South, which represents the majority of the planet’s population, seeks emancipation in international trade. Russia and China are at the forefront of diversification.<\/p>\r\n\r\n\r\n\r\n Russia’s “fiscal fortress” policy includes a significant increase in its gold reserves. China, not far behind in this strategy, also sees value in bolstering its gold holdings.<\/p>\r\n\r\n\r\n\r\n Despite various pressures, these countries see the diversification of their gold reserves as a crucial step to change economic power relations, and this strategy includes the rise in the use of local currencies and the plan for a new common BRICS currency .<\/p>\r\n\r\n\r\n\r\n In an interconnected global economy, the use of local currencies is set to increase, changing the current economic landscape. Central banks are likely to hold a more diversified basket of currencies, possibly including a new BRICS currency.<\/p>\r\n\r\n\r\n\r\n This move could provide a strategic alternative to the dollar, providing a buffer against volatility in the global financial system.<\/p>\r\n\r\n\r\n What do the data say?<\/strong><\/p>\r\n\r\n\r\n\r\n On the data front, central banks around the world continued to gobble up gold in November, adding another net 44 tonnes to their reserves, according to the latest data compiled by the World Gold Council.<\/p>\r\n\r\n\r\n\r\n Turkey was the biggest buyer of gold in November, increasing its stockpiles by 25 tonnes as it continued to unwind large sales it made earlier in 2023. The Turkish central bank sold 160 tonnes of gold last spring, but returned to the markets in the third quarter of 2023.<\/p>\r\n\r\n\r\n\r\n According to the World Gold Council, the large gold sell-off was a specific response to local market dynamics and did not appear to reflect a change in the Turkish central bank’s long-term gold strategy. Turkey’s central bank sold gold in the local market to meet demand after the government imposed import quotas in a bid to improve its current account balance. The country has a significant trade deficit.<\/p>\r\n\r\n\r\n\r\n Although the Turkish government reinstated gold import quotas in early August, so far there has been no resumption of sales in the local market to meet increased demand.<\/p>\r\n\r\n\r\n <\/p>\r\n\r\n\r\n\r\n China continued to add gold to its reserves at a steady pace in November with a purchase of 12 tonnes. It was the 13th consecutive month of gold purchases for the People’s Bank of China. Since the start of the year, China’s central bank has increased its official reserves by 216 tonnes and has added 267 tonnes since resuming official purchases in November 2022.<\/p>\r\n\r\n\r\n\r\n There has long been speculation that China owns far more gold than it officially discloses. China holds several thousand tons of gold “off the books” in a separate entity called the State Administration for Foreign Exchange (SAFE). Also, at the end of 2022, there were large unreported additions to central bank gold reserves.<\/p>\r\n\r\n\r\n\r\n Central banks that often secretly buy gold include China and Russia. China was the invisible buyer, accumulating gold reserves to minimize its economy’s exposure to the dollar.<\/p>\r\n\r\n\r\n\r\n In 2021, Bank of Poland President Adam Glapi\u0144ski announced a plan to expand the country’s gold reserves by 100 tons. The central bank achieved that goal last month. Glapi\u0144ski recently indicated that the Bank of Poland will continue to add gold to its reserves, and that appears to be the case.<\/p>\r\n\r\n\r\n\r\n The Polish central bank made its biggest purchase of 2023 in November, adding 19 tonnes of gold to its reserves.<\/p>\r\n\r\n\r\n\r\n When announcing the plan to expand its gold reserves, Glapi\u0144ski pointed out that owning gold was a matter of financial security and stability. Gold will retain its value even if someone cuts the power to the global financial system, destroying traditional assets based on electronic ledgers.<\/p>\r\n\r\n\r\n\r\n Of course, we don’t assume that will happen. And the central bank is called upon to be prepared even for the most adverse conditions. This is why we see a special place for gold in the currency management process.<\/p>\r\n\r\n\r\n\r\n Other major buyers of gold in October were:<\/strong><\/p>\r\n\r\n\r\n\r\n The Central Bank of Uzbekistan allocated another 11 tonnes of gold during the month. This follows a sale of 11 tonnes in October. The National Bank of Kazakhstan also continued its recent sell-off, reducing its inventories by 3 tonnes. It is not unusual for banks that buy from domestic production \u2013 such as Uzbekistan and Kazakhstan \u2013 to switch between buying and selling.<\/p>\r\n\r\n\r\n\r\n Market dynamics exceeded expectations<\/strong><\/p>\r\n\r\n\r\n\r\n Central banks’ buying of gold in November continues a trend we’ve seen for more than two years.<\/p>\r\n\r\n\r\n\r\n In the third quarter, central banks recorded the second-highest total of gold purchases for a third quarter on record, behind only the third quarter of 2022.<\/p>\r\n\r\n\r\n\r\n The World Gold Council said \u201cit is certain that central banks are on track for another colossal year of buying,\u201d after the record 2022. Market strength has, to some extent, exceeded expectations. While we were confident that central banks would remain net buyers in 2022, it was seen as unlikely to match last year’s record buying volume.<\/p>\r\n\r\n\r\n\r\n If markets continue to be strong in Q4, the year total could rise more than we expect. However, the historically high level of purchases in Q4 2022 may be difficult to overcome.” Total gold purchases by central banks in 2022 amounted to 1,136 tonnes.<\/p>\r\n\r\n\r\n\r\n It was the highest level of net purchases recorded since 1950, including the suspension of the convertibility of the dollar to gold in 1971. It was the 13th consecutive year of net purchases of gold by central financial institutions.<\/p>\r\n\r\n\r\n <\/p>\r\n\r\n\r\n\r\n The ongoing momentum<\/strong><\/p>\r\n\r\n\r\n\r\n According to the 2023 Central Bank Gold Reserves Survey published by the World Gold Council, 24% of central banks said they planned to add more gold to their reserves in the previous 12 months. 71% of central bankers surveyed believe the overall level of global reserves will increase over the next 12 months. This performance represents an increase of 10 percentage points over the 2022 survey. So the future belongs to gold.<\/p>\r\n","protected":false},"excerpt":{"rendered":" Central banks around the world are hoarding gold at a record pace, signaling a transformation of historic proportions in the global financial system. This “gold rush” is not just about a defensive strategy to preserve the value of assets from the “storms” of the global economy – it is a strategic move on the grand … <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17,58,391],"tags":[634,527,83,82],"class_list":["post-1835","post","type-post","status-publish","format-standard","hentry","category-financial-markets","category-investment-destinations","category-market-analyses","tag-brics","tag-central-banks","tag-dollar","tag-gold"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts\/1835","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/comments?post=1835"}],"version-history":[{"count":2,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts\/1835\/revisions"}],"predecessor-version":[{"id":1844,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts\/1835\/revisions\/1844"}],"wp:attachment":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/media?parent=1835"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/categories?post=1835"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/tags?post=1835"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/www.liberalglobe.com\/wp-content\/uploads\/2024\/01\/image-35.png\")
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