Gold is the world’s time tested island of safety. Gold is also the only money that has no liabilities against it, the only money that is pure intrinsic value. Gold is your safe haven, and your shield against a global currency system unraveling. And finally, in the eyes of the world’s central banks, gold is reclaiming its role as the ultimate benchmark currency.
The World Gold Council recently announced that the central banks of Russia, the Philippines, Kazakhstan and Venezuela have been buying gold, and Saudi Arabia’s monetary authority has restated its reserves upwards from 143 to 323 tonnes.
Of course any discussion on gold and central banks would be incomplete without mentioning China. “China is considered a stealth buyer of gold”, said Boris Schlossberg, director of currency research at Global Forex Trading.
As the world’s largest producer of gold, China often buys gold from its own mines, and doesn’t report those sales publicly. But in April 2009, China did admit to having added 454 tonnes of gold, or a 76% increase, to its reserves since 2003.
Some analysts believe that China is already the world’s largest gold buyer. However, as a very smart and private country, Chinese officials are not quick to exclaim their pro-gold stance publicly. Just announcing a pro-gold position would likely be enough to push world gold prices higher, and drive down the U.S. dollar. A falling dollar would lessen the value of their portfolio of U.S. government bonds, and rising gold makes its accumulation less appetizing.
This is not such a hard game my friends, just follow the money, or the yellow brick road in this case, and get longer gold.