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Global Central Banks Continue Ditching the Dollar for Gold’s Stability


In a decisive move signaling a major shift in global financial strategy, central banks worldwide are beefing up their gold reserves, stepping away from the US dollar amidst rising geopolitical tensions. Bob Minter from Aberdeen Standard Investments highlights this trend as a defensive play against the dollar’s politicization across successive US administrations. This pivot to gold, seen as a bastion of stability in a volatile economic environment, underscores a collective push for a more resilient monetary foundation. With ETF investors showing signs of returning interest, this resurgence in gold buying by central banks could mark the dawn of a new era in currency security, emphasizing gold’s timeless value over the unpredictable swings of cryptocurrencies.

(Kitco News) - Central banks around the world are accelerating their gold purchases, a move that Bob Minter, Director of Investment Strategy at Aberdeen Standard Investments, believes is a strategic pivot away from the US dollar amid geopolitical tensions. In an interview with Jeremy Szafron, Anchor at Kitco News, Minter pointed out that the use of the dollar as a tool of US foreign policy, spanning four presidential administrations, has pushed emerging market countries to diversify their foreign exchange reserves. "All four presidents have used the dollar's reserve status as a means or an arm of US foreign policy," Minter said, underscoring the political neutrality of this trend.

 In December, China's gold reserves increased for the 14th consecutive month, with holdings reaching 71.87 million troy ounces, up from 71.58 million ounces the previous month, as reported by Kitco News. This shift towards gold is seen as a critical hardening of currency in an uncertain global financial landscape. "You harden your currency with gold. You don't harden it with, you know, a cryptocurrency. So gold is key to a key part of the monetary system," Minter said, pointing out gold's enduring value and stability compared to the volatile nature of cryptocurrencies.

The dynamics within the gold market, especially the role of ETF investors and the correlation between real yields and gold prices, are also highlighted by Minter as significant factors influencing gold's performance. Despite a recent sell-off of gold by ETF investors, Minter suggests a potential rebound as central bank purchases continue to set records, driven by a desire to mitigate risk associated with the dollar's dominance in foreign reserves.

This article originally appeared on Kitco News

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