A record central bank gold rush has been triggered by fears of Western sanctions after Russia was made a pariah state in the wake of its invasion of Ukraine, according to the World Gold Council.
Officials in many countries outside the West are rethinking their foreign currency reserves after the sanctions meant Russia’s central bank lost the use of its war chest, hampering its ability to protect the ruble and its banking system.
Central banks snapped up more gold in the first nine months of 2022 than all the annual totals since 1967, according to the WGC. Almost 400 tonnes of gold were bought by central banks in the third quarter, quadruple the amount acquired in the same period a year earlier.
Money printing has advanced much faster than the production of goods and services. Therefore each piece of money is worth less in goods and services. Gold stocks do continue to rise apace, but at a slower rate than that money supply. Logically, therefore, we’d expect gold to increases its value vis a vis money and something like maintain it’s value in goods and services.
Not wholly and exactly, but as a rough guide to the near future that is what we’d expect.
And who is most likely to grasp this? The central banks, the people printing the money…..