According to a survey by the World Gold Council (via Bloomberg News), central banks are likely to increase their holdings of gold bullion over the next 12 months.
Why it matters: This is yet another indication of increasing concern about a potential global financial crisis resulting from concerns about economic risks in reserve currency economies and potential changes in the international financial system.
The numbers: Approximately 25% of central banks in emerging markets and developing economies plan to add more gold bullion to their reserves. This is an increase of 21% over 2021.
What they’re saying: “The geopolitical situations are much more volatile and we don’t know how much longer this situation will persist. What has happened is gold has proven its safe haven characteristics during that situation. That’s one aspect that central banks are considering,” said Shaokai Fan, global head of central banks at WGC.
The bottom line: Gold is a safe investment during uncertain financial times, but high demand is likely to result in increasing prices on gold bars and gold coins in the short-term. It’s better to buy your gold and wait than it is to wait to buy your gold.
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