{"id":25295,"date":"2018-11-07T05:51:28","date_gmt":"2018-11-07T13:51:28","guid":{"rendered":"https:\/\/goldco.com\/?p=25295"},"modified":"2022-01-24T12:34:45","modified_gmt":"2022-01-24T20:34:45","slug":"central-banks-buying-gold-now-years-know","status":"publish","type":"post","link":"https:\/\/goldco.com\/central-banks-buying-gold-now-years-know\/","title":{"rendered":"Central Banks Buying More Gold Now Than in Years: What Do They Know?"},"content":{"rendered":"<p>Gold has been almost universally derided by governments in recent decades. Finally freed from the strictures of the gold standard, central banks and governments around the world have done their best to propagandize their people that gold is nothing more than a \u201cbarbarous relic.\u201d For a while it seemed to be working, with gold prices trading in a narrow range for years. <a href=\"https:\/\/www.gold.org\/what-we-do\/official-institutions\/central-bank-gold-agreements\" target=\"_blank\" rel=\"noopener noreferrer\">Many central banks<\/a> even began to believe their own propaganda, <a href=\"https:\/\/en.wikipedia.org\/wiki\/Sale_of_UK_gold_reserves,_1999%E2%80%932002\" target=\"_blank\" rel=\"noopener noreferrer\">selling off significant amounts of their holdings<\/a> when gold had bottomed out in price. But now that gold has rebounded, central banks have <a href=\"https:\/\/www.ft.com\/content\/e1334e52-c25c-11e8-95b1-d36dfef1b89a\" target=\"_blank\" rel=\"noopener noreferrer\">once again become buyers of gold<\/a>, particularly Russia, India, Turkey, China, and other non-Western nations. What do they know about gold that is causing them to buy?<\/p>\n<p>Throughout my years in Congress I made it a point to regularly ask Federal Reserve chairmen about gold. In particular, I remember asking Chairman Bernanke <a href=\"https:\/\/www.youtube.com\/watch?v=g-kP2a2qfSY\" target=\"_blank\" rel=\"noopener noreferrer\">why the Fed continued to hold gold<\/a> as an asset. His answer? \u201cIt\u2019s tradition.\u201d Yet it\u2019s not just tradition that causes the US government to hold the world\u2019s largest gold reserves and other nations to continue buying gold.<\/p>\n<p>Governments know that gold is the ultimate store of wealth. When fiat currencies are hyperinflated and devalued, gold asserts itself as the currency of choice. We\u2019re currently in the middle of a nearly 50-year experiment in a global floating fiat currency standard and things aren\u2019t going too well.<\/p>\n<p>Whereas consumers in the 19<sup>th<\/sup> century could have expected prices to be roughly constant over the course of the century, or even <a href=\"https:\/\/mises.org\/library\/deflating-deflation-myth\" target=\"_blank\" rel=\"noopener noreferrer\">lower towards the end of the century<\/a> as industrial production increased, consumers in the 20<sup>th<\/sup> and 21<sup>st<\/sup> centuries have seen prices skyrocket. According to the government\u2019s own statistics, $1 in 1913 would have had the same purchasing power as over $25 today. That\u2019s over a 96% reduction in the dollar\u2019s purchasing power.<\/p>\n<p>Compare the dollar against gold and you\u2019ll see that the dollar has lost 97% of its value compared to gold just since the <a href=\"https:\/\/www.youtube.com\/watch?v=7_Xw5tWsOQo&amp;\" target=\"_blank\" rel=\"noopener noreferrer\">closing of the gold window in 1971<\/a>. That\u2019s a pretty astounding figure, but not surprising to those who keep tabs on central banks and their money printing.<\/p>\n<p>The rest of the world understands that the Federal Reserve is a one-trick pony, that its policy response to everything is just to create more money. They realize that holding dollars or dollar-denominated Treasury debt as assets is foolish, as those assets will continue to decline in value as the Fed creates more money. That\u2019s why they\u2019re turning to gold, seeking to break their reliance on the dollar and to position themselves well for the dollar\u2019s ultimate collapse.<\/p>\n<p>Investors in the US would do well to heed the warning signs that foreign central bank gold purchases are broadcasting. American investors too can <a href=\"https:\/\/goldco.com\/gold-ira\/\" target=\"_blank\" rel=\"noopener noreferrer\">benefit from investing in gold<\/a>, using tools such as gold IRAs to protect their existing retirement assets and safeguard themselves from the effects of a market crash. Gold has served as the ultimate protection against financial crisis for centuries and will continue to do so well into the future.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Gold has been almost universally derided by governments in recent decades. Finally freed from the strictures of the gold standard, central banks and governments around the world have done their best to propagandize their people that gold is nothing more than a \u201cbarbarous relic.\u201d For a while it seemed to be working, with gold prices [&hellip;]<\/p>\n","protected":false},"author":13,"featured_media":32647,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[212],"tags":[],"class_list":["post-25295","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-central-banks"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v25.0 (Yoast SEO v25.0) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Central Banks Buying More Gold Now: What Do They Know? &#8211; Goldco<\/title>\n<meta name=\"description\" content=\"Central banks may denigrate the importance of gold, yet they continue buying more and more gold. 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