That overall amount of currency kept in central bank reserves surpassed 36,000 tonnes for the first time since 1990, according to World Gold Council statistics. The increase follows a 4,500-ton increase in the banks’ stated ownership of the asset over the last decade.
For the first time since 1990, the quantity of gold stored in central bank reserves reached a record high of 36,000 tonnes in September 2021. The World Gold Council (WGC) reports that central banks increased their gold reserves to something like a 31-year high following effectively adding 4,500 tonnes of both gold bullion during the last years.
This same WGC blames the federal reserve’s increased desire for gold for the US dollar’s collapse, according to a story published by Nikkei Asia. The article demonstrates how well the Central Bank of the United States of America’s massive monetary easing has resulted in a rise in the quantity of US currency. According to the paper, this rise in the supply of dollars has led the dollar’s value against gold to plummet during the last decades.
This study cites Poland, which banking system is thought to already have acquired roughly 100 tonnes of gold in 2019. This supports the premise that central banks are increasingly selecting gold.
Its president of the National Bank of Poland (NBP), Adam Glapinski, is described in publications as saying that the precious metal is not directly linked to any nation’s economy, which allows it to withstand global market turmoil.
Gold is unaffected by collateral concerns.
Gold is often regarded to be devoid of credit and counterparty hazards, in addition to being largely resistant to severe fluctuations in financial markets. This is one of the reasons, according to the study, that Hungary increased its gold stockpiles from over 90 tonnes.
According to the research, emerging-market central banks are likewise attempting to minimize or diminish their reliance on the dollar. Furthermore, these central banks are increasing their gold holdings in order to protect the businesses against the depreciation of the national currency.
Before 2009, several financial institutions sought to use earnings from gold sales to increase their holdings of dollar-denominated assets such as US Treasury securities. Nevertheless, during the financial crisis of 2008, which saw money flow out of Other government bonds, confidence in the dollar plummeted, according to the survey.
Gold is now being a weapon used by central banks to secure its holdings, according to WGC’s September statistics.