Wednesday, March 21, 2018

Global central banks provide reasons behind their accumulation of gold while the U.S. remains silent in new survey

It seems that nearly all central banks except the United States are now focusing on either repatriation, or accumulating gold as the global financial system spirals towards its next liquidity or debt crisis.  And in a survey conducted by Bullionstar earlier this month, 41 of the top gold holding central banks responded to the questionnaire while only one remained silent.

And that one was the United States.

Taking the list of official sector gold holders compiled by the World Gold Council (which uses IMF data sourced from the individual banks), the Top 40 gold holders on this list were identified. While most of the Top 40 gold holders are national central banks or equivalent, there are also a small number of international monetary institutions in the Top 40, namely, the Bank for International Settlements (BIS), the European Central Bank (ECB), and the International Monetary Fund (IMF). A similar question was sent out to each bank and institution. The question was: 
“in the context that central banks hold gold as a reserve asset on their balance sheets, can Central Bank X clarify the main reasons why it continues to hold gold as a reserve asset?”Bullionstar via Silver Doctors
Germany:


Gold is a type of emergency reserve which can also be used in crisis situations when currencies come under pressure.”

Austria:

“Gold is an essential part within our strategy for crisis prevention and crisis handling and is held as liquidity reserve but is also a means to diversity our investments.”

Switzerland:

“As part of a good diversification of currency reserves, a certain proportion of gold can help reduce the balance sheet risk. The Swiss Federal Constitution, art. 99 stipulates that the SNB has to hold a part of its currency reserves in gold.

Poland:

“Gold, due to its attributes is a quite specific asset, and traditionally has been an important component of central bank’s foreign reserves.

...

While these are just a few of the over three dozen central banks that responded to the questionnaire, you can see that the primary reason for each bank is nearly the same... to act as a reserve and to protect their currencies in the event of a monetary or financial crisis.

Which begs the question then... would gold accumulation accelerate if the world decides to go back to a form of the gold standard?  And outside of completely devaluing their currencies, how much gold, or how high a gold price, would be necessary to backstop their debt and money supplies?

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