Who’s Buying All The Gold? It’s Not The Little Guy. It’s The Central Banks.

Gold has not received much attention from investors lately. There are a number of reasons for this.

Gold is down about 20% from its recent interim high last March. After that decline, it has traded in a narrow range from $1625 per ounce to $1675 per ounce without much indication that it was going much lower or higher in the short run.

The price has not been that volatile, retail investors have shown no interest at all, and gold ETFs are out of the headlines. Gold has become the one thing gold investors never expected – boring. Still, that may be beginning to change.

This article reports that central banks have been buying gold hand over fist. Central banks bought a record amount of gold in the third quarter of 2022. They bought over 399 metric tonnes worth about $20 billion at the market. Among the major central bank buyers were Turkey, Qatar, and India. Large amounts of gold were also purchased by central banks that do not report their purchases, including China and Iran.

The price of gold has not risen strongly, but the central bank purchases have helped put a floor under the price in the face of gold sales by ETFs.  Central banks are among the most powerful financial players on the planet. They have almost unlimited resources, including billions of dollars of dollar-denominated reserves that can be sold to purchase gold.

What does it mean when some of the biggest players on earth are buying gold and everyday investors are not? It means they know something you don’t. They see something coming that you may not be able to see.

Central banks have a front-row seat on an emerging global liquidity crisis in which confidence in the U.S. dollar may be eroded and gold may once again become the go-to safe haven asset. That’s a powerful inference from the available information.

It’s not too late for everyday Americans to join the big central banks and acquire some gold for its own sake and as a rainy-day hedge against the collapse of confidence in the dollar. Still, this crisis may arrive sooner than anyone expects. The time to get on the gold train is now.

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