Many central banks are boosting their gold holdings.
“The Russians are no fools. They’ve nearly doubled their exposure to gold since the end of 2008. Russia’s gold holdings now make up 4% of its foreign reserves, compared with only 2.2% at the beginning of the year.
“Smaller central banks are also being crafty. Ecuador’s gold holdings have more than doubled since the start of the year -- to 54.7 tons, from only 26.3 tons. Gold now represents 32% of that country’s reserves. Even Venezuela is buying gold. Gold now makes up 36% of its reserves, compared with only 23% in 2009.
“Perhaps central bankers see more clearly than most what the effect of all their money creation will be. In recent months, we’ve seen a truly unprecedented boom in bank reserves. Bank reserves drive money creation.
“More money means money buys less -- and the gold price should rise.”
“Smaller central banks are also being crafty. Ecuador’s gold holdings have more than doubled since the start of the year -- to 54.7 tons, from only 26.3 tons. Gold now represents 32% of that country’s reserves. Even Venezuela is buying gold. Gold now makes up 36% of its reserves, compared with only 23% in 2009.
“Perhaps central bankers see more clearly than most what the effect of all their money creation will be. In recent months, we’ve seen a truly unprecedented boom in bank reserves. Bank reserves drive money creation.
“More money means money buys less -- and the gold price should rise.”
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