Monday, March 22, 2010

Central Banks Step Up Their Gold Purchases

The world is turning upside down when central bankers are accumulating gold and ordinary people are not.
Last year, central banks were net buyers of gold for the first time since 1988. In fact, they bought the most gold in any year since 1964. Total central bank holdings worldwide, according to the World Gold Council, grew by 425 metric tons last year.
True, that’s only 1.4% of the gold central banks already held. But it’s the trend that matters: China, India, and Russia all added to their reserves last year. And it fits into a bigger picture -- growing distrust of the world’s reserve currency.
"I think we already have a gold standard … created by the marketplace," says the inimitable Marc Faber. Not just the central banks, either: "We have the [exchange-traded funds] that have proliferated, and we have more and more physical buying of gold."
At least there’s more physical buying when it comes to the ultra-wealthy who can buy huge bars of the stuff. Retail investors who buy coins? Not so much.

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