Pthey have not been linked to gold in any way since 1971. For a long time, the central banks of the European Union were looking for criteria according to which they should conduct their monetary policy. Consequently, in some cases, the acquisition of gold in the vaults is expensive, so there is no need to sell it massively and even in a coordinated manner. This trend was not avoided even by the Czech National Bank, which in 1997 and 1998 sold 56 tons of the 70 tons of gold it originally had.
After 2008, monetary policy embarked on a series of experiments – from zero and negative interest rates to the expansion of the balance sheet through the purchase of a wide range of financial assets. In the last two years, not only have the annual rates changed, but the central bank has in many respects negated the many steps they have taken in recent years.
The first news is that the rates in the future should be standard, not inflation. In addition, central banks began to shrink their balance sheets in various ways, and some assets were not held at all.
The whole world started buying gold and replacing it with other assets on the balance sheet. At the same time, the heat starts to heat up. 20 and 30 years ago, central banks globally sold gold at a rate of 200 to 300 tons per year. Around 2010, the sales stopped and the banks started making the first purchases. They reached 1100 tons last year. This year, 800 tons of gold were added to the vaults of central banks in the first quarter alone, and this is likely to be a new record result.
Regionally, the buyers are quite divided, this year in first place and second is Poland, which bought 100 tons of gold this year alone and wants to grind a fifth of its balance in it. NB with eight tons is the 6th most active buyer this year.
Central banks are buying record amounts of gold
11/07/2023 ▪ 2 minutes the
By the way, the central bank does not have a special monetary reason for some purchases. Somewhere, geopolitics can play a role, including the dream of exposure to the dollar, where it is about diversifying the balance sheet. It is possible to see a sign that the time of experimentation in terms of politics is over. I want to forget about these attempts as much as possible.
It will be so interesting to watch how all the central bank changes play out. These gold purchases are isolated steps from changes in policy.