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An excellent article by Joanne Hart in one of the Sunday papers grabbed my attention this weekend, as it suggested that there are another 13 Billion reasons to own gold.

Stocking Up

Since the start of 2018 the central banks around the world have purchased around 275 tonnes of gold. The current value is around 13 billion pounds Sterling.

It appears that the central banks who, by the way, continue to print more and more paper money, are actually using some of this paper to convert large amounts into physical gold. This is not an unusual thing as we have seen this happen many times over the last 10 years. The financial crisis taught many of the central banks that they could not be without some physical gold as protection from what may come. However, in 2018 this size of purchasing has jumped to another level, up at around 8% over 2017.  It seems as if someone somewhere doesn’t like what is happening out in the world economies...

Whilst the central bankers tell you everything is going well, and we are well on the way to an economic recovery, they are stocking up with our favourite precious metals.

Interestingly, it is not just the usual suspects who are buying. We know that China and Russia are big buyers of physical gold, but this year some new faces are in the market. Countries like Poland and Egypt have started to accumulate some physical gold holdings - so perhaps there is a lesson here we all ought to learn from?

Planning Ahead

At some point you need to protect your financial well being just as you would your health. There is a reason we put sunscreen on when we head to the sunnier climates for our summer holidays - to protect us from the dangers of over exposure to the sun.

Such economic dangers are out there for all to see. We know about the problems in Greece which rang through the last financial crisis and once again the focus is on another Mediterranean country: Italy. From political turmoil to economic mismanagement, the Italian economy seems to be wavering in the dark. Too few young people in jobs paying taxes to financially support the retirees who have done their bit and now want to relax in the warm Mediterranean Sea. There was no future planning when it was necessary, instead the usual political firefighting of dealing with a crisis when it happens rather than planning ahead to avoid such damaging events.

So maybe we should take a look at what the people in the know do, rather than say. They seem to have played their cards and are buying the most precious of all commodities: some physical Gold.

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This blog represents one person’s opinion only. Customers should conduct their own research and take advice before making an investment. We do not offer investment advice.


1 Comment(s)

Interesting article Paul.

You and your readers may recall my comment on a previous article on 31st Oct 2016.

"Some say, the powers that be are taking long 'tortoise' positions in physical precious metals.
Some say, the price is currently 'fixed' low to facilitate those acquisitions.
Some say, the price at some time in the future will be 'fixed' very very high, so as to maximise those holdings".

It's getting close now.

As for Italy, just check out the share price of Banca Monte dei Paschi di Siena SpA trading at less than 2 Euros from a high of 11081 Euros in 2007 and 888 Euros in 2014.

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