Central banks in gold rush
|Image Credit: Bloomberg News
A key reason why central banks want to
hold onto gold is the instability of
their most common reserve asset, the
Gold bars Central banks around the globe have joined the gold rush, as the World Gold Council's latest report makes clear. This is especially true of the central banks of rapidly growing emerging countries. Up until the third quarter, the central banks of Russia, China, Thailand and Mexico increased their gold reserves six-fold in comparison with the same period last year, which amounts to a total increase of 148.8 tonnes.
Global investors are increasingly afraid of systemic risks and imbalances affecting economic relations. Many observers fear the outbreak of a global currency war as financially stricken countries try to debase their currencies in order to obtain trading advantages. In this context, markets are focusing on the US. It seems that an increasing number of market participants do not believe that the US is following the necessary strategies to keep a strong currency. The country's economic problems are too big, with the unemployment rate remaining stubbornly high. US president Obama has repeatedly said that from now on the US has to concentrate on creating jobs in the exports sector. In order to do this, it needs a currency that is internationally competitive... Finish reading>>