Central Banks Say They’ll Buy Gold

Gold’s appeal is growing beyond individual and institutional investors in the age of the coronavirus pandemic. A new survey of global central bankers finds a significant increase in the percentage that plan to buy gold this year—20 percent, up from 8 percent last year. This rising interest in the precious metal comes on the heels of a record year for central bank gold purchases, which totaled 650 metric tons in 2019.

Buy gold American Eagles at cost.

The global financial system’s response to COVID-19 has increased the attractiveness of gold for central banks. To stimulate their economies, many countries have pushed down interest rates, in some cases below zero. Germany, Switzerland, and Japan are among the nations where short-term rates have entered negative territory, and rates are almost certain to remain low for many months. 

Most central bankers, 88 percent, say negative interest rates factor into their thinking about gold. Other reasons central bankers view gold favorably are the precious metal’s performance during times of crisis and its status as a long-term store of value—79 percent cited both factors. Gold’s lack of default risk was mentioned by 74 percent of central bankers.

Respondents expect gold to take a more prominent position in central bank reserves over the next five years. More than half anticipate gold will account for 14–20 percent of reserves, up from 13 percent of international reserves last year, while 12 percent predict gold will account for more than 20 percent of reserves.

The survey was conducted by The World Gold Council and You Gov and included input from 51 central banks around the globe.

Buy gold American Eagles at cost.