by Peter Schiff, Schiff Gold:
Globally, central banks purchased a net 35.8 tons of gold in May. Year-to-date, reported central bank net purchases of the yellow metal total 247.3 tons. That represents a 73% increase over the same period in 2018.
April’s central bank net gold purchases were revised up from 43 to 49 tons.
The World Gold Council bases its data on information submitted to the International Monetary Fund.
China was the biggest purchaser in May, according to the preliminary data. The Chinese added 15.9 tons of gold to their hoard. That brings their gold purchases year-to-date to 63.8 tons.
Russia added 6.7 tons to its reserves. That brought its year-to-day total to 77.1 tons.
Other gold buyers in May include:
- Egypt – 0.1 ton
- Kazakhstan – 4.3 tons
- Kyrgyz Republic – 1 ton
- Serbia – 0.1 ton
- Turkey – 6.6 tons
- Uzbekistan – 7.5 tons.
Qatar was the only seller in May, shedding 6.2 tons of gold from its reserves.
According to the World Gold Council, a total of 10 central banks have increased their gold reserves by at least 1 ton in the last five months – with reserves rising by a combined 260 tons.
This emphasizes the continued positive mindset the central banking community has towards gold,” WGC analyst Krishan Gopaul said.
Central bank gold purchases in April continue a trend we saw through 2018. In total, the world’s central banks accumulated 651.5 tons of gold last year. The World Gold Council noted that 2018 marked the highest level of annual net central bank gold purchases since the suspension of dollar convertibility into gold in 1971, and the second highest annual total on record.
A move to minimize dependence on the US dollar, especially by countries like Russia and China, is driving this central bank gold-buying spree. As an editorial in the Northern Miner put it, anti-US sentiment is at the root of all this central bank gold buying.
And yes, there is a distinct geopolitical element to it all, as these central bank buyers are predominantly from countries that stand in direct economic or political opposition to the US, and so are keen to move away from the US dollar as a foreign reserve currency.”
We’ve written extensively about how the US government has weaponized the dollar and efforts by countries like Russia, China and others to minimize their exposure to the greenback. Buying gold is a key component of their strategy.