by Peter Schiff, Schiff Gold:
In one of the biggest central bank gold buys in decades, Hungary tripled its gold reserves last month.
The National Bank of Hungary (Magyar Nemzeti Bank, MNB) bought 63 tons of gold, increasing its gold holdings to 94.5 tons, a record high for that country.
In a statement, MNB called gold “a crucial reserve asset.”
As it carries no credit or counterparty risks, gold facilitates reinforcing trust in a country in all economic environments, which still renders it one of the most crucial reserve assets worldwide.”
The bank cited increasing government debts and inflation worldwide as a reason to hold more gold.
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The appearance of global spikes in government debts or inflation concerns further increase the importance of gold in national strategy as a safe-haven asset and as a store of value.”
This isn’t the first time that Hungary has made a big gold buy. It boosted reserves 10-fold in the fourth quarter of 2018. At the time, a statement by the bank said the increase in gold holdings was intended to increase financial stability and strengthen market confidence.
In keeping with the historical role of gold, it remains one of the safest instruments in the world, which, even under normal market conditions, exposes its stability and confidence.”
At the time, the bank emphasized that stability goals drove its decision to buy gold, and it isn’t merely a short-term investment.
Gold also has a confidence-building effect in the normal period, that is, it can play a role in stabilizing and defending it not only in the extreme market environment, structural changes in the international financial system or in deeper geopolitical crises. Gold is still considered to be one of the safest assets that can be attributed to unique properties such as the finite supply of precious metal, which is not linked to credit and counterparty risk, since gold is not a claim against a specific partner or country.”
The National Bank of Hungary also brought its gold home in 2018, repatriating its existing gold holdings from London.
The role of gold reserves in the nation and economy strategy is becoming more and more appreciated while both the possession and the increase of the precious metals nationwide appear to be a decisive international trend.”
Hungary isn’t the only eastern European nation turning to gold.
In 2018, the National Bank of Poland began aggressively adding gold to its reserves. Through the first half of 2019, the Polish central bank added more than 100 tons of gold, nearly doubling its reserves. Now the Poles want to add another 100 tons to their reserves over the next several years.