Central banks accumulated gold at the fastest pace on record in the first two months of 2023, according to a report by the World Gold Council’s Krishan Gopaul. In January and February, central banks collectively bought a net 125 tonnes of the metal, the highest amount for the year-to-date period since banks became net buyers in 2010.
Meanwhile, very few countries’ central banks shrank their gold reserves. Net sellers were Kazakhstan, Uzbekistan, Croatia and the United Arab Emirates , though year-to-date purchases far outweighed sales.If you look back at the list of net buyers, you’ll notice that three are members of the BRICS countries . I point this out because, as I’ve been sharing with you for a couple of weeks now, we may be seeing the emergence of a multipolar world, with a U.S.
If this is indeed the case, the implication is clear to me that investors should be increasing their exposure to gold and gold miners. Gold is a finite resource. It’s expensive and time-consuming to produce more of it. At the same time, BRICS countries will continue to be net buyers as they seek to diversify away from the dollar.Net inflows into gold-backed ETFs turned positive in March after 10 straight months of outflows as the metal’s price flirts with a new record high.
The Federal Reserve’s actions to slow economic growth appear to be having the desired effect. We may be looking at the end of the most aggressive rate hike cycle in two generations, and this carries risks that investors should be aware of.
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