months, and if you are wondering what the cause is, you’ll find almost everyone has a different theory. That said, certain factors in historic gold rallies tend to be ignored. For example, the mainstream financial media often hyper focuses on stimulus measures by the Federal Reserve as the cause, but I would remind people that the most recent upward trend in gold started while the Fed was tightening liquidity and raising interest rates, not stimulating. Also, many analysts suggest that precious metals absorb investment cash flows when equities are sliding, yet, for now, stocks have been rallying for the past year as gold prices also trend upward. So, what is the mainstream missing here?
First and foremost, it’s important to understand that gold is not necessarily just an inflation hedge; it is also a crisis hedge. As economic and geopolitical uncertainty grows, gold prices skyrocket. The past decade has seen uncertainty and instability that the world has not seen for almost a century. The problem is, the average American is oblivious to this state of affairs. They have no idea how bad the situation can get, as they assume there are checks and balances to counter any potential disaster in the financial structure. They assume that the government or the banks will step in.
However, there are signals that tell us that this will not be the case. In fact, it appears that central banks around the world are preparing for an event that they either cannot quantify yet or simply refuse to warn the public about. This is evident in the acceleration in gold stockpiling by banking institutions.
In 2018, foreign central banks bought levels of gold not seen since 2010. The past year of 2019, according to 3rd quarter figures, shows that banks bought even more; 12% more than in 2018. Last year, central banks purchased at least 550 tons of the “barbaric relic”, and it looks like they don’t plan to stop anytime soon.
Leading buyers have included Russia, China and Turkey, with the former two being the leading buyers for several years now. But central banks aren’t just buying gold, they are also demanding their gold storage be transferred away from offshore holdings and back to their own vaults............http://www.silverbearcafe.com/private/01.20/rushing.html
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