Central Banks Led by Russia and China Ditching Dollar for Gold Hits Highest Level in Six Years
World Gold Council reports 145.5 tons of gold being bought by central banks in the first quarter of 2019 and further expects this demand to stay strong for the rest of the year.
In the first quarter of this year, gold purchases by central banks were the highest in six years as countries ditch the US Dollar. Global gold reserves saw a 68 percent increase from last year, said the World Gold Council on Thursday in a report.
Among countries diversifying their assets away from the US dollar, Russia remains the largest buyer as the country reduces its US Treasury holdings as part of its de-dollarization plan.
“We’ve seen a continuation of the strong demand from central banks,” said Alistair Hewitt, head of market intelligence at the World Gold Council.
“We’re expecting another good year for central bank purchases, although I’ll be pleasantly surprised if they are to match the level seen in 2018.”
Central Banks Hoarding Gold
For some time now, the central banks have been hoarding gold. They are actually, one of the world’s largest gold investors. Last year, in the first ten months, central bank purchased 351.5 tons of gold, an increase of 17 percent for the same period the year before.
In the first quarter of 2019, apart from the regular buyers like Turkey and Kazakhstan, Ecuador added to its reserves for the first time since 2014. The council also reported sizeable purchases by Colombia and Qatar.
The buyers are dominated by those countries that are looking to reduce their dependence on the US Dollars and are with a lower share of gold reserves than Western European countries.
These central bank purchases offset the lower demand from coin investors, bar, and industrial users of the metal. Gold has lost 1 percent so far this year as it trades at about $1,270 an ounce. In fact, ETF levels are at their lowest levels in four months as inflows have been wiped out over the rest of the year.
When it comes to supply, World Council has revised its estimates for small scale miners, now estimated to account for 15 to 20 percent of global gold mine production.
Bitcoin to be the Next One in Hoarding Line?
The de-dollarization plans by Russia, China, Turkey, and many other countries have been going on for some time now which is slowly accelerating in pace. Gold hoarding is one such example.
These are definitely bullish times for gold which serves as a safe haven during the turbulent times. But in recent times, we have seen how Venezuela has been denied its $1.2 billion of gold.
When it comes to being valuable, digital currency Bitcoin offers even far more benefits than the gold, moreover, it is unconficatabe, unlike gold. We have already heard rumors of Russia buying up Bitcoin, which may not be true yet but in the future could very well be a reality as part of the nation’s de-dollarization drive.
As Bitcoin grows, it could be expected that just like gold, Bitcoin would become the go-to hoarding digital asset of choice for these central banks.
Bitcoin’s price is $35,071.22 BTC/USD exchange rate today. The real-time BTC market cap of $657.21 Billion currently ranks #1 with a chart dominance at 62.37%, daily trading volume of $25.64 Billion and live coin value change of BTC -2.13 in the last 24 hours.