The Reality of Central Bank Gold Ownership

Gold has been called a lot of things over the years. While some investors have lauded gold as a safe haven asset that can preserve wealth and purchasing power, others have referred to it as a “barbarous relic” and silly investment. It is our belief that those who understand the monetary system understand and appreciate the value of gold and precious metals, while those that do not are the ones that choose to bad-mouth such investments.

We mock what we don’t understand…

For those who believe that gold is an idyllic piece of history, or that gold has no meaning or purpose in modern society, I have but one question:

Why do central banks, the largest financial institutions on earth, hold so much of it?

Think about this for a moment. Mainstream investors choose to place their faith in governments and central banks to manage economies and the money supply. Yet as mainstream investors put capital to work in dollar denominated assets and other fiat based investments, the central banks meant to safeguard such fiat currency and investments are buying and holding gold…

If gold is a silly relic of the past, are central banks simply naïve, or perhaps dumb for holding so much of it?

Why haven’t central banks sold their gold holdings if it serves no true purpose in modern economics?

In an Econmatters.com article, Alan Greenspan was quoted as saying “If, in the words of the British economist John Maynard Keynes, gold were a ‘barbarous relic,’ central banks around the world would not have so much of an asset which rate of return, including storage costs, is negative.”

As gold has been increasingly bad-mouthed by financial academia and others, central banks have continued to hoard their gold. Central banks from emerging markets such as China and Russia have been steadily increasing their gold reserves.

Former Federal Reserve Chairman Ben Bernanke stated that gold is not money. When then asked why central banks bought and held gold, Bernanke’s answer was “tradition.”

You’ve got to be kidding me….Let me get this straight…The U.S. owns over 8,000 tons of gold because of “tradition?”

Obviously this answer really does not hold a lot of water, and it’s not just the U.S. that has a significant portion of its reserves in gold, either.

Germany, China, France, and Italy-they all have significant portions of their reserves in gold. It is unlikely that so many central banks are going through the trouble of buying and storing gold out of “tradition.”

Perhaps there are other reasons these financial powerhouses own gold. Perhaps these central banks know more about money than most investors, and they understand how fiat currencies work.

Perhaps there are plans for further dollar devaluation…

The fact is-nothing says “real value” like gold. Period.

Central banks own gold as a means of diversification and value.

According to the World Gold Council, “Gold can help central bank officials to manage market risk, improve portfolio performance and preserve national wealth.”

While gold’s value and purpose may be downplayed by some, other officials openly discuss the benefits of holding gold.

European Central Bank President Mario Draghi recently stated “For central banks this [gold] is a reserve of safety, it’s viewed by the country as such. In the case of non-dollar countries it gives you a value protection against fluctuations of the dollar.”

These central banks control the global financial marketplace. If they see the value and benefits of owning physical gold, shouldn’t you?

Perhaps now is the time to consider adding gold to your reserves…

Fortunately, it has never been easier to add physical gold to your portfolio than it is today. One of the simplest ways to add this valuable metal to your holdings is with a precious metals IRA.

To those who continue to suggest that gold serves no purpose and is a thing of the past, we’ll see who gets the last laugh once the dollar collapse accelerates.

Don’t wait until it’s too late. Consider an allocation in physical gold today.

Getting started with a gold IRA is easy. Our experienced executives are here to guide you, step-by-step, through the entire process. Call us today.