Investment strategy of central banks: Buy gold

A Bank of America investment strategist last week recommended investors look to precious metals in search of safety as global tensions rise.

Michael Hartnett gave a to-the-point analysis in a note Thursday.

“Do what central banks are doing … buy gold,” he said.

Harnett cited the Federal Reserve’s posturing to lower interest rates, which will likely contribute to the ongoing inflationary climate and, naturally, give precious metals more upward momentum.

A step above the others

Gold prices have risen more than 20% year-to-date and have outperformed equities markets — including tech stocks.

Despite the price rise, investors have divested overall from the yellow metal, with $2.5 billion outflowing in 2024, signaling profit-taking.

Who is adding more?

In the second quarter of 2014, the reserve banks of Poland, India and Turkey were the largest buyers of gold. Between the three countries, 52 tonnes of gold were added to reserves.

On the other hand, Kazakhstan and Singapore were the biggest and only two notable sellers of gold over the past month. The sales totaled less than 20 tonnes.

Keeping gold in reserve

While the United States is the largest holder of physical gold, when factoring in forex reserves, China is overwhelmingly the world’s leader in gold possession. The country has nearly $3.5 trillion invested in gold, with the digital assets factored in, towering over the world’s second-largest holder of gold, Japan, at a mere $1.2 trillion.

The United States has the third-largest holding of gold, with digital assets at more than $800 billion.

Source: https://markets.businessinsider.com/news/commodities/gold-price-prediction-buy-record-highs-central-banks-pile-in-2024-8