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National Banks are in a Global Gold Run




Prime Values reports trends, news regarding gold and the state of the global (and certain regional-) economies.

We have found that there's a gold run going on, which includes the central banks of various states.

Simply: the national banks of various countries are struggling to accumulate gold either through purchase, through intensifying the production of gold or, they bring their foreign vault-held gold reserves.

This means, gold has gained importance since the panic of '08. States themselves are accumulating the precious metal.
Perhaps they're preparing for a developing financial disaster?

It's obvious that even countries are regarding gold as a safe haven asset and the mere accumulation of gold bars proves the fact that they central banks require something more reliable than just their currencies.

Let's see more about how this gold run is undergoing...



Many National Banks are Buying Gold


The shiny yellow metal is perceived as a hedge against currency devaluation even by the banks, not just by individual investors. Since 2008, more and more countries have engaged into gold purchases.

Some of the biggest buyers were: Russia, China, Brazil. Others include: Kazakhstan, South Korea, Turkey, Azerbaijan.

The importance of gold has risen during the past decade.
It seems, gold's 2013 April price drop hasn't scared the big buyers away (great examples are China and Russia).

The fact that national banks are buying tonnes of physical gold is pointing out the something is about to happen and gold is regarded as a safe haven asset (as it has been throughout history).

We can also observe an opposition between dollar-favouring states, which are not buying gold and, the states that favour gold and are rather dollar avoidant.

The USA and the United Kingdom are not in the category of gold buyers.
It's obvious that if the US would start accumulating gold, then this action would bring the dollar's value down and pump up the gold's price. So, the USA has to protect its currency, therefore encourage the use of US dollars.

China, Russia, India, Brazil, Iran, Venezuela and many others have shown strong interest towards gold.
Therefore, these countries fit into the "dollar avoidant club" and, they're also part of the "gold hoarders' club".

But besides buying, there's also a trend towards repatriation...



National Banks are Repatriating
Their Abroad-deposited Gold


A vast number of countries hold large amounts of gold within foreign vaults.
Especially New York and London are important financial centers where such gold vaults have been established.

Not just for security reasons, but also for facilitating trade, it's easier to hold bullion bars abroad at some major intermediator's vault (like the Federal Reserve's vault in New York). Because: if a country sells something in exchange for gold, then the physical gold will not be moved, it will merely change its owner. Of course, the new owner will be able to re-sell it afterwards.

Germany, the Netherlands, Venezuela, Switzerland, Ecuador are just some of the many countries that have requested for their bullion to be repatriated. Venezuela was among the first to have recuperated its gold holdings entirely.

However, the return of Germany's Fed vault-held gold seems to be a particularly strange case: Germany has requested their gold bars to be returned, but the Fed doesn't seem to have the gold anymore(!). It has most likely been sold-off or rented to other parties.

Never before have we seen such a "gold bullion repatriation fever". Obviously, it's a sign: national banks don't have much confindence in their own currencies either.





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