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Banca d’Italia/Statement/Undated
‘Gold is an excellent hedge against adversity. Its price tends to rise when operators perceive the level of risk to be high, for instance during military escalation or, more often, financial crisis, when financial instruments, especially high risk ones like shares, plummet in value but gold tends to rise in price. Incorporating gold into a financial portfolio is a way of hedging against high-risk scenarios, however unlikely. This function has been very much to the fore in recent years: in the face of widespread fears about the resilience of the financial system in 2008-09 and the stability of the euro area in 2011-12, gold performed particularly well, adding considerably to the equity revaluation account in which the Bank records increases in the value of its gold reserves.”
USAGOLD note: Why do central banks hold gold? By and large, they hold it for the same reasons you and I do. Bank of Italy’s clearly stated rationale is worth a full review at the link ……
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