The ‘alchemy’ of central banks

“For a variety of reasons it is likely that central banks that hold gold will tend to husband their reserves and that some with low levels of reserves will acquire more. Gold goes where the money is. After moving from the colonial world to Europe, to the United States, back to Europe it is now moving to the emerging economies of Asia. This is consistent with the view that central bank’s gold position signals economic power and prestige.”

USAGOLD note:  HSBC’s Steel says central banks will continue to favor gold because it is an asset they can hold free of counterparty risk. Ultimately, that happens to be the very same reason why private institutions, funds and individual investors hold the metal. All in all, this article offers significant background as to how central banks viewed in the past, how they view it now and how they are likely to view it in the future.