Global Gold Rush Continues

Chart of the Week #37

I don’t usually do these more than once a week, but if I stumble upon something timely or pressing, I like to share it.

Now, you might have noticed that gold’s back in the spotlight. That’s for good reason. As I wrote earlier this week in the latest issue of Crisis Investing, the yellow metal finished 2024 at around $2,600 per ounce, up 26%—its best annual gain since 2010.

While there were several factors behind this performance, one stands out: massive central bank buying. And that's exactly what today's chart is about.

Looking at the latest figures below, you'll see that central banks purchased 694 metric tons of gold through Q3 last year. While slightly below 2023's record pace, it matches the same period in 2022 and stands above all previous full years. Take a look.

Once the final quarter figures are out, based on the current pace, we’re on track to match or even exceed the record-breaking levels of 2022 and 2023.

Ok, but why does all this central bank buying matter?

Gold price gains aside, to me, it signals preparation for a major shift in the global financial system—most likely tied to the coming move away from dollar hegemony.

If I'm right, this buying spree is far from over. In fact, last year's OMFIF survey revealed that about 15% of central bank managers plan to increase their gold exposure over the next 12-24 months. Their calculations suggest this could mean an additional $600 billion worth of gold reserves in the next few years.

Looking back at the graph above, the trend is crystal clear.

Regards,

Lau Vegys