Central Banks Continue To Accumulate Gold At Record Levels: What This Means For Crypto

July 6, 2022 7:29 pm

Based on multiple data sources, it seems that central banks around the world are continuing to accumulate hard assets like gold during this time of high inflation.

In just the month of May, it was reported that around 35 trillion was acquired by central banks globally as many probably see it as a key component to hedge against the falling markets.

After all, gold and metals are traditionally thought of as safe havens during times of economic crisis.

Central banks may also be interested in exploring alternative assets for hedging purposes in the future which may include digital assets like Bitcoin where there is limited supply.

Gold.org rteports on the data:

The latest update to our central bank holdings data set – capturing data to end-May – is now available. It shows that in May, central banks reported adding a net 35t to global gold reserves.1 This is the second consecutive month of net buying, having recently oscillated between monthly net purchases and sales (Chart 1).

Purchases were primarily concentrated among the same four banks that dominated buying in April. Turkey (13t), Uzbekistan (9t), Kazakhstan (6t) and India (4t) all added to their gold reserves again in May, accounting for most of the month’s buying.

Qatar added 5t to its gold reserves in May, taking total gold reserves back to 56.7t, the same level as the start of 2022.

Contrastingly, Germany was the only notable seller during the month, reducing its gold reserves by 2t, likely for its longstanding coin-minting programme.

With that being said, many have also observed that the price of gold has not been increasing recently and has more or less stayed within the same price range despite the bear markets in both the equity and crypto spaces.

However, some are saying that the price will truly reflect the true value once the predicted financial “reset” that many believe happens.

For the most part, more nations are accumulating than selling at this point.

For investors who are looking for assets like gold and crypto for hedging purposes, it is also important to make sure that your ownership of the assets are secure.

This means owning the gold in a safe jurisdiction that will be unaffected by geopolitical conflict and decreased security.

For crypto, this means ensuring that the digital assets are stored in a private wallet.

FXEmpire reports:

The dynamics of bitcoin and the Dollar in the coming days could be a prologue to the crypto market behaviour in the coming weeks. On the one hand, it is tough to be bullish on cryptocurrencies in an environment of a sharply strengthening dollar and a sell-off in risk.

A rising dollar and an aggressive Fed are significant current obstacles to buying cryptocurrencies.
On the other hand, Bitcoin is historically relatively cheap, attracting the interest of long-term buyers.

However, it is still tricky for anything more than the formation of a bottom. It will probably take months before a rally, as we saw in 2020, starts.

BTC could fall another 20-40% by the end of the summer, according to Cane Island Alternative Advisors. The US economy is entering a recessionary phase, and capital will leave risky assets accordingly.

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