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Saturday, October 20th, 2018 - Buy Gold - Bringing you trusted gold news and gold investing information since 2006

Central Banks of Major World Emerging Markets Buys Gold to Diversify Portfolios

There are strong indications that the central banks of some countries whose economies are being regarded as emerging markets have started buying gold in an unprecedented manner despite the high prices gold has attained in recent times. The Director of Government Affairs, the World Gold Council, Nathalie Dempster, said in a statement that the central banks of some countries in the category of the emerging market nations are fast rebalancing their foreign exchange reserves by buying gold.

Relying on international financial statistics released by the International Monetary Fund (IMF), Dempster reported in a statement that the biggest buyers of gold from the year to date alone have been South Korea with 25 metric tons of gold, Thailand with 26.3 metric tons of gold, Russia with 48 metric tons of gold, and Mexico with 98.8 metric tons of gold. Whereas the net purchases of gold by the world’s central banks put together from the year to date are 203.5 metric tons as reported by Dempster, these emerging markets have already bought 198.1 metric tons of gold out of the total quantity bought so far by the world’s central banks which shows a 97.3% for these emerging-market nations alone. In fact, the central bank of South Korea was reported to have made a public announcement that confirms this data.

Generally, a new trend has emerged in the world gold market where the world’s central banks have collectively bought a total of 127.5 metric tons of gold within the first five months of the year as against 76 metric tons recorded in all of 2010 which is a whopping 168 percent increases over the net purchases for all of 2010 as analyzed by Dempster.

Though Ross Norman, the CEO of Sharps Pixley observed that the high net purchases of gold by the central banks of these nations must have been speculative, Dempster, however, explained that the central banks of these emerging markets must have resorted to buying gold big time in order to rebalance their foreign reserves and also focus attention more on risk management techniques of managing foreign reserves rather than yield enhancement strategies in use before the global financial meltdown.

Jeff Clark, Casey Research’s senior precious-metals analyst, observed that nations are buying gold in order to reduce their countries’ high sovereign debt risk and more as a necessity than as a means to diversify.


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