Central Bank Gold Buying Rises In Q3 As Geopolitical Tensions Loom Large

Photo: Central Bank Gold Buying Rises In Q3 As Geopolitical Tensions Loom Large

The demand for physical gold in both bars and coins was strong in the last quarter according to The World Gold Council. The narrative that is being sold that somehow overlooks big buys of physical metal by central banks in Russia, Turkey and Kazakhstan is somehow being dismissed. But the fact that jewelry demand, as well as ETF buying, saw some pretty poor performance is being widely reported.

India has been a traditional buyer of gold, but after their government went whole-hog with a bold experiment that nearly crashed the economy, demand has fallen off a bit. The wild idea that their government pursued consisted of banning large notes, and forcing citizens to go to an all digital system where any large transaction would have to be made electronically.

Doug Casey's latest book details how the same thing could be unfolding in the USA, and with the drastic reduction in demand for silver and gold eagles from the US Mint, he very well may be right. But when it comes to nations buying gold, demand across Eurasia is intact. China and Russia are both big buyers of the yellow metal, and it would appear that the Chinese consumer is once again in the market for gold.

Nothing Special?

The western cultures have a unique view of gold. The rise of central banking that revolves around the US Dollar is probably blinding most westerners to the dire situation the west is facing. Since the end of the Second World War the entire world has been lashed to the fate of the US Dollar, but not many people understand that it really is just a made up currency that has no intrinsic value.

Like any fiat currency, a US Dollar can be contrasted with silver and gold, both of which have a cash value in most areas of the world, as well as industrial value. The same report from The World Gold Council stated that industrial use for gold rose 2% in Q3, and given the proliferation of more advanced electronic technology, that number may continue to rise for the foreseeable future.

The real story is central bank buying, and an Asian demand for gold that hasn't gone anywhere. With things like a “Fedcoin” being predicted by legendary investor Doug Casey, we all have to wonder what will happen to all those US Dollars that are outside of the United States.

Not Stable At All

The idea that the world at-large is just going to let the USA walk away from the enormous debt it has built up in the post Nixon era is beyond absurd. There is no way to know how this situation will play out, but as the recent events in Saudi Arabia have shown us, things can change very quickly.

Many people are frustrated with gold's performance over then last few years, but if it shoots up 1000x on the back of massive social misery and international conflict, we may be looking back at the days of $1300usd/oz gold as the Elysian Fields of the post WW2 era.

If you are interested in how the next decade might play out in the world of precious metals, or investing in general, the upcoming Silver and Gold Summit is a great place to be. A number of well informed investors and CEO's will be presenting their ideas, with people like Doug Casey, Rick Rule and Jim Rickards talking about what is going on right now. The two day event will be starting on November 20th, and it all takes place in downtown San Francisco!