Central banks worldwide are ramping up their gold purchases, signaling a strategic shift away from the US dollar amid growing geopolitical tensions. Bob Minter, Director of Investment Strategy at Aberdeen Standard Investments, sees this move as a response to the use of the dollar as a tool of US foreign policy across multiple administrations. The trend reflects a desire by emerging market countries to diversify their foreign exchange reserves, emphasizing the political neutrality of this shift.
In an interview with Kitco News’ Jeremy Szafron, Minter highlights gold as a crucial element in fortifying currencies amid the uncertainties in the global financial landscape. He underscores that gold serves as a reliable store of value and stability, distinguishing it from the volatile nature of cryptocurrencies. Minter emphasizes the significance of hardening currencies with gold, a tangible asset, especially in times of economic uncertainty.
Minter also discusses other factors influencing gold’s performance, such as the dynamics within the gold market, the role of ETF investors, and the correlation between real yields and gold prices. Despite a recent sell-off of gold by ETF investors, Minter anticipates a potential rebound as central banks continue to set records in their gold purchases. This trend reflects a collective effort to mitigate risks associated with the dominance of the US dollar in foreign reserves.