Central Banks are Still Aggressively Buying Gold

Central banks around the world bought more gold than first thought, according to Bloomberg.

In fact, “Countries expanded bullion reserves by 337 tons in the three months through September, the World Gold Council said. That follows an increase of 175 tons in the second quarter, which was bigger than the council’s previous estimate of 103 tons.”

“Central bank purchases for the first nine months of the year now total 800 tons, driven mainly by China, Poland and Singapore, as well as unreported buying. The pace has exceeded the amount for the same period of last year, which ended with record demand.”

Analysts say emerging market banks have been buying to diversify away from the U.S. dollar since it can be exchanged for any currency.

Plus, as noted by The Street, “Central banks buy the world’s ‘favorite safe haven’ because it retains its value against volatile currencies or falling bond prices. Simultaneously, investors don’t need to rely on any particular issuer or government to trade it. Protection from geopolitical and economic shocks is also, of course, another reason emerging and developed central banks are purchasing gold.”

With central banks likely to buy even more, investors may want to jump into related stocks, like Barrick Gold (GOLD), Newmont Corp. (NEM), and ETFs, such as the SPDR Gold Trust (GLD) and even the Sprott Gold Miners ETF (SGDM).