At a global level, the central banks of many countries have been purchasing large amounts of gold bullion. In January, over thirty tons of the precious metal were added to the reserves of countries like Turkey and China. Data from the World Gold Council confirms this information.
In 2022, there was a significant increase in the amount of gold bullion that central banks stockpiled, with an impressive $70 billion being added to their reserves; a record-breaking amount of gold buying by central banks!
What is it that central bankers are privy to that the rest of us are not aware of?
In the past two years of skyrocketing inflation, it has become apparent that the U.S. dollar is not as dependable as gold. Last year, the inflation rate in the United States hit its highest point in four decades, and wages did not rise in tandem. Consequently, the average American was adversely affected while more knowledgeable financiers and investors protected their wealth by investing in assets that would remain resilient against inflationary pressures, such as gold and silver.
It is quite evident why.
A comparison of the performance of gold, silver, and the platinum-group metals to the U.S. dollar, U.S. Treasury bonds, and the stock market during the last twelve months can be made by looking at the following data:
- Gold:An increase of 7.95% is reported for gold
- Silver:A 13.32% rise has been seen for silver
- Platinum:An appreciation of 6.5% has been observed for platinum
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- S&P 500: A 0.5% decrease
- U.S. Dollar: A drop of 6.41% according to the Bureau of Labor Statistics
- Total Bond Index: 13% lower
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As of March 8, 2023, the figures (unless otherwise stated) represent changes within a 6-month period.
*According to the Bureau of Labor Statistics’ Consumer Price Index (CPI) report, the annual inflation rate for January 2023 is currently known.
In 2022, the U.S. investment-grade bonds had the lowest one-year yield in history, as reported in the most recent annual update of the TBI.
It is evident that as interest rates have increased, stocks have been stagnant, and other possessions such as property have decreased in worth, precious metals have been a major success.
Given that Jerome Powell, Federal Reserve Chairman, has suggested that hawkish interest rates are likely to persist (all the way until 2024 as some analysts have predicted), stock market investors should not anticipate a bull run until the monetary policy environment alters. According to Yahoo Finance, it is unlikely that the U.S. will experience a reduction in interest rates until at least 2024, indicating that a shift in the monetary policy environment is required for a bull run to occur.
In the meantime, the need for gold around the world is extending, with central banks purchasing 16% more in January than in December, continuing the trend from the previous year. According to Business Insider, the U.S. is coming off a record high in gold buying and is expected to carry on at least until 2024.
Do you have as much trust in gold as many central bankers have in the U.S. dollar?
At the end of 2021, the Federal Reserve implemented strict monetary controls and gold and other precious metals have been the only investments to display steady growth during this period of limited funds.
In the year 2023, those investors who are aware of the risks have been buying up gold to protect their retirement funds and to safeguard their wealth from the depreciation caused by inflation. Currently, the value of paper money is decreasing, and stocks are not performing well, but gold, silver, and platinum are increasing in value.
At this moment, it is the perfect opportunity to make your financial situation stronger with gold. To incorporate gold or silver into your retirement investments, think about creating or transferring a self-directed IRA with one of America’s highest rated gold investment firms. Sign up right away and benefit from waived fees from certain providers for a brief period.