Central banks and their functions

Almost 36,000 tons currently belong to central banks. Since 2010, when the central banks‘ buying spree began, they have been net buyers worldwide, whereas previously they were net sellers. Between 2000 and 2009, they sold a good 4,420 tons of gold. They reached a fifty-year record in 2018, when they bought 656 tons of gold. In 2021, the central banks increased their gold reserves by 455 tons, in 2022 it was already around 1,135 tons (an all-time high). And in 2023, they added 1,037 tons to their holdings. 2024 also got off to a strong start in terms of gold purchases by central banks, which bought 290 tons of the precious metal in the first quarter.

Central banks set interest rates, regulate monetary policy and control the circulation of coins and banknotes. The central task of central banks is to ensure price stability of the national currency and the banking system. Inflation is an expression of good or bad work, but this is not always so easy, as the present day shows. This is why central banks are so eager to back gold. There are basically three motives behind the central banks‘ hunger for gold. The first is to reduce the risk of a weakening US dollar or another fiat currency. Gold serves as a portfolio or investment diversifier. Secondly, gold acts as a hedge against inflation. To ensure that inflation does not have such a strong economic impact on a country, it needs investments that are detached from the US dollar. And the third reason is that growth and stability can only be achieved by central banks if economies are not jeopardized by depreciating currencies.

But gold is also an effective means of hedging for private investors. Gold companies such as GoldMining or Victoria Gold can also be used here.

Victoria Gold – https://www.commodity-tv.com/ondemand/companies/profil/victoria-gold-corp/ – expects gold production from its Eagle gold mine in the Yukon to be between 165,000 and 185,000 ounces of gold in the current year. Gold production in the first quarter amounted to almost 30,000 ounces of gold.

GoldMining – https://www.commodity-tv.com/ondemand/companies/profil/goldmining-inc/ – has gold and gold-copper properties in North and South America and one of the largest gold resources in the world. In Brazil, the company has started drilling at its São Jorge gold project.

Current company information and press releases from GoldMining (- https://www.resource-capital.ch/en/companies/goldmining-inc/ -) and Victoria Gold (- https://www.resource-capital.ch/en/companies/victoria-gold-corp/ -).

In accordance with §34 WpHG I would like to point out that partners, authors and employees may hold shares in the respective companies addressed and thus a possible conflict of interest exists. No guarantee for the translation into English. Only the German version of this news is valid.

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