Select Page

​As I perused today’s news in Google, I couldn’t help notice many stories talking about what’s going on with gold.  While many of the click-bait titles drew my attention, there was no getting away from the article I read on The Street that discussed the rabid buying going on at the World Banks.  Today, I’ll give you the lowdown on that, and other news surrounding this precious metal that all of a sudden is the topic of a lot of debate.

Banks Buying Gold at Incredible Levels

Central Bank

715.7 metric tons of gold bullion holding a value around $29.4 billion was bought up in the 12 months leading up to March 31, 2019.  This news was gathered by a report put out by the World Gold Council.

“In all likelihood, we expect another strong year,” says Alistair Hewitt, director of market intelligence at WGC in London.

Additionally, the amount of gold bought by institutions over the last four quarters was on a level larger than any prior calendar year dating all the way back to 1971.  That year marked the time when then President Richard Nixon pulled the precious metal off of the standard monetary system.  For the record, gold was valued at $35 per troy ounce.

Today, the precious metal is going around $1,278 per ounce, which is a tad bit down from the high of $1,341 achieved back in February of this year.

For the record, I am acquiring the gold mining stock IAG.  I’ve also been holding it for quite some time as a possible hedge against a market that eventually will come down.  Play it at your own risk and remember that I am not a financial advisor.  The stock is currently trading at $2.94 at the time I write this.  

Emerging Markets Driving Demand

That sub-headline was taken right from The Street Article, and they went on to outline how emerging markets like Russia are buying gold in a diversification effort to get away from buying American dollars.  After the financial crisis of 2008 this trend started to take place, and it hasn’t slowed down.

Other Stats Pointing to Gold Gaining Popularity

  • Central banks bought 657 tons of bullion in 2018.  The number in 2010 was only 79 tons.  (Source:  WGC Report)
  • Many countries in the “developing world” think they have too much money invested in U.S. Dollars and are looking to diversify through gold bullion buying.

However, another WGC report detailed how the developing world doesn’t hold much in comparison to the rest of the world.  75% of the U.S. reserves are gold.  Germany has 7/10 of it’s reserves in bullion.  

Another WGC report shows that central bank holdings in the developing world are far smaller than in much of the developed world. For instance, three-fourths of the U.S. reserves are held in gold, while Germany holds seven-tenths of its reserves in bullion, WGC data shows.  When you compare that to Russia, who holds 18.5% of the countries reserves in gold, and China, 2.5%, as well as India, 6.3%, it’s a big difference.

There is also no variation of buying when the price moves up or down. They are reportedly accumulating at all prices.

Will this trend continue, or will it be something of a cyclical nature?  That’s the million dollar question.  As someone who always thinks both long and short term, I have to start adding more gold stocks to my retirement plan as a long term hedge.  Of course, for those of you who are looking to really get into bullion, I urge you to read about setting up a gold IRA custodian.  There are numerous resource articles in my metals section that will detail the process of doing so for those learning more about it.

Tim Schmidt

About 

A Florida-based Entrepreneur, Author, and Life Hacker, Tim Schmidt decided to take control of his retirement portfolio several years ago by setting up a self-directed IRA. This blog shares his thoughts and opinions on the top of retirement and investments. You can follow his career and travels on his Official Website as well as on his Instagram page.

Money MGMT.

How to Convert a SEP IRA to a Roth IRA

If you want to avoid having to pay taxes on the distributions in retirement when you have a simplified employee pension individual retirement account, you have the choice of converting it into a Roth IRA. This can be done regardless of having the pension account...

What is a 529 Plan?

Today I'll share with you the basics of a 529 plan.  This plan operates as a savings plan for college that provides specific financial aid and tax related benefits. Many of today’s 529 plans are also used as a way to invest and save money for grade school tuition for...

Precious Metals

Why Investing in Precious Metals is Wise

Gold has always been a sexy investment, however investors have also turned to the merit of precious metals for investment.Just like gold, precious metals such as platinum, silver and so on are also equally capable of retaining monetary value even if the economy goes...

Retirement Tips

Where to Donate Used Books – 10 Options to Consider

Do you love buying books? Are you the type to stop at every bookstore in your path? Do you always buy at least one new book whenever you’re in a bookstore? It’s no secret to your family and friends that you’re a book fanatic. In fact, they enable your collecting habit...

Flipping Houses for Profit

Not that long ago, I met a guy who just decided that it was time to get started in the real estate game. He decided to become a real estate agent. But he didn’t end his education there. In fact, he decided to learn all he could about renovations too. This led to him...

Stock Market

How to Invest in Dividend Stocks

Know what feels even better than getting some money from a hard day's work? Making money passively! While some investments take a lot of research and speculating to choose the right place to put your money in a growth stock, you can rest easy when putting some of your...

Monroe Capital Corp Currently Offers a 14% Yield

​Those of you who are holding cash in retirement accounts may want to consider some stocks that yield high dividends.  I just came across this gem of a stock called Monroe Capital that is currently paying a 14% yield.  If that’s not jaw dropping, I don’t...

Making Money Investing in Gold Stocks

Among other precious metals, gold has been the most popular choice among investors. Most people today view the metal as a hedge against inflation and a measure of protection in stringent economic times. Many people choose gold to diversify their portfolios.There are...