Why are Central Banks really buying Gold?
Why are Central Banks really buying Gold?
Pax Aurea: Gold keeps the Peace
Gold didn’t invade Ukraine and it didn’t take Russia’s reserves.
Gold isn’t the problem, it’s the solution
Hedge Against Fiat Debasement
If You Can’t Touch It, Is it Really Yours?
No Going Back Now
Focusing on the Swift side
The West Stole From Russia
Gold Solves Problems
The SOV Problem Solved
The MOE Problem is Harder
Golden Guaranteed Fiat Multipolarity
This Didn’t Happen Overnight
Bottom Line
Appendix: The Multipolarity Partnership
Why are Central Banks buying Gold?
Summary: People worry about risk of debasement. Nations worry about outright theft. Gold and good accounting hedges both. (2200 words)
Hedge Against Fiat Debasement
Most of us already understand the obvious case for Gold given games played by governments to inflate currency and decrease debt-service costs. Nations, like people, concerned about this need a money with no counterparty risk or associated debt attached to it1.
World governments have accepted and dealt with debasement/inflation risk since the Second World War ended and the USD became its global reserve currency (GRC); First, as MOE, then as Global SOV after 19712.
Consider that post 1971 when the US went off the gold standard, no nation went off the dollar standard (full Gold hoarding) seemingly until this year. There certainly were inflationary problems between then and now. But those problems subsided as trust in the Pax Americana grew, mutual debasement was used to keep each other in line, and international trade blossomed. So what changed all of the sudden?
Listen: Nixon said he was suspending the Gold window to “defend the dollar”, but what was he really protecting?
What changed last year to start all this global dedollarization talk? Risk of sovereign wealth theft entered the picture in the eyes of many. That is what changed. Any nation’s money can be confiscated (stolen) now.
If You Can’t Touch It, Is it Really Yours?
Due to the sanctions and confiscation of Russia’s reserves, nations now need a way to ensure their own sovereign wealth will not be similarly (in their eyes) stolen from. Right or wrong, this is an existential risk they cannot ignore.
Before continuing: Let’s quickly address the What if we gave it back and Russia left Ukraine idea some have put forth as a solution to the current crisis. Here’s why that would not fix things…