The global economic engine continues to sputter, and many of the world’s governments and central banks are expected to resort to drastic measures to reinvigorate anemic economies. Central banks in the eurozone, as well as the Bank of Japan, already have their nations’ interest rates in negative territory. Former Federal Reserve Chairman Alan Greenspan said recently “it’s only a matter of time” before negative rates arrive in the U.S.
But what happens if even more dynamic applications of monetary policy by the world’s central banks fail to keep the global economy from falling into the abyss? What then?
According to one of those central banks, De Nederlandsche Bank or the Dutch Central Bank, the savior of the global economy will come in one form: gold. For a central bank to say gold is the only real life preserver capable of keeping the global economy from drowning is nothing short of stunning. It is also an exceptionally powerful statement about gold’s capacity to serve as genuine portfolio insurance – for the world and for individuals.
Gold Is the Financial System’s “Anchor of Trust”
The Dutch Central Bank publicly takes this strong stance in favor of gold by way of an article published recently at its official website. The piece reads like a testimonial from a true believer, shocking observers who’ve come to expect a more reserved posture on the metal from central banks.
The Dutch Central Bank wasted no time singing gold’s praises, beginning the article this way:
De Nederlandsche Bank (DNB) holds more than 600 tonnes of gold. A bar of gold always retains its value, crisis or no crisis. This creates a sense of security. A central bank’s gold stock [gold supply] is therefore regarded as a symbol of solidity.
That’s not even the bank’s strongest endorsement of gold in the article. This is:
Shares, bonds and other securities are not without risk, and prices can go down. But a bar of gold retains its value, even in times of crisis. That is why central banks, including DNB, have traditionally held considerable amounts of gold. Gold is the perfect piggy bank – it’s the anchor of trust for the financial system. If the system collapses, the gold stock can serve as a basis to build it up again. Gold bolsters confidence in the stability of the central bank’s balance sheet and creates a sense of security.
It’s no secret that central banks have been engaged in a concerted effort to stockpile gold. In a trend the Foundation for Economic Education referred to as “an unprecedented shift toward gold” that “has been led by the financial authorities of the world,” central banks remain on a record-setting pace of gold-buying that began last year when they collectively purchased more gold in 2018 than they did in any of the 50 previous calendar years.
Still, I cannot recall another central bank making a statement about gold that’s as bold as the one the Dutch Central Bank makes here when it refers to gold as “the anchor of trust for the financial system.” One would think that, even though central banks the world over are shoring up their gold reserves at a record pace, they all still would take the position publicly that it’s the inherent economic power of their respective nations that citizens should rely on. After all, what is it we’re told that serves as the backstop of the U.S. dollar? Not gold (at least not anymore), but “the full faith and credit” of the U.S. government, or, as the U.S. Treasury puts it, “all the goods and services in the economy.”
But that’s not what De Nederlandsche Bank says. The Dutch Central Bank now makes clear its view that gold is the true backstop – of not only national currencies but the entire global economy.
Financial Giants’ High Regard for Gold Speaks Volumes
It seems that no matter how hard mainstream financial institutions and asset managers try to publicly distance themselves from gold – now popularly seen as an “alternative” asset – they eventually embrace it. In addition to central banks, “too-big-to-fail” private banks and even hedge fund managers are stockpiling gold in recognition of its demonstrated record of strengthening when economies and markets are in turmoil. Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, is now famously a gold bug of sorts. Earlier this year, Sandler Capital, one of the world’s best-performing hedge funds in 2019, made gold its single largest position.
If a central bank sees gold as the “anchor of trust” for the financial system, should it not be the anchor of trust that serves your personal portfolio? If you’ve been thinking it could be a good idea to include gold (or silver) among your assets, but don’t know where to turn for honest, no-pressure answers to your questions, I have a solution: Augusta Precious Metals.
When you call Augusta at 800-700-1008, you will speak to a knowledgeable gold and silver professional who understands the challenges retirement savers face when negotiating the physical precious metals terrain for the first time. One particular question savers have is whether it’s difficult to buy physical gold and silver in an IRA. The short answer is that it’s not difficult when you go through Augusta. Augusta Precious Metals has created an efficient system that streamlines the silver and gold IRA process while preserving the tax-advantaged integrity of your funds. The Augusta team member you speak with will happily provide you with all the details, as well as fully inform you about all the features of precious metals that make them the safe-haven asset of choice for so many – including the world’s central banks.