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Weekly Touchpoint: Bloomberg: Central Banks’ Gold Buying Spree

Posted By Isaac Nuriani |

The price of gold remains firmly above $1,400 an ounce a little over three weeks after Federal Reserve Chairman Jerome Powell signaled that the nation could be entering a renewed climate of declining interest rates. This is a new posture for the Fed based on anticipated weakness in the economy, a condition many have suspected could develop for many months. For some time, central banks around the world have been aware that a slowdown is lurking, which largely explains their focused effort over the last year and a half to stock up on physical gold. Recent data indicates not only have central banks in no way let up in their drive to buy gold, but they’re actually on pace to end 2019 having purchased even more gold than they did in 2018. Global central banks’ latest gold-buying endeavors begin our review of key news items for this week.

  • The effort of the world’s central banks to stock up on physical gold shows no sign of losing strength. In fact, according to a recent Bloomberg article, central banks are on pace so far this year to top the buying spree they went on in 2018. Last year, central banks bought 651.5 tons of gold, 74% more than they did in 2017. Bloomberg cites data that says central bank purchases through May of this year are 73% higher than they were through the same time period in 2018. The article also reports that Poland is now the top owner of gold among central European nations, having more than doubled its gold reserves since the beginning of last year.
  • As you surely know, the national debt continues to surge upward with absolutely no sign of slowing down – let alone decreasing. Since President Trump took office, the debt has jumped more than 13%, ballooning to nearly $22.5 trillion. But as Reuters pointed out in a recent article, mentions of the debt and the deficit have been entirely missing from the talking points of the declared Democratic candidates for president. Although one would think America’s rapidly deepening indebtedness would be a juicy target for those seeking to replace Trump, it turns out Democrats have no room to talk on the issue. Reuters notes that some of the most heavily touted Democratic campaign promises so far – such as expanding Medicare and eliminating all student debt – effectively guarantee an even more massive expansion of nation’s obligations. Regardless who wins the White House in 2020, this is a message that it could be particularly important for retirement savers to include stores of value such as physical precious metals among their assets.
  • Has the U.S. economy lost its mind? Citing a record high stock market, record low interest rates and evidence that the Federal Reserve is preparing to lower rates further, Jeffry Bartash of MarketWatch suggests Americans are now living in an alternate reality. There has been a great deal of news lately suggesting the economy is considerably weaker than a few popular economic metrics imply, but Bartash clearly is not sold on the Fed’s latest bias. He writes, “Economists are skeptical that a small reduction in already low interest rates will do anything to spur borrowing or help the economy.” Bartash goes on to say flatly, “The Fed has become unmoored from its typical approach to setting interest rates.” Given the likelihood that lower rates will lead to a weaker dollar, could an economy “gone mad” mean higher gold prices?
  • When you consider reasons to purchase an asset for your retirement portfolio, is the asset’s capacity to serve as a store of value at the top of your list? Probably not, but maybe it should The strength of the global economy is increasingly in doubt, and there’s growing talk that the U.S. may be on the verge of a new era in loose monetary policy. If we, in fact, do enter such an era, it could result in a greatly weakened dollar, and that could turn stores of value into a retirement saver’s most important assets. To learn more, including which asset may be the best store of value to include in your portfolio, read Augusta’s latest blog article here.

Gold remains strong weeks after finally breaking through the $1,350-an-ounce level of price resistance that had proved effectively impenetrable for more than five years. The momentum responsible for breaching that barrier is found in the prospect that interest rates, already low, are headed further down. And the reason for that is acknowledgement that the economy may not really be as strong as the 4% unemployment rate suggests. Central banks understand all of this. Well over a year ago, in anticipation of a global economic slowdown, they began shoring up their own portfolios’ gold reserves. That may be one of the best validations of gold as a store of value. Is it time for you to make certain store-of-value assets are appropriately represented in your portfolio? Call Augusta Precious Metals at 800-700-1008 or visit

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