REAL GOLD VS PAPER GOLD: CENTRAL BANKS ARE ACCUMULATING REAL GOLD AT A RECORD PACE

 

If you concentrated on the paper price of gold you'd think gold was in a huge funk, neglected, a useless relic of a bygone age.  In fact there are many who will tell you gold is not really money - not any longer - since you can't use it to buy a quart of milk at the super market.

However, if you look at the central bank activity - those who issue, regulate, and proclaim what is and isn't money you get an entirely different story.

Central Banks are accumulating gold are record rates.  They have bought 399 tonnes worth 20 billion dollars in the third quarter alone.  The largest buyers are Turkey, Uzbekistan, Qater, and India.  Retail buying in these countries is up 300 percent year over year - as these goverments encourage their populations to buy gold

This is the fastest pace of accumulation since the dollar was convertible into gold back in 1972.

Interesting.

But this is only half the story.  Russia and China are engaged in a furious gold accumulation - but the figures don't show up because they mine the gold themselves and the gold goes straight from domestic miners into the Russian and Chineses Central Banks.  Gold analysts like Simon Hunt estimate the CHina has now accumulated 30,000 tonnes of gold as opposed to the 2000 tonnes they admit officially. 

The Chinese government also actively encourages the Chinese population to buy gold.

It is widely known that many other central banks are also purchasing gold without reporting their purchases

It is interesting that the countries that don't mine gold but are buying at furious rates are all countries that China and Russia seek to include in their sphere of trade influence.  

And many analysts believe (again like Simon Hunt)  this furious accumulation of gold is prelude to a new gold/commodity backed currency to challenge the US dollar.

Meanwhile the paper price of gold is controlled by the Fed and a few bullion banks here in the US - most notably JP Morgan - who keeps getting slap on the wrist fines for their illegal manipulation.

So if your gold accumulation is in paper gold - it's really not clear how that will hold up under future crisis scenarios.

The only real portfolio protection is in Real Assets.  Real Gold amongst them.