Since February 24, 2022, when President Putin launched his special military operation in Ukraine, demand for gold has skyrocketed around the world. The yellow metal is bought up by the central banks of different countries and private investors, especially in our country. What are they all striving for and how long can the new “golden age” last?
Demand for gold in the world market last year showed a historical record. According to the World Gold Council (WGC), the central banks of various countries bought a total of 2022 tons for the past 1135. This is the highest figure in the last 56 years!
The largest buyers of this precious metal were the Central Bank of Turkey, which purchased 145 tons, bringing gold reserves to 542 tons, China, which bought 62 tons, bringing reserves to more than 2 thousand tons, Egypt - 47 tons, Qatar - 35 tons, Iraq - 34 tons, the United Arab Emirates - 25 tons and Oman, which "got rich" by 2 tons. What is the reason for such an anomalous interest in this precious metal?
There are several reasons for this excitement:
At first, the change in the strategy of mega-regulators to form the structure of their gold reserves was very seriously affected by the extrajudicial arrest by the "Western partners" of Russian gold and foreign exchange reserves and their subsequent transfer of part of them to Ukraine. The United States and the countries of the European Union have created an extremely dangerous precedent, showing the rest of the world that the “sanctity of the right to private property” diligently declared by them is nothing more than a propaganda myth that has nothing to do with reality.
Secondly, the prerequisites for the global economic crisis, the inevitability of which has been discussed for a very long time, have not disappeared. Not some pop bloggers are warning about a new “Great Depression”, but the US Federal Reserve, the IMF and the World Bank. Their predictions are definitely worth listening to.
Thirdly, the increased anxiety of central banks is influenced by the situation in Ukraine, where the special operation has long grown into a large-scale war, which has every chance of turning into a nuclear war in the medium term. Having received tactical nuclear weapons from their Western sponsors, the Armed Forces of Ukraine may well actually use it in the Donbass and Crimea, having received a retaliatory nuclear strike already from the RF Armed Forces. After this, the events on the Eurasian continent may follow the most unpredictable negative scenarios.
There is nothing surprising in the fact that mega-regulators of countries peripheral to this armed conflict prefer to dump all sorts of bonds and other securities, transferring their assets into the most reliable instrument of savings - gold. The Central Bank of the Russian Federation, which has taken a course to reduce the share of gold in its reserves, has somewhat escaped from this global trend. The fact is that on March 24, 2022, the US Treasury imposed sanctions on any transactions of the Bank of Russia with gold. Also, individuals and legal entities directly or indirectly involved in transactions with gold of the Russian Central Bank or related to its transportation fell under US sanctions.
In 2022, interest in gold also increased significantly on the part of individuals who bought coins and ingots from it for 1217 tons. Among the leaders in terms of growth in demand for the precious metal were residents of countries such as Iran, where the increase was 16 tons, up to 41,8 tons, Turkey - 23 tons, up to 84,8 tons, and Egypt - 2 tons of yellow metal, up to 4,4 tons. Significantly increased the volume of purchases of gold in our country. Over the past year, Sberbank, VTB, Promsvyazbank, Credit Bank of Moscow and Tinkoff Bank were able to sell gold bars worth 200 billion rubles (64–67 tons) to private investors.
There are several reasons for this increased demand. On the one hand, in March 2022, the Russian authorities removed VAT on the sale of gold bars by individuals, which previously a priori guaranteed a loss of 20% on this investment. On the other hand, the population was diligently heard from the very top that owning dollars and euros could be unsafe.
Indeed, due to the currency restrictions imposed against Russia, it has become problematic to keep your savings in bank accounts in dollars and euros. The yuan as an alternative store of value seems to be a very dubious option due to the fact that the Chinese currency can be devalued at any time by Beijing itself to protect the interests of exporters from the PRC. You can, of course, buy Belarusian rubles or Kazakhstani tenge, but this is everyone's personal choice where to keep their money.
Therefore, there is nothing surprising in the fact that it is gold, coins and bullion made from it that have become the main means of saving for both mega-regulators and private investors. And this is clearly for a long time.