Official Monetary and Financial Institutions Forum/9-19-2016
“The OMFIF research document – the ‘Seven Ages of Gold’ – contains detailed statistics plotting long-run changes in central banks’ policies on buying and selling gold over seven distinct periods during the past two centuries, each lasting an average of around 30 years. The latest ‘Rebuilding’ Period VII has been underway since the financial crisis in 2008. In these eight years, central banks in both developed and developing countries have shown a new fondness for the yellow metal, rebuilding gold’s importance as a bedrock of most countries’ foreign reserves.”
MK note: We should keep in mind that changes in central bank behavior in the aggregate with respect to gold accompanies times of fundamental change in the global monetary system. As such, the change to central banks becoming net buyers of the metal (and one should not discount the importance of official sector sales abstinence in the equation) signals something important might be in progress. If we are eight years into an average thirty year process, as OMFIF asserts, that is something that needs to be filed for future reference. OMFIF attributes central bank demand as a “factor in the price recovery since 2015.”
