Friday Dec 01, 2023
Unearthed: Why Central Banks are stocking up on gold ft. Shaokai Fan, WGC
In the latest episode of "Unearthed," hosts John Reade and Joe Cavatoni dive into the pressing question: Why are central banks stocking up on gold? As the World Gold Council's experts explore this trend, they are joined by Shaokai Fan, the authority on Central Banks and Asia-Pacific affairs. Together, they probe into record-breaking gold demand levels, the speculation of moving away from US dollar dominance, and the strategies driving allocation for reserve managers. Amidst the economic uncertainty, the trio also contrasts the moves of central banks with those of retail and institutional investors, offering a comprehensive view of the gold market's intricacies.
- [2:44] Shaokai explains the impact of Bretton Woods.
- [6:56] How do geopolitics play a role in central banks buying gold?
- [8:58] The hosts discuss with Shaokai why central banks hold FX reserves overall.
- [13:35] Shaokai explains the reasoning why central banks are holding gold specifically.
- [20:18] Joe and Shaokai discuss how digital currencies and crypto influence central banks.
Additional Resources:
Notable Quotes:
“For gold, (central banks) don’t look so much at return, they look at its ability to be a downside protection.” - Shaokai Fan
“Central banks are some of the biggest asset owners in the world, when they’re signaling that they want to buy gold and increase the rate of their purchases, I really do think that that’s had a big impact.” - John Reade
“Holding gold means that you have a certain degree of independence, of demonstrating to an international audience or sometimes a domestic audience that your country has the ability to defend its currency and defend its markets when necessary.” - Shaokai Fan
“When it comes to institutional dialog with our clients, what we find there’s definitely a level of interest (in digital/crypto currency) but it’s a risk asset in their minds …and there’s a lot of work that still needs to be done before there is a wholesale adoption.” - Joseph Cavatoni
“Crypto currencies don’t really fit the bill as a central bank asset. Safety, liquidity, return… not quite there yet.” - Shaokai Fan
About World Gold Council
We are a membership organisation that champions the role gold plays as a strategic asset, shaping the future of a responsible and accessible gold supply chain. Our team of experts builds understanding of the use case and possibilities of gold through trusted research, analysis, commentary, and insights. We drive industry progress, shaping policy and setting the standards for a perpetual and sustainable gold market.
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