Buy Gold As “Extremely Low-Risk Asset” – Rogoff Advises Creditor Nations

Buy gold as it is an “extremely low-risk asset” is the advice of Professor Kenneth Rogoff to emerging market, creditor nation central banks including the People’s Bank of China (PBOC).

Rogoff believes that there is a good case to be made that emerging market central banks, such as the People’s Bank of China who have over $3.3 trillion in foreign exchange reserves, accumulate gold as this would “help the international financial system function more smoothly and benefit everyone”.

Russian central bank bought another  500,000 troy ounces of gold in April (ShareLynx)

Writing in Project Syndicate Rogoff notes that:

“Moreover, there is a case to be made that gold is an extremely low-risk asset with average real returns comparable to very short-term debt. And, because gold is a highly liquid asset – a key criterion for a reserve asset – central banks can afford to look past its short-term volatility to longer-run average returns.”

Rogoff notes that creditor nation central banks have been accumulating gold already but at a snail’s pace:

“Emerging markets have remained buyers of gold, but at a snail’s pace compared to their voracious appetite for US Treasury bonds and other rich-country debt. As of March 2016, China held just over 2% of its reserves in gold, and the share for India was 5%. Russia is really the only major emerging market to increase its gold purchases significantly, in no small part due to Western sanctions, with holdings now amounting to almost 15% of reserves.”

The latest data from Russia over the weekend shows that the Russian central bank bought another 500,000 troy ounces of gold in April.

Russia and China continue to be the largest sovereign buyers of gold today and central bank demand remained robust in the first quarter of the year – central banks purchased 109 metric tonnes. This represents the 21st consecutive quarter that central banks have been net purchasers of gold as they continue to diversify their huge exchange reserves and significant US dollar exposures.

Despite the steady buying, most creditor nations still hold less than 10% of their reserves in gold compared to 60% to 100% in large debtor nations such as the US, Greece, Italy, France and others.

Source Wikipedia 

Other emerging market creditor nation central banks with large foreign exchange reserves include Saudi Arabia, India, Brazil, Mexico, Thailand, Algeria, Iran, Turkey, Indonesia, Malaysia and United Arab Emirates (UAE).

The article by Rogoff is an important one and yet, like many recent significant developments in the gold market, it got surprisingly little mainstream media coverage.

It is another sign that gold is being re-monetised in the global financial and monetary system.

It also bodes well for gold’s outlook as the massive scale of international foreign exchange reserves means that even a small allocation into the small physical gold market by creditor nation central banks should see gold reset to much higher levels in all currencies. This may be why Professor Rogoff says  regarding gold that “there is no limit to its price.”

Rogoff is a thought leader and a leading voice of western central banks. He was the chief economist of the International Monetary Fund from 2001 to 2003 and is the Professor of Economics and Public Policy at Harvard University. See full article on Project Syndicate here


Recent Market Updates
Buy Silver – “Best Precious Metals Trade”
Bank Bail-Ins Pose Risks To Depositors, Investors & Economies
Take Delivery of Gold and Silver Coins, Store Gold Bars – Hobbs

George Soros Buying Gold ETF And Gold Shares In Q1
Hedge Funds Take Record Long Silver Position As Silver Bullion Deficit Surges


Gold and Silver Prices and News
Gold holds earlier losses on firmer Asian shares – Reuters
Gold Options Traders Remain Bullish Even After Price Dip – Bloomberg
Dubai Investor Set to Open Monaco’s First Gold Refinery in 2017 – Bloomberg
Buy Gold on Dips as Fed May Have to Backtrack, Mideast Bank Says – Bloomberg

One of the World’s Most Expensive Countries Is Debating Giving Away Money – Bloomberg
Silver Lower Today Than Was In December 1979 – Smaul Gold
Counterfeit gold and silver coins burning buyers – WCPO
Middle East, OPEC nations may be first to return to gold standard – Examiner
Doug Casey’s Four-Part Plan to Fix a Broken Economy – Casey Research


Gold Prices (LBMA AM)

23 May: USD 1,250.40, EUR 1,115.84 and GBP 860.89 per ounce
20 May: USD 1,256.50, EUR 1,120.18 and GBP 862.75 per ounce
19 May: USD 1,253.75, EUR 1,117.74 and GBP 857.37 per ounce
18 May: USD 1,270.90, EUR 1,127.21 and GBP 882.05 per ounce
17 May: USD 1,270.10, EUR 1,121.43 and GBP 877.50 per ounce

Silver Prices (LBMA)
23 May: USD 16.31, EUR 14.55 and GBP 11.27 per ounce
20 May: USD 16.56, EUR 14.76 and GBP 11.35 per ounce
19 May: USD 16.60, EUR 14.81 and GBP 11.35 per ounce
18 May: USD 17.05, EUR 15.13 and GBP 11.77 per ounce
17 May: USD 17.08, EUR 15.09 and GBP 11.80 per ounce


Read Our Most Popular Guides in Recent Months

Mark O'Byrne

Also on news-goldcore-com

Videos

Gold and Silver Chart Analysis January 2023 with Patrick Karim

Gold, Rate Hikes and The Central Bank Illusion?

Top 5 Gold Buyers’ Motives Revealed

Blog posts

US Federal Reserve Sticks To The Script But For How Long?

Those watching the gold price and price of silver will have noticed the sharp uptick following the Federal Reserve’s announcement, yesterday. This was despite the Fed doing exactly what everyone expected them to do. For now, the Federal Reserve is sticking to its relatively well-telegraphed plan but how long will it be until they need […]

READ MORE

China and the US at sovereign debt war

US dollar hegemony has long been a standard feature of the global financial and economic system. But developments in recent years and months (weeks, even) suggests there are more than a handful of countries who are looking to rely less on the US dollar. Instead countries who have long been at the mercy of the […]

READ MORE

What happens if the debt ceiling raises

It’s that time again when the US government has to prepare itself for an internal battle to raise the debt ceiling so it can meet various obligations. This is a merry dance that has been danced before, as we mention below. For sure, every time it happens fewer and fewer people are convinced of the […]

READ MORE

Featured

The King and Queen will be Gold and Silver

READ MORE
Newsletter
Category
Archives
Popular

No posts available

Videos

Gold and Silver Chart Analysis January 2023 with Patrick Karim

Gold, Rate Hikes and The Central Bank Illusion?

Top 5 Gold Buyers’ Motives Revealed

Blog posts

US Federal Reserve Sticks To The Script But For How Long?

Those watching the gold price and price of silver will have noticed the sharp uptick following the Federal Reserve’s announcement, yesterday. This was despite the Fed doing exactly what everyone expected them to do. For now, the Federal Reserve is sticking to its relatively well-telegraphed plan but how long will it be until they need […]

READ MORE

China and the US at sovereign debt war

US dollar hegemony has long been a standard feature of the global financial and economic system. But developments in recent years and months (weeks, even) suggests there are more than a handful of countries who are looking to rely less on the US dollar. Instead countries who have long been at the mercy of the […]

READ MORE

What happens if the debt ceiling raises

It’s that time again when the US government has to prepare itself for an internal battle to raise the debt ceiling so it can meet various obligations. This is a merry dance that has been danced before, as we mention below. For sure, every time it happens fewer and fewer people are convinced of the […]

READ MORE

Featured

The King and Queen will be Gold and Silver

READ MORE