At present, gold has become the focus of institutional investors, including central banks, sovereign funds and pensions, and the annual net purchase of gold by central banks has set a record since statistics were available. So why are global central banks so crazy about buying gold? In my opinion, it mainly comes from the following three factors:
First, the Fed's tightening of monetary policy (raising interest rates) led to the devaluation of other countries' currencies.
Before talking about this issue, let me briefly talk about what the Fed's monetary policy is tightening (raising interest rates). The so-called monetary tightening means tightening the amount of funds, and the supply of this currency in the market is reduced, which leads to the appreciation of this currency relative to other currencies. The interest rate hike is to increase interest income. For example, if you have 65,438+0,000 yuan, you can get higher income than your local currency in the bank after changing it into dollars, which will also lead to the depreciation of your local currency.
Because the dollar has an absolute advantage in the global currency, it can "bu face" and do whatever it wants. This also gives the Fed more courage to tighten monetary policy (raising interest rates) to cope with the impact of the global economic downturn. At the same time, in order to avoid economic risks, other countries use large quantities of gold to combat this unfair competition. (Gold is very tough and generally does not depreciate with the changes in the market. )
Second, global geopolitical risks have increased sharply and unstable factors have intensified.
Everyone here should not disagree that the United States is the number one "warmonger" in the world. The proxy war between Ukraine and Russia has been going on for almost a year, but there is still no sign of ending. Both Ukraine and Russia were exhausted in this war, but the United States enjoyed it and made a "war fortune."
In a war (or a country with a great risk of war), money is generally worthless because it is not known when it will be restricted and cannot be widely circulated. In this environment, it is undoubtedly wise to buy gold, because gold is recognized and valuable all over the world, and will not be restricted or devalued easily.
Third, the global economic recession, the market downturn.
The COVID-19 epidemic has lasted for more than three years, and now it is the fourth year. Although the impact of the epidemic is gradually weakening, the damage caused to the world before is enormous, and it is difficult for countries to "turn over" in a short time.
During the epidemic, the economic activities of various countries have been greatly reduced, and even regional exchanges in some countries are in a semi-closed state. When economic activities decrease, the currency circulation will decrease, which will lead to currency depreciation. If converted into gold, it can effectively resist the risks brought by this situation. At least after the epidemic is released, I won't lose too much money by changing foreign currencies.
At present, financial globalization is still developing further, and it is believed that central banks' love for gold will not weaken. At the same time, I also remind some friends to buy more gold when they get married and buy dowry, and don't always want a diamond ring. Gold has room for appreciation, but diamond rings will only depreciate wildly.