Central Banks Bought
Gold in 2014. Did You? by Gary North | February
Gold is a barbarous relic,
Keynes famously said. Keynesian economists repeat this .
. . until they become central bankers. Then, it’s a different
Governments added 477.2
metric tons to their reserves [in 2014], the second-biggest
increase in 50 years and 17 percent more than a year earlier,
the World Gold Council said in a report Thursday. . . .
Central banks have added to gold reserves for the past
five years, a reversal from two decades of selling since
the late 1980s. Purchases will be at least 400 tons this
year, according to estimates from the London-based council,
which represents 17 gold producers. Total demand for gold
fell last year as Chinese consumers bought less jewelry,
bars and coins.
So, central bankers, who create money to
buy gold, bought more gold last year. Why is that? They
“There is a lot of scope for emerging
market central banks to expand their holdings as these
are still significantly underweight,” Alistair Hewitt,
head of market intelligence at the council, in a phone
interview on Wednesday. “Demand from this sector is going
to remain robust.”
Underweight? Why should
there be any weight? Isn’t the barbarous relic barbarous?
Central bankers don’t think so.
Central banks own far more IOU’s from the U.S. government
than they own gold.
Russia’s gold stockpile
has grown to the biggest since at least 1993 after purchases
topped 173 tons last year. The country has been buying the
metal to diversify its foreign reserves and solve problems
related to ruble liquidity, central bank Governor Elvira
Nabiullina said in an interview with Bloomberg Television
in Moscow this month.
Gold accounts for about 12 percent of its total foreign
reserves. That’s still less than the U.S. and Germany,
the biggest holders, with the metal making up about 70
percent of reserves.
What’s this? The USA and
Germany hold far more gold than IOU’s? Imagine that!
The barbarous relic isn’t barbarous any longer.
It never was.
Barbarous economists who promote state power don’t want
the public to exercise a veto on central bank policy. The
gold coin standard provided this. “Barbarous!” said Keynesians.