US Dollar Weaponization Powers Record Central Bank Gold Buying
Professor of Applied Economics at Johns Hopkins University, Steve Hanke, has explained how US policies have pushed central bank gold buying this year to record levels. Hanke stated in an interview that the buying is largely triggered by the weaponization of fiat currencies such as the US dollar, which has pushed countries into “de-dollarization mode” to seek refuge in gold.
Central Bank Gold Buying Linked To Dollar Weaponization
Steve Hanke, Professor of Applied Economics at Johns Hopkins University has linked the central bank's gold buying to dollar weaponization. Known as a Bitcoin critic and dollarization proponent, he highlights the return of gold as a reserve currency for central banks. Hanke disclosed his stance in a recent interview on Jesse Day’s Commodity Culture on the future of gold as a reserve asset and US policies impacting the rise in central bank gold purchases.
Hanke attributes the recent rise in US sanctions, the weaponization of the US dollar, and a climate of uncertainty as triggers for central banks to purchase gold at record levels.
He explained:
"You never exactly know what these central banks are going to do, but the trend right now is a lot of central bank buying, and the reason behind this is that there is a lot of uncertainty; everything has become more politicized in the realm of fiat money."
Moreover, central banks hardly conspicuous in the gold market are emerging as significant buyers, largely those whom Hanke labels in “de-dollarization mode” and are looking to reduce their dependence on the US dollar due to the expansion of sanctions.
Leveraging of Sanctions Gradually Increasing
Hanke recounts that since the 9/11 incident, the leveraging of sanctions has been gradually expanding, but in the Biden administration, they are “on steroids.” Hanke called this trend “utter stupidity,” with countries like China and Poland planning to increase their gold buying.
Poland has traditionally never been a strong gold buyer but has now accumulated 105 tons of gold, in line with its policy of maintaining 20% of its reserves in gold, according to the statements released by President Adam Glapiński of the National Bank of Poland (NBP).
The prevailing circumstances have led Hanke to take a bullish stance on gold for the future, explaining that from a fundamentals perspective, gold looks pretty strong.
What is your take on the future of gold markets and de-dollarization? Please share your thoughts and opinions in the comments section below.
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