Gold is down more than a quarter since January, yet central banks have barely paused their buying. They have absorbed more gold over the past four years than at any point in decades, and that behaviour makes little sense if you read this market through inflation and interest rates alone.
The explanation is geopolitical. After Russia’s assets were frozen in 2022, governments around the world started asking how much of their reserves should sit within reach of a foreign power. Gold answers that question in a way no currency can, and buyers with that motivation pay very little attention to where the price happens to be.
Our Founding Partner Patrice Mesnier shared his perspective with Matt Whittaker at U.S. News & World Report.
Full article here:
https://money.usnews.com/investing/articles/best-gold-etfs-to-hedge-volatility
Quotes from Oldenburg
“Central banks have become the most important force in the gold market, and their motivation is very different from an investor chasing a hedge; they want reserves that no foreign government can touch.
In 2022, the West froze Russia's reserves, and every central bank in the world watched it happen. In the wake of that policy, many have been quietly shifting a portion of their savings out of dollars and into gold ever since."
— Patrice Mesnier, Founding Partner