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Last week it was reported that 85 sovereign wealth funds along with 57 central banks from around the world took part in the annual Invesco Global Sovereign Asset Management Study – this is an annual study that aims to put its’ finger on the pulse of organizations that are deeply integrated in world finance. The reason this study is looked at in such a positive light as far as its information accuracy, is because the study is anonymous, meaning these financial institutes do not need to pull any punches when answering the study’s questions out of fear what they say will be used against them.
One of the main topics spoken about was how United States sanctions were weaponized against Russia in the wake of their war in Ukraine and what the ripple effect from that decision is going to be across the world. Naturally, with that being one of the major survey points, gold and inflation were high on the priority list when it came to finding out how countries were preparing themselves now that they know that if the Unites States and larger G7 countries disagree with what they are doing, they can swiftly be parked in poverty having their assets frozen. As a reminder, Russia had nearly $320 billion of their forex reserves (Foreign Currency Reserve) held outside the country frozen. If it were not for the gold and oil Russia held inside their own country, surely we would have seen them collapse. Again, it was physical commodities held in their own possession that allowed for Russia to stay afloat, similar to how we have been reporting in our newsletters that physical precious metals are the best way to protect individuals from financial turmoil within their own countries. As paper fiat currencies collapse, you see citizens and central banks alike flee toward physical gold and silver as their main line of defence to rapid currency debasement.
What was interesting, is that Russia did not use their oil to rebuild forex reserves held within their borders, but rather used it to build up their physical gold reserves as they used their oil exports to receive physical gold in return to settle trades. Since this move by Russia, other countries have seen the benefit of holding their gold within their own borders, rather than leaving it in London vaults that currently holds over 1/5th of all the world government above ground gold.
Shifting our attention back to the Invesco Global Sovereign Asset Management Study – the study showed that a “substantial share” of central banks were highly concerned by the precedents set by the United States to freeze assets whenever they deem necessary. The study went on to say that 60% of all respondents said that this precedent made gold a far more attractive financial commodity, going even further to report that in 2020, 50% of all central banks held their gold at home within their own borders – that number now having spiked to 68% in 2023, while 74% reported they plan to bring their gold home over the next 5 years. Rod Ringrow, the head of official institutions at Invesco stated that “It is a broadly-held view, ‘if it’s my gold then I want it in my country and that this has been the mantra we have seen in the last year or so.” One central bank also anonymously stated “we did have our gold held in London… but now we’ve transferred it back to our own country to hold as a safe haven asset and to keep it safe.’” It is clear, that as we have repeatedly stated here at Au Bullion – gold and silver held in your own possession is by far, the best way to protect yourselves from rapid changes in the global financial system as no one entity has control over your wealth other than you – giving you full financial sovereignty.
Looking toward inflation, the concerns continued among those institutions involved in this study. It also was noted that 80% of those surveyed reported that geopolitical tensions are the biggest risk to global finance over the next decade, and from there, 83% of respondents cited inflation as the largest concern over the next 12 months. With that being said, it should come as no surprise that central banks have continued to stockpile gold at record paces, led by China, who added to their gold reserves for an 8th straight month, adding 680,000 troy ounces in June, equivalent to 23 tons. Since their golden run started last November, China has added a whopping 183 tons of gold to their reserves after not reporting any buying of gold for years, marking a categorical shift in their financial plans.
One story that we feel should be reminded of to highlight the risk of holding your gold outside of your own possession, is what came out of Venezuela in 2022. Due to Venezuela facing incredible financial hardships, with inflation year-over-year sitting at 429.20%, they were looking to repatriate over $1 billion worth of gold from London vaults to help stabilize their country’s finances. However, London’s High Court rejected this request and is now holding Venezuelan gold hostage, and because this gold is held across seas, there is nothing Venezuela can do, as they certainly are in no position to take on London and its allies on a military level to get it back.
With all that said, it is clear that world central banks and other financial institutions are worried about the continued loss of purchasing power in world fiat currencies (inflation), as well as the powerful role gold will play in ensuring the impact of that loss in purchasing power is at a minimum. As we have consistently stated, it is up to individual citizens to begin to act as their own banks, not relying on outside entities to protect them financially. If you want to secure your savings in your own possession to ensure you will always have wealth readily available when you need it, Au Bullion is always here with a large supply of investment grade bullion to help add that layer of defence to your portfolio. Below you will find three products that are of high quality, and low premium, allowing you to be sure your wealth is stored securely, while also allowing you to purchase gold and silver at some of the lowest costs across Canada.
