Why Are Central Banks Still Stockpiling Gold?

In an era of inflation shocks, shifting alliances, and economic volatility, one thing hasn't changed: central banks are doubling down on gold. While investors may debate crypto, equities, or cash, the institutions managing national reserves are quietly ? and consistently ? boosting their gold holdings. And they're doing it in record amounts.

The latest Central Bank Gold Reserves survey from the World Gold Council offers fresh insights into why this centuries-old asset remains so essential in modern reserve strategy. The message is clear: gold isn't just a relic ? it's a key tool for navigating global uncertainty.

The takeaway? Confidence in gold is strong. Nearly all respondents (95%) believe global gold reserves will increase over the next year, and 43% say they personally plan to add more to their own reserves. None reported plans to decrease their holdings.

Why the continued interest? It comes down to a few key factors: gold tends to perform well during periods of crisis, it provides portfolio diversification, and it holds long-term value ? something that matters when inflation or geopolitical risk are on the rise.

The survey also shows changing views around currency reserves. A majority (73%) of central banks think the U.S. dollar's share of global reserves will shrink over the next five years, while assets like the euro, Chinese renminbi, and gold are expected to gain ground.

More central banks are also actively managing their gold, with 44% now doing so ? up from 37% last year. Risk management and return optimization were cited as the top reasons. And while the Bank of England remains the most popular place to store gold, more banks are bringing their reserves closer to home ? 59% now store at least some gold domestically.

Bottom line: in a world of uncertainty, gold remains a trusted asset for central banks ? and their continued buying signals long-term confidence in its role as a stabilizer in turbulent times.

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