RE: RE: RE: RE: RE: RE: RE: RE: RE: RE: RE: RE: RE Hi bug,
Fiat money is no longer on the Gold Standard. Therefore I don't think central banks are buying gold "to back their currency" i.e. maintain a constant ratio of gold on reserve vs money in circulation. The governments of the world got off that standard so they could print freely.
Gold is a near constant. It is international money. Gold goes up and down on a per currency basis. If the USD crashes and the Ruble surges, then gold is expensive for Americans and cheaper for Russians.
One of the core appeals of gold is that an ounce today will buy roughly the same amount of goods anytime in the future. If central banks are stockpiling gold it would most likely be to be able to protect their wealth. Like us individuals, they can weather out economic storms, and then when the time is right buy domestic or foreign currencies with their gold.
If anyone doubts that gold is money, ask yourself. If you had a truck load of grain to sell and the buyer told you he could only pay you in gold, would you accept payment in gold? I would. Why? Because I know gold is stable in the long term, and I know that no matter what happens there will always be a country that will accept payment in gold or accept to convert gold into their local currency which can then in turn be converted back to any other currency of my choice. Gold is international. For it to fail every single country, company and individual on Earth would all have to agree at the same time to no longer accept or convert gold.
The only entities that hate gold are governments of countries that want to irresponsibly spend without any form of control. Just look at the US.
- They have sued (or threatened to sue) S&P to indirectly muzzle them (imo) against any future rating downgrades.
- they essentially got rid of their debt ceiling limits,
- they are encouraging their Federal Reserve to keep printing to the tune of trillions of "fake" dollars (not backed by real production).
Germany wants their gold back, Cyprus almost decided to pay their debts with their gold reserves, Iran is accepting gold as payment for oil, Russia, India, China and many others are stockpiling gold ever faster each time it drops in price.
Gold is convertible, gold is trusted, gold cannot be cheated (except possibly by paper shorting - the verdict is still out on this as I am not convinced even that can skew gold value in the long term), gold has survived the test of time.
