Recently, the World Gold Council conducted a survey where it found that financial institutions, both private and public, are losing faith in the U.S. dollar. As a result, central banks are dropping dollars for gold. For example, Singapore increased its gold reserves by 20% earlier this year. By the second quarter of 2021, Singapore had added an additional 26.3 tons of gold. This is the first time Singapore has expanded its gold reserves since 2000, and its reserves now hold about 154 tons of the precious metal. The Monetary Authority of Singapore (MAS) believes that investing more in gold will allow the central bank to further diversify its portfolio and remain resilient through financial turmoil.
Q3 2021 hedge fund letters, conferences and more
BTG Pactual Is Positioned For An Aggressive Fed Hiking And QT Cycle
The BTG Pactual Rates Fund returned -0.17% for the first quarter, following returns of 0.14%, 0.19%, and -0.5% for January, February and March, respectively. A Challenging Period For Rates In their March letter to investors, which was obtained by ValueWalk, the BTG Pactual Rates team said the first quarter brought sizable moves in the rates Read More
Purchase Went Under the Radar
The MAS didn’t disclose the amount paid for the bullion, but with current market prices, it is estimated that the central bank invested over $1.5 billion. The transaction was also made under the radar, which is puzzling to economists as to why the central bank waited months to report the gold purchase. Investors believe that the recent gold purchases by MAS will significantly increase the value of Singapore’s currency, which can affect foreign exchange rates.
Why are Central Banks Purchasing So Much Gold?
We have seen an uptick of countries looking to build up their gold reserves since the start of the COVID-19 pandemic and with inflationary pressures currently persisting, governments are preparing for a financial downturn. Another country joining the fray is Poland, which has reported that it plans on purchasing an additional 100 tons of gold. With inflation increasing at alarming rates, gold provides both stability and financial security in times of financial turmoil.
Who Else is Investing in Gold?
Aside from large institutional investors, individuals can also hedge against inflation too. Many people are currently purchasing bullion like the Gold American Eagle. Today, investing in gold has become essential for those who want to protect their assets from an economic collapse. Inflation is devaluing the dollar and causing prices to go up significantly. As a result, both individual and institutional investors continue to ditch the dollar for safer assets.
Current Spot Prices
Friday’s precious metals spot prices were mixed. Gold grew 0.28% to $1780.70 per ounce. Silver fell 0.13% to $22.44 per ounce. Platinum rose 0.11% to $954.90 per ounce, while Palladium increased 1.81% to $1845.00 per ounce.