Private investors and central banks like gold

Central banks bought 74 tons of gold in January, and another 52 tons in February. This is the most ever bought in these two months. The leader was Singapore with more than 51 tons. Turkey is in second place. About 33 percent of Turkey’s international reserves are now in the form of gold. It is followed by China and India. There are also a few countries that have sold the precious metal, such as Croatia, probably because gold had to flow to the European Central Bank due to its accession to the EU. Further among the sellers were the United Arab Emirates, Uzbekistan and Kazakhstan.

For central banks, gold reserves serve diversification purposes. Investors value gold for its value preservation function. In any case, gold is a hedge against inflation in the longer term, but other factors are also at play. The price of gold has risen even though inflation in the U.S. has slowed. However, the banking crisis and the weak U.S. dollar have also had an impact. There is also a relationship between the gold price and real interest rates. Gold becomes less attractive when interest rates go up, because money then benefits from higher interest rates.

Theories and analyses abound, and deviations from them are always there as well. In any case, it seems that risk assets do not perform as well in times of high inflation, stagnant economic growth and geopolitical crises. Gold is then all the more in demand, as it was with central banks last year and this year. If you want to invest for the longer term, you can’t avoid gold and gold companies with promising projects. For example, Caledonia Mining or Karora Resources.

Caledonia Mining – https://www.commodity-tv.com/ondemand/companies/profil/caledonia-mining-corporation-plc/ – is a successful gold producer thanks to the Blanket mine in Zimbabwe. The company has also been paying quarterly dividends for quite some time.

Karora Resources – https://www.commodity-tv.com/ondemand/companies/profil/karora-resources-inc/ – posted record gold production in the first quarter of 2023. The gold came from the two gold mines in Western Australia. The targeted growth thus seems to be successful.

Current corporate information and press releases from Caledonia Mining (- https://www.resource-capital.ch/en/companies/caledonia-mining-corp/ -) and Karora Resources (- https://www.resource-capital.ch/en/companies/karora-resources-inc/ -).

In accordance with §34 WpHG I would like to point out that partners, authors and employees may hold shares in the respective companies addressed and thus a possible conflict of interest exists. No guarantee for the translation into English. Only the German version of this news is valid.

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