Gold Rush
The World Gold Council released its latest report yesterday, which highlights that at the start of this year, demand for the precious metal from central banks around the world was the highest on record. Public institutions added 290 tonnes to their official holdings during Q1 with China being the largest buyer. Demand from Chinese investors was also strong with an increase of 68% in their purchases of gold bars and coins. Their appetite has most likely been driven by an underperforming economy and poorly performing stock market, according to the council.
China has now increased its gold reserves by 16% since it embarked on its buying spree in the summer of 2022, fuelling concerns about their motives. According to John Reade, chief market strategist at the World Gold Council, sanctions placed upon the Central Bank of Russia in the aftermath of the invasion of Ukraine, have made politicians and reserve managers realise they are more vulnerable to western sanctions than they perhaps thought.
According to the report, with gold trading near its all-time high of $2,343 per troy ounce, Beijing’s stockpile is valued at $170.4bn. This compares to the US, which has the largest reserves in the world, valued at $602bn, and the UK which owns £23bn worth of the yellow metal.
Meanwhile, outflows from gold-backed exchange traded funds continued in the first quarter, extending a long-running trend. Investors appear to have banked some of their profits after the big run up in the gold price since mid-February. ETF holdings fell by 114 tonnes in the first quarter, a fall of 4%. The current high prices appear to have also hit demand from jewellers, usually the biggest buyers of the precious metal, with their demand falling by 2%.
The Welcome Stranger is the largest gold nugget ever discovered. It was unearthed by two Cornish miners in Australia in 1869. They found it near the base of a tree just 3 centimetres below the surface! At the time of its discovery there were no scales large enough to weigh it. After trimming, its net weight stood at 72.02 kilograms. They broke it up it into three pieces and took it to the London Chartered Bank of Australia, where they were eventually paid £9,381 for it. Today, it would be worth approximately £4.2m.
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