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Central banks across the globe have turned to gold as a safe haven, setting a new record with 483 tonnes purchased in the first half of 2024. This unprecedented accumulation of the precious metal is not only driving gold prices to new heights but is also sending liquidity through the crypto and gold market, highlighting a broader shift in global economic strategies.
According to data shared by the macroeconomics outlet, The Kobeissi Letter, on September 2, central banks collectively bought 483 tonnes of gold in the first six months of 2024, the highest amount on record. This marks a 5% increase over the previous record of 460 tonnes set during the same period in 2023. The second quarter alone saw 183 tonnes of gold purchased, a 6% year-over-year increase.
This surge in gold buying underscores the growing preference for tangible assets in a volatile global economic environment. Central banks in countries like Poland, India, and Turkey have been at the forefront of this gold rush. The National Bank of Poland, for instance, has been particularly aggressive in its acquisitions, with its president, Adam Glapinski, stating in late August that the bank aims for gold to comprise 20% of its reserves.
The implications of these record purchases are profound, especially for the crypto and gold market. As gold becomes a more significant part of central bank reserves, the traditional narrative of gold as a stable store of value is reinforced, but it also raises questions about the role of cryptocurrencies like Bitcoin in this evolving landscape.
The surge in central bank gold purchases is not occurring in a vacuum. It has significant repercussions for the broader crypto and gold market, where the dynamics between these two assets are increasingly intertwined. Gold’s record-breaking run in 2024, up 23% year-to-date, has outpaced traditional stock market indices like the S&P 500, which has gained 18% over the same period. Meanwhile, Bitcoin, despite experiencing a 22% decline from its March all-time high, has still appreciated 37% so far in 2024.
The contrasting fortunes of gold and Bitcoin highlight the shifting dynamics in the crypto and gold market. Tolou Capital Management founder Spencer Hakimian emphasized this shift, stating, “China, India, Russia, and Saudi Arabia no longer trust owning Western reserve assets. Gold is the only neutral and non-volatile reserve asset.” Hakimian’s remarks underscore a growing distrust in traditional financial instruments and a pivot towards assets perceived as more secure in times of economic instability.
As central banks stockpile gold, some analysts believe this could also influence the crypto market. While gold remains the go-to asset for central banks, Bitcoin and other cryptocurrencies continue to attract attention as alternative stores of value, particularly among retail and institutional investors. However, the record levels of gold accumulation suggest that, at least for now, central banks prefer the established safety of gold over the volatility of cryptocurrencies.
Another factor contributing to the changing landscape of the crypto and gold market is the emergence of a potential gold-backed stablecoin from the BRICS nations. In a September 1 post on X (formerly Twitter), tech entrepreneur Kim Dotcom speculated that a BRICS-backed stablecoin could significantly boost demand for gold while destabilizing the US dollar. “The introduction of a gold-backed stablecoin could serve as a powerful catalyst for increasing gold’s value, potentially undermining the dollar’s dominance,” Dotcom suggested.
If the BRICS nations proceed with such a stablecoin, it could lead to further central bank accumulation of gold, thus intensifying the interplay between the crypto and gold market. As more countries seek alternatives to the US dollar, the alignment of gold and crypto as complementary assets could become more pronounced. Gold, with its centuries-old reputation, and Bitcoin, the digital gold of the 21st century, could see their roles evolve in parallel as global reserve assets.
For investors in both the crypto and gold market, the record central bank gold purchases in 2024 offer critical insights into the future of global finance. Gold’s enduring appeal as a hedge against uncertainty is evident in the actions of central banks, which are increasingly wary of traditional reserve assets like the US dollar. At the same time, the performance of Bitcoin and other cryptocurrencies suggests that digital assets remain a key part of the conversation.
“Gold has seen one of the best runs in history this year, but Bitcoin’s resilience cannot be ignored,” commented Global Markets Investor, an influential market analyst. “While gold is up 23% year-to-date, Bitcoin has surged 37%, reflecting its growing acceptance as a legitimate asset class despite its volatility.”
As the crypto and gold market continues to evolve, investors should consider the implications of central bank actions on both assets. While gold remains the cornerstone of traditional financial stability, cryptocurrencies are steadily carving out their niche, especially as more institutional players enter the market.
The record levels of gold purchases by central banks in 2024 highlight a pivotal moment in the crypto and gold market. As global economic uncertainty persists, the ongoing accumulation of gold underscores its role as a safe haven, while the resilience of cryptocurrencies like Bitcoin suggests that the future of finance will likely involve a complex interplay between these two asset classes. For now, gold may be the star of the show, but the crypto and gold market is dynamic, and shifts could come at any moment.
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