Gold Prices Hit All-Time Highs, Central Banks Go on Buying Spree, But Bitcoin Still Leads the PackDuring the first half of 2024, global central bank gold purchases reached a record high of 483 tons, driving gold prices to unprecedented levels. This staggering figure represents a 5% increase from the previous record of 460 tons set in the first half of 2023, with central bank gold purchases in the second quarter alone surging 6% year-on-year to 183 tons
Gold Prices Hit All-Time Highs, Central Banks Go on Buying Spree, But Bitcoin Still Leads the Pack
During the first half of 2024, global central bank gold purchases reached a record high of 483 tons, driving gold prices to unprecedented levels. This staggering figure represents a 5% increase from the previous record of 460 tons set in the first half of 2023, with central bank gold purchases in the second quarter alone surging 6% year-on-year to 183 tons. The National Bank of Poland, the Reserve Bank of India, and the Central Bank of Turkey were the largest buyers of the precious metal during this period.
Why the Central Bank Frenzy for Gold?
The strong demand for gold by central banks in the first half of 2024 reflects declining trust in Western reserve assets. Spencer Hakimian, founder of Tolou Capital Management, believes that countries like China, India, Russia, and Saudi Arabia have lost faith in holding Western reserve assets, making gold the preferred choice as the only neutral, non-volatile reserve asset.
Will BRICS Gold-Backed Stablecoin Accelerate Dollar Decline?
Tech entrepreneur Kim Dotcom believes that the BRICS nations (Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates) are on the verge of introducing a new gold-backed stablecoin, which will further increase demand for gold and contribute to the decline of the US dollar. He predicts that by 2030, 14% of global GDP will shift from the US to other nations.
Gold Prices Surge, But Bitcoin Still Outperforms
Gold prices have risen by 23% year-to-date in 2024, exceeding the S&P 500's 18% gain. However, Bitcoin has continued to outperform, gaining 37% in 2024 despite a 22% drop from its all-time high in March.
Can Bitcoin's Rally Sustain?
Despite a strong start to 2024, Bitcoin prices have retraced in the past couple of months. Peter Schiff, a gold bug and cryptocurrency critic, believes that Bitcoin's rally has come to an end, especially after the US launched a Bitcoin spot ETF.
Central Banks Remain Cautious on Cryptocurrency
Despite Bitcoin's outperformance compared to gold, central banks remain wary of this relatively new asset class and have not included it in their reserve assets.
Conclusion
Strong global central bank demand for gold in the first half of 2024 has pushed gold prices to record highs. However, Bitcoin continues to outperform, even though central banks remain cautious about this emerging asset class. The impact of a potential gold-backed stablecoin from the BRICS on the dollar and gold markets, along with the sustainability of Bitcoin's lead, are crucial topics to watch in the future.
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