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Central Banks Buy Record Gold Bullion Tonnage Q1 2024

Summary

  • Central banks bought a record 290 tons of gold in Q1 2024, on pace for the highest annual net buying ever.
  • Gold demand in China surged in 2023, likely to accelerate with recent price breakouts.
  • China remains a massive net importer of gold despite being the world's leading producer.
  • Physical gold demand in China is robust, with delivery volumes surging on the Shanghai Gold Exchange.
  • The first US bank failure of 2024 occurred late last week.
  • Hundreds of US banks face potential bankruptcy due to loan losses and rising interest rates.
  • Gold and silver prices dipped slightly this week, but remain near multi-year highs.
  • The Silver Institute expects silver demand to rise significantly in the coming decade.
  • Copper price forecasts are up nearly 50% for next year, while silver lags behind despite strong industrial demand.
  • Silver has the potential for massive price gains as its store of value role becomes increasingly important.

Government Central Banks continued their record size gold reserve buying for the first quarter of this year 2024 admitting to have bought over 290 metric tons for the first quarter of this year.

A little over +9.3 million troy ounces of gold valued at over +21 billion in fiat US dollar official gold buying.

This recent official gold bullion buying by central banks is on pace for 1,160 metric tonnes, becoming the highest net buying in recorded history after 2022 and 2023 respectively.

The World Gold Council admitted gold demand in China was up +16% in 2023 compared to 2022 demand.

With the price breakout of gold in local fiat Chinese yuan, how much do you want to bet that demand growth accelerates?

The WGC also pointed out the explosive growth of gold demand in Japan in 2023 compared to the year prior.

That makes sense, after all Japan in recent weeks has spent nearly $60 billion in recent weeks propping up their failing fiat yen currency.

New line gold mining production numbers by nation are in for 2023, and China leads the world mining over 370 metric tons of gold last year. The United States mined 170 metric tonnes and while being a net exporter of gold as it has mostly been since the late 1980s. China remains a massive net importer of gold to the tune of around four times its internal world leading gold mining production in order to meet ongoing demand.

Since the 2008 Global Financial Crisis, China has been combining mining and importing gold at a clip not seen since the USA during the World War 2 era which built the foundation for the still dominant fiat US dollar having defaulted on its final gold tethering in 1971.

Physical gold demand in China remains not only robust but on the Shanghai Gold Exchange. Of late, we are seeing physical gold delivery volumes up from 2 to 3Xs the average levels of delivery volumes seen over the past year. 

Turning to the USA, late last Friday after the market closed, the FDIC announced the first bank failure of 2024.

Republic First Bancorp's failure cost the FDIC a -$667 million loss.

The mainstream fiat financialized media reported this week that hundreds of US banks, mostly regional according to them, face bankruptcy given the dual threats of commercial real estate loan losses and potential losses due to higher interest rates.

Bank failures and further consolidation chaos is not over.

Let me remind you again of the concerns expressed during the FDIC's Systemic Resolution Advisory Committee Meeting from November 2022.

While increasing prices remains the most important family financial problem by far according to USA Gallop Poles. 

Here is a clip which caught fire this week featuring Jared Bernstein, a current Chair of the White House Council of Economic Advisers. A man on record arguing for the US government to drop its commitment to maintaining the US dollar's reserve currency status.

Judging by record gold buying over the last 2 years and a quarter. It is obvious that by their collective actions, central banks are taking Mr. Bernstein's bumbling words to heart buying bullion over fiat US dollar promise piles.

The spot gold and silver markets sold off slightly on the week.

The spot gold price finished the week above $2,300 oz bid and the spot silver price closed just above $26.50 oz bid.

The spot gold silver ratio ended the week flat at 86.

A current Chairman of the Silver Institute was in India this past week speaking on behalf of increasing silver demand worldwide. We'll highlight a few of his key points made here, have a listen.

This placid $50 oz silver spot price forecast he gives mainly citing escalating silver laced solar power panel demand through this decade totally discounts the wild card of growing investment demand to come as gold rises to untold numbers, eventually silver follows and outperforms.

The Silver Institute also published research this week tying silver price correlations with copper, and while that has been the case generally since 1990 as they illustrate with data here.

There are runs of time when silver's store of value investment demand drives its performance exceedingly high. The last 2009 to 2011 ran a short preview.

And while record Indian demand for silver and copper are increasingly climbing record sized walls as the nation industrializes. Price forecasts for copper are now nearing 50% higher next year from levels it is currently reaching.

So while we currently have copper rising of late to price more than 3Xs its 1980 high, we still have systematically price suppressed silver lagging at nearly half its seemingly ancient 1980 price high.

Allow me to remind you of the kind of silver price performance percentage gains the world saw last time the full fiat currency world got called out for its then store of value fraud at the time.

Silver might have the industrial demand winds at its back at the moment. The most important bull case for silver is the coming store of value category five hurricane to come. That is what promises to push silver to again super high valuation levels that prudent bullion owners one day will be thrilled they had the foresight to position for ahead of time.

There are silver bull market runs during increasing store of value demand eras where silver 

That will be all for our weekly SD Bullion Market Update. 

And as always to you out there, take great care of yourselves and those you love.

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James Anderson
James Anderson
Senior Market Analyst & Content

A bullion buyer years before the 2008 Global Financial Crisis, James Anderson is a grounded precious metals researcher, content creator, and physical investment grade bullion professional. He has authored several Gold & Silver Guides and has been featured on the History Channel, Zero Hedge, Gold-Eagle, Silver Seek, Value Walk and many more. You can pick up Jame's most recent, comprehensive 200+ Page book here at SD Bullion.

Given that repressed commodity values are now near 100-year low level valuations versus large US stocks, James remains convinced investors and savers should buy and maintain a prudent physical bullion position now, before more unfunded promises debase away in the coming decades...

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