Central Banks Lead the Way In Massive Gold Bullion Buying

Central bank gold demand to start Q1 in 2023 is the highest and fastest pace we have seen since at least 2010. Of course, last year, in 2022, central bank gold buying was the largest amount since before World War 2. 

And yet here we are starting this year with Governments in net, front-running financial institutions, and asset portfolio managers who have barely begun allocating in precious metals like gold bullion and certainly not silver, yet.

Pretty much all of last year into this year, we've seen net ETF selloffs and much of that unallocated gold bullion underlying get sucked off to the east, be it for high-grade jewelry or investment demand for many major eastern central banks.

Meanwhile, the gold spot price has just been climbing.

Yet another positive but holiday-shortened week for gold and silver bulls.

We have lots of interesting fresh data, news, and information to share with you here.

China again announced another purchase of official gold bullion last month, March 2023.

That is 5 months in a row for 120 metric tonnes or 3.85 million troy ounces of gold bullion added to the Chinese official gold reserve pile.

Gold priced in fiat Australian dollars cleared $3,000 oz this week. Note the old cup handle breakout move from 2019 until now in early April 2023, up nearly 67% over that timeframe.

Well, the fiat Fed note price of gold this week cleared and closed above $2000, and I'm looking forward to the breakout beyond $2,100 and similar performance for gold bulls stateside compared to down under soon enough.

On the silver side of the Australian vs. USA comparison. You can see how well silver has been doing down under since 2020, low to high of late over $37 oz in Aussie dollars.

What I found interesting this week is that even Artificial Intelligence bots, when asked about building a defensive recession-proof investment portfolio. ChatGPT suggested a 20% allocation to bullion, mentioning a mix of gold bullion, silver bullion, and other precious metals (probably platinum bullion) to diversify one's allocated holdings.

This AI bot is onto something, I think, given that CPM Group's backtesting of bullion vs. US bonds & the S&P 500 from 1968 into 2020 suggested a 20-25% liquid net worth allocation to Gold Bullion over that timeframe was the best risk to reward allocation percentage. Of course, there are timeframes when either silver or platinum outperformed as well.

Metals Focus had an interesting related publication and report this week concerning physical gold demand in the semiconductor manufacturing industry, which has been decentralizing and growing in size of late.

Unbeknownst to most who have no idea what precious items are used to create rapid oncoming future technologies like super quantum computing power or growing artificial intelligence applications. Gold and other precious metals are irreplaceable in the electronics and semiconductor industry due to their unique elemental characteristics. 

So we have global central banks front-running the gold trade buying physical in mass quantities, and we're going to need physical precious metals if we want to get interplanetary someday and build a better quality of life going forward.

All while readying the oncoming fiat Central Bank Digital Currency grid.

Both the silver and gold markets traded this Easter week positively. 

The daily silver price in fiat US dollar terms rose to close around $25 oz bid. 

The spot gold price in fiat US dollar terms rose to close the week over the important $2,000 oz level, which I maintain will inevitably prove to become a key long-term price support level in the upcoming years.

The spot gold-silver ratio fell to close the week at 80.

To close this week, I want to draw your attention away from the constant BRICS end of the petrodollar headline hype to the more important Bank for International Settlements Project mBridge, aka oncoming wholesale mCBDC payment settlement grid that will likely be foisted collectively on us whether we like it or not. 

Let us take a gander at what the BIS and major central banks, and commercial banks have been planning in the emerging CBDC world.

What the oncoming underlying mCBDC grid means is that major government central banks and commercial banks will increasingly have the ability to trade and settle payments without fiat US dollars as the intermediary currency unit. 

That is major bearish for secular fiat US dollar demand once implemented and increasingly utilized. 

That is also a coming key structural support beam in a less fiat US dollar-dominated hegemonic system and a move toward a more multi-polar world order.

The coming fiat CBDC world is but one reason why we see government central banks scrambling to stack up more official gold bullion in record volumes of late. 

The good news here is that we still have some time remaining to be our very own prudent central banks for ourselves and our long-term wealth by acquiring prudent bullion allocations before bullion goes up and goes un-afford-ium and likely silver squeeze to gold squeeze unobtainium in size in reasonable deliverable timeframes.

I hope you, too, are front-running this, as I most certainly have myself.

That will be all for this important holiday-shortened week and SD Bullion Market Update.

We wish you all a very Happy Easter weekend with you and your loved ones.

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...