Since 2010, some central banks have begun selling tons of gold for the first time to ease the financial pain caused by the Covid-19 pandemic. The price of gold is US$1,875 per ounce, which has fallen -9.63% since it hit a high of US$2,075 per ounce on August 6.
Although the price of gold has fallen sharply compared with Bitcoin (BTC), the gold bug Peter Schiff decided to use this opportunity to ravage Bitcoin on Twitter. “If the size of the asset bubble is measured by the buyer’s confidence in the transaction, then the Bitcoin bubble is the largest I have ever seen,” Schiff Tweet October 28. “During the bursting of the bubble, Bitcoin advocates were more confident than the Internet or home buyers that they were right and ensured that they would not lose.”
However, unlike Bitcoin, which has fallen sharply recently, the price of gold per ounce is already in trouble. Precious metals did reach a high of $2,075 on August 6, but fell -9.63% to the current low of $1,875 per ounce. According to a Bloomberg report, some central banks started selling gold to offset the disastrous economy driven by central planners and bureaucracy. The World Gold Council pointed out that gold demand fell by 19% year-on-year.
The report pointed out that in some countries, Russia is the first to sell gold reserves in 13 years. Other countries that saw central banks sell gold in the third quarter include Turkey and Uzbekistan. Total net sales in the third quarter were 12.1 tons of gold bars, and more sales are expected, while purchases in the third quarter of 2019 were 149 tons. In fact, last year, central banks around the world purchased the largest tonnage of gold in 50 years. In the first week of April, some gold investors emphasized that they were afraid that the central bank might dump gold and silver during the economic crisis.
When talking about recent central bank gold sales, WGC senior analysts said that the central bank that sold tonnage last quarter did not surprise him.
WGC chief analyst Louise Street explained: “In this case, it’s not surprising that banks might consider their gold reserves.” “Almost all selling comes from banks, which are financially strained. When the price of gold was soaring, it was purchased from domestic sources.”
The report titled “Gold Demand Trends in the Third Quarter of 2020” written by WGC further explains:
As consumers and investors continue to fight the impact of the global pandemic, gold demand in the third quarter fell to 892.3t, which is the lowest quarterly total demand since the third quarter of 2009. The year-to-date demand is 2,972.1 tons, which is 10% lower than the same period in 2019. Although the amount of gold recovered increased by 6%, the total supply of gold fell by 3% in the third quarter to 1,223.6t, although mine production still felt the impact of the H1 Covid-19 restrictions.
WGC said that jewelry demand improved in the second quarter, but in the third quarter, due to the government’s blockade, jewelry demand shrank significantly.
However, compared with jewellery sales, “demand for gold bars and coins has increased, increasing by 49% year-on-year to 222.1 tons.” The report concluded that increasing the use of gold in certain technologies is also “still weak”, with only a few emerging technology markets experiencing this. improve.
What do you think about the sharp drop in gold prices last quarter and the central bank’s selling of gold bars? Tell us what you think in the comments section below.
Picture Credits: Shutterstock, PNG, Wiki Commons, WGC,
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