Gold continues to shine amid financial uncertainty that sparks the growth of US public debt. It is within this framework that central banks around the world are accumulating the precious metal in their reserves at record levels.
According to financial bulletin analysts The Kobeissi Letter, central banks have 12.1% of the world’s gold reserves in their handsthe highest level since 1990.
In that sense, they indicated: “This percentage has skyrocketed this year and has more than doubled in the last decade. “China, India, Türkiye and Poland have been the largest contributors to gold purchases by global central banks.”
In the case of the Asian giant, the precious metal now represents “5.4% of currency reserves” and “reached 2,264 tons in 2024, a new record.”
As CriptoNoticias has already reported, The price of an ounce of gold has risen more than 30% so far in 2024 and is at all-time highs (ATH).
At the time of publication of this note, the price of the ounce of gold is located above the line of 2,740 dollars.
Russ Koesterich, director and portfolio manager at BlackRock, believes that “the gold stars remain aligned” and explains:
“This year, gold is proving its value as a long-term reserve, especially in times of stratospheric government debt.”
Russ Koesterich, director and portfolio manager at BlackRock.
Specifically, what happens is that the debt of the United States is already 35 trillion dollars and generates concern about the economic consequences that could exist worldwide.
In fact, the International Monetary Fund (IMF) urged the authorities of the main financial power to take action on the matter to address the problem. It is one of the highest debts in the worldsecond only to Greece and Italy in proportion to its gross domestic product (GDP) within the European Union.
This debt level is one of the highest in the world, only surpassed by Greece and Italy in proportion to its GDP within the European Union.
It is worth noting that The United States is the main financial power globally and any uncertainty about the stability of the dollar, which could trigger a global crisis. This occurs because many countries have their reserves in the North American currency.
Therefore, if investors notice that debt continues to increase, despite measures such as tax increases or cuts in public spending, they are in a position to demand higher interest rates. Thus, the US government will be able to obtain financing to meet its obligations.
However, that will lead to a further increase in debt and an increase in the interest ratewhich makes credit more expensive for households and companies.
It is in these contexts that the narrative of gold emerges as a refuge asset par excellence.
What about bitcoin?
Although the digital currency created by Satoshi Nakamoto is considered “digital gold,” Its price is not showing a behavior similar to that of the precious metal.
After reaching its ATH in March 2024, bitcoin (BTC) has still not managed to overcome the $73,000 barrier. Currently, its price is $67,550.
Despite being known as “digital gold”, the narrative as a store of value has not yet been consolidated among more traditional investors such as central bankswho still see it as a speculative bet.
However, the digital currency has several characteristics that make it similar to gold.
As CriptoNoticias has reported, BTC has a total supply set at 21 million, which marks a difference with fiat money, which isIt is constantly devalued by inflation due to the issuance of central banks.
Its inherent scarcity is what generates institutional interest and small investors, in times of economic uncertainty or geopolitical conflicts.