Most central banks will publicly denounce gold role in monetary affairs, claiming that it is an outdated relic of a bygone era. While central banks gave up on maintaining a constant gold price by the early 1970s, they still attempted to control gold’s price through coordinated sales through the late 20th and early 21st centuries. But every now and then a central bank allows the mask to slip, saying something that makes it clear that central banks understand perfectly well the role that gold plays as money.
The Dutch central bank did that recently, with its web page about the bank’s gold stock saying things that wouldn’t be out of place on the website of any firm selling gold, such as “A bar of gold always retains its value, crisis or no crisis,” and “Shares, bonds and other securities are not without risk, and prices can go down. But a bar of gold retains its value, even in times of crisis.”
But the Dutch Central Bank went even further, stating that “Gold is the perfect piggy bank – it’s the anchor of trust for the financial system. If the system collapses, the gold stock can serve as a basis to build it up again.” That’s a far cry from the official position of Federal Reserve policymakers, who try to deny that gold plays any sort of role in monetary policy.
Many central banks are engaged in clear disinformation campaigns when it comes to gold, trying to publicly undermine confidence in gold so that they can build up confidence in their own paper currencies. But behind the scenes central banks are doing everything they can to build up their gold stores. That’s why countries such as the Netherlands and Germany are doing everything they can to repatriate their gold holdings, and why central banks around the world are buying gold on a larger scale than ever before.
Investors shouldn’t let themselves get fooled by anti-gold rhetoric from central banks. There’s a reason central banks still hold tens of thousands of tons of gold. Gold is the ultimate source of monetary stability, and the ultimate hedge against financial and economic turmoil.
Gold can serve individual investors just as well as central banks, which is why so many investors today have trusted in gold to protect and safeguard their assets. Investing in gold has enabled them to secure their financial future in a way that investing in other assets cannot ever do.
This article was originally posted on Goldco.
