Gold, long considered an outdated reserve asset, is experiencing a significant comeback on the international stage. In recent years, central banks have been actively purchasing this precious metal, indicating a decline in trust towards the dollar and other traditional assets.
Reasons for Gold's Resurgence
The global economy is facing numerous challenges, including the political instability in the United States driven by President Donald Trump's actions. Trade wars and foreign policy issues have prompted investors to reassess their strategies. According to John Reade, chief market strategist at the World Gold Council, "It's Trump, in a word." The escalating circumstances have made gold more appealing for investors seeking safe assets.
Support from Central Banks
Central banks, particularly in countries such as China, Turkey, and India, have significantly increased their gold purchases to reduce reliance on the dollar. This trend has continued amid fears that potential sanctions, similar to those imposed on Russia, could also affect them. Gold is viewed as an asset that cannot be frozen or devalued.
Economic Consequences and Expert Opinions
While the price of gold has reached record levels, some experts, like Kenneth Rogoff from Harvard, emphasize that gold remains on a pedestal despite discussions about cryptocurrency. "People often say bitcoin is the new gold. I say, 'No, gold is the new gold.'" Although some experts express concerns about gold being overvalued, there is significant attention to this asset, indicating its enduring value in times of instability.
Gold's return to prominence as an essential reserve asset underscores its resilience amid global uncertainty. Despite risks and expert opinions on overvaluation, demand for gold continues to rise, making it a reliable asset in turbulent times.
