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Uncanny Central Banks Make a Bullish Case for Higher Gold Prices Lombardi Letter 2019-12-03 05:38:07 Gold Prices price of gold Gold prices seem severely undervalued, given the recent surge in buying by central banks around the world. These banks could send the price of gold much higher in the coming years. Commodities,Gold https://www.lombardiletter.com/wp-content/uploads/2019/12/gold-american-dollar-coins-GU68TNX-150x150.jpg

Uncanny Central Banks Make a Bullish Case for Higher Gold Prices

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Central Banks Make a Bullish Case for Gold Prices to Rise

Current Gold Prices Are Pennies on the Dollar

Gold prices currently stand at around $1,460 an ounce. Here’s a bold statement: the price of gold could go much higher in the coming years. By then, the price you see now could be considered pennies on the dollar.

I can’t stress this enough: there’s a gold rush and the buyers have a lot of money.

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Who are the buyers? Central banks. Mark my words: central banks could be the catalysts that send gold prices surging in the coming years.

Here’s the thing: the demand for gold is coming from uncanny central banks too. Yes, Russia, China, and Turkey are snapping up gold with both hands, but a lot of small central banks are scrambling to buy as well.

Serbia & Poland Load Up on Gold

Serbia purchased $434.0 million worth of gold for its reserves in October. The yellow precious metal now makes up 10% of its foreign exchange reserves. (Source: “Keep Buying Gold to Brace for Crisis, Serbian Leader Tells Bank,” Bloomberg, November 19, 2019.)

Mind you, Serbia thinks gold will provide the country with financial stability, and it may be far from ending its gold purchases. The president of the country, Aleksandar Vucic said about buying gold, “I think we’ll continue doing that because of what we see in which direction the crisis in the world is moving.”

Another uncanny central bank loading up on gold: Poland.

Poland’s central bank has been buying gold for the past two years. It now has gold holdings amounting to close to $11.0 billion. (Source: “Gold ‘symbolizes strength’: Poland repatriates 100 tons from London,” Kitco News, November 25, 2019.)

If you think Poland is done buying, you could be making a big mistake. The governor of the central bank of the country, Adam Glapiński, pointed out that the central bank of Poland is not looking to sell. In fact, it may buy more.

Here’s the kicker: how does the Polish central bank governor see gold? Glapiński said, “The gold symbolizes the strength of the country.” (Source: Ibid.)

Gold: The Next Big Trade In The Making

Dear reader, if you are not looking at gold prices, you could be missing out on the next big trade.

Central banks have been net buyers of gold since the last financial crisis. In 2018, they bought the most gold since they ditched the yellow precious metal in the 1970s. It wouldn’t be shocking to find out later that they bought even more gold in 2019 than they did in 2018.

The banks are scrambling to buy gold and they are far from stopping anytime soon.

But remember the big picture: the gold market is facing its own issues. The suppressed price of gold has made the supply side weak. Between 2013 and 2018, not much exploration was done. In the coming years, there could be an outright decline in gold production.

What happens if central banks continue to buy more gold and the supply side of the gold market keeps suffering? You get a rapid move to the upside in gold prices.

I have been bullish on gold for a while now, and my stance has not changed whatsoever. The demand we see from uncanny central banks make my bullish take on gold even stronger.

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