According to the World Gold Council purchases by central banks in the first quarter of this year were the strongest since 2013. Turkey has been a constant in terms of central bank buying whilst other purchasers include Qatar, Columbia, India and Kazakhstan.
Exploration success has been lacking amongst gold mining companies in recent years and according to a recent study by McKinsey and Co stated reserves have fallen by around 26% since 2012. Exploration spending is down around 70%. The World Gold Council tells us that annual mine production is currently around 3500 tonnes, insufficient to meet annual demand for jewellery, investors, central banks and technology. The supply gap is made up by recycled gold.
Gold cannot be manufactured by central banks and, perhaps most importantly, gold is money. It always has been, and we’re not about to deride those who choose it over alternative investments. Besides, it looks far more attractive around the neck than a string of paper currency.