Gold Could Push out Dollar

Gold Could Push out Dollar

In recent years the role of gold as a monetary anchor has been rapidly renewed. The need for the “yellow metal” is increasing rapidly, according to an analysis of global trends regarding the purchase of gold.

As they recall in the analysis, China developed the Shanghai Stock Exchange for decades, directing it to trade in precious metals. It is estimated that during the last two decades, China managed to buy over 21,000 tons of gold through the stock market, which, along with about 7,000 tons from domestic deposits, is now a kind of gold support for the yuan, the currency in which, at least such is the expectation, oil trade will be conducted.

On the other hand, Saudi Arabia freed itself from decades of complete reliance on the dollar and continuous purchases of American bonds, which was the main destination for the country’s so-called petrodollars.

More Reliable Relations Sought

The new Saudi leader, Mohammed bin Salman, as pointed out in the text of, departed the decades-long (unequal) partnership with the USA and led the country in a different direction, which is best seen by the share of dollars in Saudi foreign exchange reserves – in the last two seasons it decreased by 39.2 percent.

During the third quarter of 2022, central banks worldwide bought about 400 tons of the “yellow metal,” four times more than a year earlier, while demand was for 1,185 tons. This continued the trend since 2010, when central banks became net sellers of the brightest metal, because until then, and since 1971, they had mostly sold gold.

In the new circumstances and the political environment being built, new, more reliable, and equal financial relations are also being sought. Apart from the yuan, there are other currencies in which world trade will be conducted, and every currency with pretensions to world trade needs support, some anchorage – there is hardly anything better than gold, is the conclusion of the analysis.