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Apparently,
after what’s happened to the global financial system over the last few
years, the world’s central bankers have had a dramatic change in thinking
about gold bullion, formerly known as the “barbarous relic”. A
metal once considered to be a remnant of a bygone era is now increasingly
viewed as not only relevant, but “the most important” central
bank asset.
The
details are in this Financial Times report($) (alternate link):
Even
so, the more positive trend towards gold was highlighted recently by UBS, the
Swiss bank, in its annual poll of central bank and sovereign wealth funds. It found nearly a quarter of
central banks believed gold would become the most important reserve asset in
the next 25 years.
 At its
annual seminar for sovereign institutions, UBS surveyed more than 80 central
bank reserve managers, sovereign wealth funds and multilateral institutions
with more than $8,000bn in assets. The results were not weighted for assets
under management.
Asked
what the most important reserve asset would be in 25 years, roughly half of
polled officials chose the US dollar, but 22 per cent chose gold. Bullion was the second most
popular response, well above others such as Asian currencies or the euro.
Not
surprisingly, given the combination of U.S. dollar hegemony and a seemingly
insatiable desire in Washington to borrow, print, and spend our way back to
the prosperity we once knew, the appeal of gold over paper money is strongest
in emerging market economies where the standard of living is still rising and
the future still seems brighter.
Tim
Iacono
Iacono Research.com
Tim
Iacono is the founder of Iacono Research which provides market commentary and
investment advisory services specializing in macroeconomic analysis and
commodity based investing. He also writes the popular blog The Mess
That Greenspan Made.
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