Bankers Turn To Gold For Diversification
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Bankers Turn To Gold For Diversification

Gold is regarded as a safe heaven in times of economic uncertainty. In the past 50 years, there have been three periods when central banks around the world were net purchasers of the yellow metal. For instance,

  1. In the late 1960s, the US economy become shaky as America went into the Vietnam war. France, Spain and Switzerland cashed in their excess dollars for gold. This led to the failure of the London Gold Pool which contributed to the end of the Bretton Woods System.
  2. In the late 1970s, US inflation skyrocketed with steep rise in gold prices. In 1980, central banks had accumulated a net surplus of 7.4 million ounces of gold.
  3. In 1987, US stocks fell nearly 20% to 30% in a single day. The Black Monday incident sent America into recession, causing a panic in markets globally. Hence, central banks bagged in 5.3 Million ounces of gold in that year.
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