Central banks around the world are buying more gold.
During the 2008 financial crisis, also known as the Global Financial Crisis, many countries saw how risky it was to depend too much on the U.S. financial system.
Before that crisis, central banks had been selling gold for nearly 20 years. But after the crisis, they changed direction. Instead of selling, they started buying gold — and in recent years, they have been buying it at record levels.
Most of this buying has been led by non-Western countries.
Then, after Russia’s assets were frozen and it was removed from the SWIFT payment system, gold purchases increased even more — nearly doubling. This made many countries realize that holding assets like U.S. Treasuries could carry political risk.
Now, we may be seeing gold becoming important again in the global monetary system. The world appears to be splitting into two financial directions:
• Many Western countries are continuing to rely mainly on the U.S. dollar-based system.
• Some Eastern countries are slowly shifting toward a system where gold plays a bigger role.
Because of this shift, gold is once again being viewed as a key reserve asset — a form of protection and financial independence for central banks.$XAU
