Politico’s Surprising Report of a Modern-Day Gold Rush

Key Takeaways:When even a usually politics-focused media outlet such as Politico takes time to analyze and tout the use of gold as an inflation hedge, it indicates that the yellow precious metal has reached a level of “significant” acceptance and trust — and suggests that precious metals are poised to do well in 2025. Some of the reasons for the rush to gold, the journalists say, include central bank's increased demand, rising geopolitical uncertainty, and U.S. fiscal risks. Read below, or go to the original full-length article from Augusta Precious Metals, using the link near the top of this page.Central bank gold demand continues to signal a major shift in the global economic landscape. Even outlets like Politico, a publication typically focused on politics, have taken notice. A recent Politico article highlights what it calls a modern-day “gold rush,” fueled by central bank gold purchases. This shift in demand could have far-reaching implications—not just for central banks, but for investors who look to gold as a cornerstone of their financial stability, including those considering gold IRAs or 401(k) rollovers.The article stood out, given Politico's focus on politics and ideological slant. Its even-handed analysis of gold's rising appeal underscores the growing recognition of gold as a global safe-haven asset. This interest is apolitical—neither central banks nor investors are chasing speculative gains through gold but they are instead seeking protection of their wealth.Since 2010, central banks have been net buyers of gold every year, a trend that accelerated dramatically in 2022.[1] Demand has reached near-record levels, supporting gold prices and drawing the attention of analysts and investors worldwide.[2]Politico effectively outlines why central banks are stockpiling gold and how this mirrors the motivations of individual investors seeking stability in uncertain times.Generally, gold's appeal lies in its history of preserving value, which makes it as important to central banks as it is to retirement savers. The growing recognition of this fact—highlighted by Politico's unexpected coverage—shows just how appealing gold has become in today's shifting economic environment.Politico Says Gold Frenzy is Rooted in Geopolitical RiskGold's appeal as a tangible, real asset makes it uniquely suited to counter uncertainty, a feature central banks find increasingly valuable. In today's turbulent global climate, gold offers a hedge against both geopolitical instability and financial risks.Key Factors Driving Central Bank Gold DemandGeopolitical Uncertainty: Central banks are responding to rising geopolitical tensions and fading trust in the global order.[3] U.S.-led sanctions, which now affect about one-third of the world's nations, have heightened concerns.[4] The freezing of $300 billion in Russian reserves after its invasion of Ukraine is a good example of why it may be a risk to rely heavily on dollar-based assets.[5]Safe-Haven Properties: Gold is politically neutral, highly liquid, and free of counterparty risk, making it an ideal asset for countries that are wary of future sanctions. Nations such as China, Russia, and some in the Middle East and Central Asia have increased gold reserves significantly since 2022.[3]Economic and Financial Stability Concerns: Massive debt levels in the U.S. and other Western nations are casting doubt on the reliability of the post-World War II financial system.[3][14] Central banks view gold as a way to insulate themselves from both the strength and potential weaknesses of the U.S. dollar.[7]As a result of these uncertain circumstances, central banks have bought more gold, and it may be in part that their gold purchases have bolstered gold prices. The metal has surged nearly 50% since the onset of the Russia-Ukraine conflict and now trades over $2,700 per ounce. On a price-return basis, gold has outperformed most other assets over this period.[6]“Amid rising uncertainty and fading trust in the global order, central banks are scrambling to stock up on an old but trusty asset.”[3] – PoliticoChina alone has purchased 316 tons of gold since the Ukraine war began.Why It MattersCentral banks aren't just preparing for potential sanctions; they're also positioning themselves for a world where the reliability of dollar-based systems and debt-heavy economies is increasingly questioned. Gold's universal appeal and history of preserving value make it an asset chosen by many to weather these economic challenges.Featured Partners (Ad)Request Your Free Gold Investment Educational KitLearn More →Central Banks Eye U.S. Fiscal Risks and Turn to GoldAmerica's deteriorating fiscal outlook is one factor that has prompted central banks to increasingly diversify reserves away from U.S. dollars. The U.S. Treasury market, historically regarded as the safest and most liquid government bond market, is no longer immune to doubts as national debt climbs to unprecedented levels and continues to grow. (Get more details and explore more deeply in the full article — see link at the top of this page.)Key Concerns Driving Central Bank DecisionsExploding Debt Levels: The rapid rise in U.S. national debt, now at approximately $36 trillion, has created fears of unsustainable borrowing practices.[8]Persistent Deficits: Trillion-dollar deficits have become more common and some say are expected to continue for at least another decade, signaling ongoing fiscal instability.[9]Default Risks: Economic experts caution that without significant fiscal reforms, it's possible the U.S. could face default within two decades—a scenario that would upend global financial markets.[10]Credit Downgrades: The U.S. credit rating has been downgraded by Fitch and S&P to AA+, while Moody's has issued a “negative” outlook on the nation's debt.[11][12]Global Confidence Erosion: Concerns about the reliability of U.S. Treasury bonds add to the reasons central banks are reconsidering their dependence on dollar-based assets.[3]In general, this sharp deterioration in the U.S. fiscal profile has prompted many central banks to reevaluate their exposure to U.S. assets. According to Goldman Sachs analyst Lina Thomas, “Many central banks have the bulk of their reserves in U.S. Treasury bonds, and policymakers may be increasingly concerned about their exposure to fiscal risks in the U.S.”[3]Economist Mohamed El-Erian emphasizes that central banks are steadily diversifying their reserves away from dollar-based assets and toward gold.[3] So, this trend reflects more than just concerns over fiscal instability; it highlights gold's appeal as a hedge against economic and fiscal stressors such as geopolitical risks, sanctions, and the weakening reliability of U.S. financial stability. For central banks, the move toward gold is both deliberate and ongoing, signaling its critical role in navigating uncertain economic times ahead. (Read further analysis in the full article. Get a link to the article at top of this page.)Featured Partners (Ad)Request Your Free Gold Investment Educational KitLearn More →Gold as an Anchor for a Shifting Financial SystemAt the start of the millennium, 72% of global reserves were held in dollars. Today, that share has fallen to about 58%.[13] This is further evidence that the global reserve landscape is undergoing what amounts to a steady transformation, with central banks continuing to diversify away from the U.S. dollar. According to the World Gold Council's 2024 Central Bank Gold Reserves Survey, this trend is expected to persist. A telling 62% of central banks surveyed believe the dollar's share of global reserves will continue to decline over the next five years. Simultaneously, nearly 70% of central banks predict gold's share of reserves will rise over the same five-year period.[1]This shift reflects the growing appeal of gold as a neutral and immutable asset, which Politico describes as “a suitable anchor for a parallel financial system still being built: one that the U.S. will not be able to dominate or manipulate.”[3]Central bank gold-buying on this scale is already significant. However, Politico suggests it has a broader impact by driving increased gold demand among individual investors, amplifying the metal's role as a safe-haven asset."Gold's neutrality and immutability make it a suitable anchor for a parallel financial system still being built: one that the U.S. will not be able to dominate or manipulate." [3] – PoliticoCentral Banks and the Ripple Effect of Gold DemandCentral banks' aggressive gold buying is reshaping investor behavior, fueling what many see as a modern-day gold rush. Beyond the price impacts of their purchases, central banks' actions influence individual investors, who recognize their role in the global financial system.As David Wilson of BNP Paribas told Politico, “If they're seeing central banks buying gold, they say, 'we should be buying too.'”[3]Data supports this trend, with gold futures ownership more than tripling over the past year.[3] This surge reflects a broad-based interest in gold piquing the interest of retirement savers, asset managers, and speculative investors alike. For many, gold's timeless reliability amid uncertainty and fading institutional trust makes it indispensable.The appeal of gold as a hedge against instability resonates globally, as Salvatore Rossi says; he is former deputy governor of the Bank of Italy: “Gold has been a symbol of trust for 3,000 years… it's the last resource, the one you would not sell.”[3]Whether central banks' record-setting gold demand persists remains to be seen, but the banks' affinity for gold is unlikely to disappear. To explore how these trends affect individual investors and retirement portfolios, read the full article on Augusta Precious Metals' website. For more insight into the movement of gold, read the full article.Featured Partners (Ad)Request Your Free Gold Investment Educational KitLearn More →[1] World Gold Council, “2024 Central Bank Gold Reserves Survey” (June 18, 2024, accessed 1/16/25). [2] Bloomberg.com, “Central Bank Buying Drives Up Gold Prices, Dart Says” (November 21, 2024, accessed 1/16/25). [3] Carlo Boffa and Ben Munster, Politico, “'It's a sign of impending wars': Why a tense world is betting on gold” (December 31, 2024, accessed 1/16/25). [4] Jeff Stein and Federica Cocco, Washington Post, “How four U.S. presidents unleashed economic warfare across the globe” (July 25, 2024, accessed 1/16/25). [5] Elena Fabrichnaya and Guy Faulconbridge, Reuters.com, “What and where are Russia's $300 billion in reserves frozen in the West?” (December 28, 2023, accessed 1/16/25). [6] StockCharts.com (accessed 1/16/25). [7] Taylor Giorno, The Hill, “Powell calls for 'change' in 'unsustainable' fiscal path” (December 4, 2024, accessed 1/16/25). [8 ] FiscalData.Treasury.gov, “Debt to the Penny” (accessed 1/16/25). [9] FiscalData.Treasury.gov, “What Is the National Deficit?” (accessed 1/16/25); CBO.gov, “An Update to the Budget and Economic Outlook: 2024 to 2034” (June 2024, accessed 1/16/25). [10] Penn Wharton Budget Model, “When Does Federal Debt Reach Unsustainable Levels?” (October 6, 2023, accessed 1/16/25). [11] Hung Tran, Atlantic Council, “Two credit downgrades in the US are a much-needed warning” (August 15, 2023, accessed 1/16/25). [12] Moody's Ratings, “Rating Action: Moody's changes outlook on United States' ratings to negative, affirms Aaa ratings” (November 10, 2023, accessed 1/16/25). [13] Jordan Finneseth, Kitco, “US dollar reserves drop 14% since 2002 as BRICS and gold challenge hegemony” (August 12, 2024, accessed 1/16/25). [14] Jeffrey Jones, Gallup, “Stocks Up, Gold Down in Americans' Best Investment Ratings” (May 15, 2024, accessed 1/16/25).

Politico’s Surprising Report of a Modern-Day Gold Rush

The usually politics-focused media outlet says investors will buy more gold — an “old but trusty asset” — because they see central banks doing it.