Investor Says Bitcoin is the Next Frontier for Central Banks: Drop Gold
While shunning Bitcoin (BTC), central banks have embarked on somewhat of a gold buying spree. Russia’s monetary authority, for instance, now owns over $100 billion worth of the precious metal, which amounts to over 2,000 tons, after purchasing 20 tons just weeks ago.
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Other prominent central banks have made similar purchases as they liquidated reserves of foreign currencies, including the long-standing reserve currency, the U.S. Dollar (USD).
Gold Being Bought Up En-Masse
According to prominent crypto investor Anthony Pompliano, the world’s central banks have scooped up more than $15 billion worth of gold in the first six months of 2019. This figure stems from a report from the Financial Times, which states that central banks accounted for one-sixth of global demand during H1 2019. While $15 billion is a mere 0.2% of gold’s market capitalization, this marks one of the larger accumulation events in written history.
Pompliano claims that these monetary juggernauts are trying to hedge their bets on the U.S. Dollar, despite the fact that the Dollar Index (DXY) continues to trend higher.
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The fear seems to be that the U.S. may get put in an unfavorable position in the world’s economy due to higher interest rates, the ongoing trade war with China, and the rise of other currencies.
There also seem to be fears of overall macroeconomic risk, which has been made quite evident by the collapse in the European banking sector, runaway sovereign debt, geopolitical tension, protests across the globe, and other trends, including the rise of an alternative money like Bitcoin.
And it isn’t only central banks that are fearing USD risk. JP Morgan recently released a report advising their clients to decrease their USD allocation for gold. In reference to the report, Bitcoin and gold bull Max Keiser added in a recent episode of “Keiser Report” that the USD could lose its reserve status.
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Nick Chong, Khareem Sudlow
