Central Banks Acquire Gold at Unprecedented Rates, but Bitcoin still outperforms

In 2024, central banks worldwide have significantly increased their gold reserves, setting a new precedent for acquiring value-storing assets.

According to a report from the macroeconomics-focused Kobeissi Letter on September 2, central banks globally added a record 483 tonnes of gold to their reserves in the first half of the year. This acquisition surpasses the previous high of 460 tonnes recorded in the first half of 2023. By the second quarter of 2024, central banks had purchased an additional 183 tonnes, a 6% increase from the year before.

Key contributors to this surge include the National Bank of Poland, the Reserve Bank of India, and the Central Bank of Turkey. Poland’s National Bank President, Adam Glapinski, has indicated plans to boost gold holdings to 20% of total reserves.

Spencer Hakimian, the founder of Tolou Capital Management, highlighted a growing distrust among nations like China, India, Russia, and Saudi Arabia towards Western financial assets, favoring gold for its neutrality and stability.

Tech entrepreneur Kim Dotcom also hinted at further shifts in the global economic landscape with the introduction of a gold-backed stablecoin by BRICS nations, predicting a significant decline in USD trade and a redistribution of global GDP.

Despite these developments, Bitcoin has outshone gold with a 37% increase in value in 2024, although it saw a 22% drop from its peak in March. Critics like Peter Schiff argue that Bitcoin’s gains were short-lived, focused primarily in the early months of the year, despite the introduction of spot BTC ETFs in the U.S.

Gold reached a new peak at $2,525 per ounce on August 27, but despite Schiff’s comments on shifting momentum, Bitcoin continues to outperform gold in terms of year-to-date gains. Central banks, however, remain cautious about embracing Bitcoin and other cryptocurrencies.

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