Steve Hank, a renowned American economist and professor of applied economics at Johns Hopkins University, discussed how US policy is driving central bank gold purchases to record levels this year. In an interview, Hank stated that the motivation behind these purchases was the "weaponization" of fiat currencies such as the US dollar, which prompted countries in a "de dollarization model" to shift towards gold. Steve Hanke, a renowned American economist and professor of applied economics at Johns Hopkins University, discussed how US policy is driving central bank gold purchases to record levels this year.
In an interview, Hank stated that the motivation behind these purchases was the "weaponization" of fiat currencies such as the US dollar, which prompted countries in a "de dollarization model" to shift towards gold.
Steve Hank is a supporter of dollarization and has expressed his views on the return of gold as a central bank reserve currency.
Hank recently revealed his views on the future of gold as a reserve asset and how US policies affect the increase in central bank gold purchases in an interview with Jesse Day's Commodity Culture program.
Hank believes that the recent increase in US sanctions, weaponization of the US dollar, and an uncertain atmosphere have led central banks around the world to purchase gold at record levels.
He explained, "You will never know for sure what these central banks will do, but the current trend is for central banks to buy a large amount of gold, and the reason behind this is that there is a lot of uncertainty. In the legal tender field, everything has become more politicized."
As a result, central banks that were not participants in the gold market before have now become important buyers, especially those in what Hank called a "de dollarization model". These central banks hope to reduce their exposure to the US dollar as more and more sanctions are being imposed by the United States.
Hank emphasized that the use of sanctions has been steadily increasing since the 9/11 attacks, but in the Biden administration, sanctions have been like "doping.".
Hank called this trend "very foolish", leading to increased gold purchases in countries such as China and Poland.
Poland has traditionally not been a strong buyer of gold. But according to Adam Glapi, President of the National Bank of Poland (NBP) ń Ski's statement states that Poland has purchased a total of 105 tons of gold so far this year, which is in line with its policy of 20% gold reserves.
This situation prompted Hank to announce a bullish outlook on gold. He explained that from a fundamental perspective, gold looks quite strong.
The large amount of gold purchases by the central bank have become an important driving force for the recent surge in gold prices. Spot gold surged nearly $27 on Tuesday (November 28th). During the session in Sanya, gold prices briefly broke through $2050 per ounce.
The strong upward trend of gold prices above $2000 per ounce has boosted market hopes that gold prices may exceed the historical high of $2074.88 set in August 2020.
Traders believe that if the gold price effectively overcomes $2050 per ounce, it will push the gold price to the historical high mentioned above.
