Central Bank Gold Buying Pushes Demand to Record Highs
Doug Casey

From Bolivia to Tanzania, central banks are buying up locally mined gold – paying in local currencies, too, rather than dollars. With gold supply tighter than ever and silver poised for a breakout, here’s what the smart money is doing right now…

Central bank survey prompts a deeper look at purchases of domestic gold

The gold market in recent years seems full of stories that fly under the radar for weeks, or even months, before finally making a big splash.

The story of central bank gold purchases is an example. Almost out of nowhere, central banks now buy gold at a record pace of over 1,000 metric tons per year. (Well, regular readers already know what's going on. Everyone else, well, let them spin their theories…)

I’ve mentioned nations adding to their central bank gold reserves by buying their own domestically mined gold several times. And this latest World Gold Council report highlights exactly why I think this is a big story.

First, central banks don't see their own gold-buying frenzy slowing: 

A significant majority of central bankers believe gold's role in global reserves will keep growing. Chart via World Gold Council.

Well, that's already a well-established trend. In Chart 1, banks are their expectations for their own reserves. 

Along the same lines, we've discussed the global dedollarization drive. How do central bankers see the dollar's role in their reserves changing?

Red arrow added to indicate spike in responses that the dollar will play a "significantly lower" role in global reserves. Chart via World Gold Council.

That's right – 73% of central banks think the dollar will make up a moderately or significantly lower share of their own reserves.

Now, I found this next part particularly interesting...

What do central bankers predict about the gold buying from central banks as a whole?

95% of central banks anticipate increasing their allocations to gold; 0% report plan to decrease their gold reserves. Chart via World Gold Council.

Central bankers think everyone's going to boost their gold allocations. Stronger still, they expect nobody to sell gold.

(I'll stop now, but there are a lot more charts available at the full Central Bank Gold Reserves Survey, consider checking it out for yourself.)

Here's the point I led with, which I think indicates a very interesting trend: More than half of responding central banks (52%) report “they are buying gold directly from domestic artisanal and small-scale gold miners in local currency.” Another 10% say they’re planning to do the same.

This is an increase over last year's survey and shows that a trend is forming, one that might have an impact on the gold market that has yet to be fully appreciated. We already know that two of the world's top gold producers, Russia and China, are buying most, if not all of their locally mined gold (without exactly being transparent about it).

Who else is a big producer of gold? Africa obviously comes to mind, so it's worth noting that both Ghana and Tanzania each have a deal to buy 20% of all gold produced by local miners, and that's just the starting percentage.

In the case of Tanzania, it's not so much a deal as it is a mandate, as the country requires that 20% of all gold from miners and even traders who export is poured into the central bank. Talk about keeping a tight lid.

Philippines and Ecuador are examples of countries whose central banks have been doing it for years. Others have recently joined in. The trend is a worldwide one, covering Asia, Latin America and Africa.

A key takeaway from this article is that these purchases are being made in local currencies. Why does this matter? Shaokai Fan, global head of central banks at WGC, explains:

"You're able to grow your reserves using local currency and therefore not sacrifice another reserve asset to grow your gold reserves.”

Usually, central banks buy gold over the London over-the-counter market – that’s where the big global bullion banks do business. But those purchases must be made in a real currency. Dollars, pounds sterling or euro. All of which are considered “reserve assets.”

You know what’s not considered a reserve asset? Tanzanian shillings, Philippine pesos and bolivianos (from Bolivia, of course).

Financially, this trade makes sense. These countries have absurdly high inflation rates. These are not currencies you want to own (unless if taking a trip there, maybe not even then). So these central banks are printing their own currencies to buy gold from local miners – you know, to fight inflation. Meanwhile those miners likely can't afford to feed their families because their own central banks are doing a terrible job of managing inflation!

Here in the U.S. (despite the last five years), we’re relatively fortunate in global terms. We saw brutal price spikes, but they’ve mostly gone away. In fact, I believe gold's run to $3,500 was primarily driven by global gold demand. Although the U.S. makes up one-fourth of global GDP, we only make up about 6% of total demand for gold.

Now, you can look at that as a good thing – American investors have superior choices for investing their hard-earned money!

Or you can look at that as a bad thing – the typical American family’s savings are severely overexposed to risk, and desperately need diversification with a safe haven asset. (We already know that the wealthiest Americans diversify with gold – what about everyone else?)

If you’re one of the “everyone else” who hasn’t diversified your savings with physical precious metals, pay special attention to this next point. The World Gold Council surveyed 73 central banks around the world – and learned that 95%expect their peers to increase their gold reserves in the year ahead.

That means the so-called “official sector,” central banks, are snatching up nearly 1/3 of the total gold supply annually. They’re even scrounging up domestic gold from “artisanal and small-scale gold mines” because the global supply is so exceedingly tight.

Folks, this looks to me like a global crisis of confidence in currencies themselves is translating into a gold supply crisis. I’ve said it before, and I’ll say it again: When central banks, who create currencies, don’t trust currencies, why should we?

I hope we’re not watching yet another global financial disaster unfold slowly (even though such a development wouldn’t surprise me in the least). Meantime, I respectfully suggest you ensure your own allocation to physical precious metals meets your needs. If the supply situation gets any tighter, prices are going to surge and we cannot guarantee availability.

Philip Streible: Silver’s run to $40 was interrupted (even so, its price will hit $50 soon)

Phillip Streible, Chief Market Strategist at Blue Line Futures and precious metals expert, is keeping a close eye on the silver price chart.

In his recent analysis, he laments how silver came so close to hitting $40 last week, and jokes how President Trump was the only one who kept it down. (He's of course alluding to the common theory that silver's price is heavily suppressed by different interests and entities.)

What really brought silver’s price back down from nearly $40 were headlines that the U.S.wais close to reaching a trade deal with the European Union. Here, as you’ll often find in precious metals market coverage from the mainstream media, all logic breaks down. Streible says that the "threat" of a stable supply chain of silver would push its price down.

Except we have been told the exact opposite almost constantly. We have been told that tariffs (or threats of tariffs) were hammering silver prices down. Because tariffs harm the industries that make up some half of silver demand.

But now the opposite is true. Now it’s lack of tariffs keeping silver prices down?

I don’t buy it.

Streible also says that concerns over silver supply support its price. History proves that’s not true, either. Silver has been in a supply deficit annually for the last six years, and prices have barely budged.

We're even told sometimes that tariffs lessening demand causing annual supply deficit to fall from 150 to 120 million ounces might negatively impact prices. But where is the massively positive impact from the 120 millions of ounces of silver deficit annually? This sounds very much like the start of the year, when we were told President Trump being elected over Harris was somehow bad for gold. Why? Well, no particular reason.

Then gold price exploded to $3,500. (Listen, you don’t have to be right to get attention in the financial media – you just have to say something. And the more you say, the more attention you get.)

As useless as this “analysis” is, there’s one thing to note. This sort of breakdown in logic often precedes interesting action in the precious metals market. Charts do indeed seem to suggest silver’s next big step is $40.

Streible and his firm expect gold to $4,000 by the end of the year -- and we’ll see $50 before New Year’s Eve. Neither of these developments would surprise me.

Yugoslavia’s descendants have just one thing in common

After the fall of the Soviet Union, its communist satellite nation Yugoslavia collapsed, but not nearly as peacefully. The resulting nations of Croatia, Bosnia and Serbia have always had their differences, and those differences fueled several wars that eventually resulted in a breakup into six separate republics.

Today, one might argue that the nations differ even more than they did before, as economic differences have been added to cultural ones.

Croatia, for example, is a member of the European Union. The nation is a member of NATO, Western-oriented and trying to model itself on its more developed neighbors.

Serbia has retained its obsession with Russia. You can tell from its large army, its lack of overt alliances with the West and its ongoing economic stagnation.

Bosnia sits somewhere in between, taking after Croatia's EU aspirations and beating Serbia economically by a fair margin.

What do all these now-separated, individual countries, whose peoples no longer necessarily view their neighboring countries as allies, have in common? Gold.

Serbia seems to want to get ahead in the gold reserves game, recently making news that it's repatriating all of its gold. That’s after boosting its gold reserves. While the statements vaguely reference “uncertainty and crisis,” the repatriation began when Russia invaded Ukraine and had its foreign assets frozen. Coincidence? I’ll let you be the judge.

In addition to being a low-key fan of Russia, Serbia also has designs on joining the BRICS alliance, seemingly preferring that to membership in the closer, far more convenient EU.

We recently discussed Bosnia, which in 2024 increased its gold reserves to the highest-ever level. Interestingly, Bosnia made this move by using its euro-denominated cash to buy gold.

In Croatia, investment is being done more on the private level. A report unveiled that around $470 million was invested in gold privately in Croatia in the first half of 2025, 300% more than last year and around $58 million more than in all of 2024.

Serbia has a junk currency, Bosnia uses a euro-tethered one, and Croatia the euro officially.

So it's very much worth noting that this happened while gold hit one new all-time high after another.

A cynic might say that money is the only thing connecting every country in the world. A realist might change that statement slightly by replacing "money" with "gold."

 

 

Peter Reagan is a financial market strategist at Birch Gold Group. As the Precious Metal IRA Specialists, Birch Gold helps Americans protect their retirement savings with physical gold and silver.

 

https://www.birchgold.com