Central banks turned their backs on the dollar

Since the financial crisis in 2008, the world's major central banks are increasingly buying physical gold and storing it in their vaults. This represents the longest global gold buying cycle since the Vietnam War began in 1965. At the same time, world gold reserves of central banks were in decline earlier, as the United States unilaterally announced the abolition of the gold standard for the dollar in 1971.

Last year, the World Gold Council estimated that states bought about 590 tons of gold, which is about 14 percent of total global demand. The majority of buyers intend to reduce dependence on external reserves and, in the first place, on the dollar.

Russia and China invest the most in physical gold. In January, Russia's central bank spent $ 800 million to acquire about 22 tons of the precious metal. “A large amount of gold has been purchased for the eleventh month in a row. As a result, Russia added a record 208 tonnes of gold to its reserves in 2015, up from 172 tonnes in 2014. Russia currently holds 1,437 tons of gold in reserve, making it the sixth-largest country in reserves, according to the World Gold Council in London. Only the central banks of the US, Germany, Italy, France and China have large foreign exchange reserves, ”says analyst William Engdahl.

An interesting fact, according to Engdahl, is that "Russia's central bank is counting on US government bonds to fund its gold purchases." Thus, dollars are exchanged for physical gold. At the end of 2015, Russia had about $ 92 billion in Treasury bonds, up from about $ 132 billion at the beginning of 2014, says Engdahl.

China is also a very active gold buyer. In January, the country, according to official reports, replenished the Central Bank's gold reserves by 17 tons, which increased from 2009 to mid-2015 by almost 60 percent and has so far reached about 1,780 tons. Other major buyers in recent years have also been Kazakhstan, India and Turkey. The trend symbolizes the attitude of key Asian powers in favor of gold.