Gold on the UP

Gold has slowly regained ground after being shunned by many of Europe’s central banks within the last decade.
The anti-gold trend started in 1999, when the Bank of England decided to sell of a large portion of its bullion, in an effort to increase its assets that were felt would produce better returns  – such as government bonds.  Within a short space of time, other central banks followed suits, and several thousand tonnes of the precious metal were sold off.  Soon, the value tumbled to lows not seen in over two decades.

Now though, this trend is slowing down as emerging markets are increasingly purchasing the metal.  China has doubled its reserves, and Russia is also increasing its demand.  The value of an ounce has risen to $900 from $280 a decade ago.

Investors are increasingly looking to gold as a safe haven in light of weakening currencies such as the US dollar.

So is the UK and other central banks wishing they hadn’t sold off so much?  After all, according to the FT, the sales have cost central banks around $40 billion.

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