Kitco: The Countries Still Boosting Gold Reserves, and What They Have In Common

Gold has been a strong asset this year. The metal has outperformed the S&P 500 index, beating out stocks in a strong year. Part of the move higher is simply due to supply and demand.

On the supply side, new gold discoveries have paled to some of the massive finds of yesteryear. And while technology can make it easier to extract more from an existing site, it doesn’t make up for changes in demand.

On the demand side, central banks have been massive buyers. That includes countries like Poland, the Czech Republic, and Turkey.

These countries are close to Russia, which has also been a strong buyer along with China. Central banks have been buyers of gold due to the perception that it’s a better holding than alternatives. Most alternatives are the currencies of other countries.

The massive inflation over the past few years has made these currencies less attractive. Even the U.S. dollar hasn’t escaped massive inflation. Gold provides diversification, hence the strong and ongoing central bank buys.

Meanwhile, individual investors still haven’t been part of the gold trend. When smaller investors start buying, not just gold, but gold mining stocks, could become winning trades.

Given the ongoing accumulation of gold by central banks, it may be wise for investors to follow suit by buying gold and gold mining stocks.

To watch the full presentation on gold buying trends, click here.