Some emerging market central banks are beginning to hoard gold as a defensive alternative currency. For instance, Venezuela holds 67% of its reserves in gold.
“Some central bankers have come to see gold as an alternative currency, certainly as a defense against potential inflationary pressures from the historical deployment of quantitative easing and low rates by global central banks,” Quincy Krosby, a market strategist for Prudential Financial Inc., said in the article.
Meanwhile, gold-related exchange traded products saw $60.4 billion, or 43% of assets, in outflows this year. The SPDR Gold Trust (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETF Physical Swiss Gold (NYSEArca: SGOL) have all declined about 21% year-to-date. [Gold ETFs Face Scary Technical Outlook]
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Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own GLD.