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Central Banks Making Bullish Case for Higher Gold Prices

This statement is going to sound very bold, but it’s worth making: gold prices could be setting up to surprise investors in 2018 and beyond. We could be witnessing the beginning of a bull market in gold.

Why should one be bullish on gold prices? Simple, because the fundamentals of the gold market continue to become more in favor of those who are bullish.

First of all, don’t focus too much on daily price fluctuations. It’s all based on noise and nothing else. Think long-term when looking at gold prices.

One of the biggest things that gold investors need to know is that the big buyers remain in the market. Who are the big buyers? Central banks. Quietly, they are accumulating gold, and it doesn’t look like they are going to stop anytime soon.

2017 marked the eighth year that central banks were net buyers of gold bullion. All together in 2017, they purchased 371 tonnes of the yellow precious metal. This is roughly 11% of the total global gold mine output. (Source: “Gold Demand Trends Full Year 2017,” World Gold Council, February 6, 2018.)

Mind you, central banks are buying gold for their reserves because gold is hands down one of the best hedges against uncertainty and currency devaluation. In this day and age of money printing, talk of trade wars, and all of the other things going on in the world, gold looks very attractive. Also keep in mind, central banks have a lot of money that could be used to buy gold bullion. In 2018, central banks have already been at it.

Russia Steps Up Gold Buying in the Name of National Security

In January, the central bank of Russia purchased almost 20 tonnes of gold. The central bank has been a notorious gold buyer in the past few years. Its has been continuously buying the metal regardless of where gold prices have traded. It has bought gold every month since March 2015. (Source: “Russian Central Bank Buys Gold – 600,000 Ounces Or 18.7 Tons In January As Venezuela Launches ‘Petro Gold’” Gold Seek, February 22, 2018.)