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Why Central Banks Want the Gold

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by VBL
Saturday, Apr 06, 2024 - 20:26


Authored by GoldFix ZH Edit

Title piece from April 5, 2023 has proven prescient and even growing in importance as the rest of the world media slowly catches up to the reality of things. The other segments below cover closely related topics in light of Gold and now Silver’s resurgence. Enjoy


  1. Why They Want the Gold (transcript in tab)
  2. What “They Want the Gold” means
  3. Zoltan’s Bretton Woods 3 is a Process
  4. On Mercantilism,The BRICS, and Gold’s Role

1- Why They Want the Gold

[Transcribed from podcast.]

This is the beautiful part about gold.

We all get sucked into the correlations. We live by them.

Things you read and follow like:

  • It's inverted to the dollar.-- Of course it is because it's priced in dollars.
  • It's opportunity cost and yield-- Of course it is. I'm not going to buy something that does nothing when I can buy something that gives me a yield.

But that's because when gold's been demonetized or has no genuine use-case--as it has been for the better part of 50 years-- it is a pet rock. It isn't needed when everyone trusts every one else with their money. It's an opportunity cost asset. Its an imperfect hedge for a plethora of risks, but wildly unpredictable for any one risk.

But now they want the gold because they need the gold to transact business across international lines. That's what's going on.

Warranted or not, ground zero for this change in priorities was the US confiscation of Russia's Forex and Treasury Wealth. Now nobody trusts anybody.

So interest rates may alter speed of Gold price going up, but it will not change the direction. At least not until everyone has enough gold that needs it for international trade. Gold has already revalued itself against every currency in the world except for the dollar.

And the dollar is coming next. That's basically it. Gold going up, even with the dollar going nowhere is a reflection of the dollar's buying power going down internationally, among other things. But I'm telling you, I remember that from a mentor explaining why correlations do not matter when you absolutely need to own something. Back then I was like:

But, the dollar's doing this.The yen's doing that.

And the guy would just say:

Vince, they don't f*cking care about your correlation. A central bank wants the gold. They don't care. And  neither do I. I have to find some to buy for them.. [click]

You need gold to transact across borders now as clean,uncorrupted collateral, and soon that will apply to Silver.  Which is why you also need Bitcoin as an entity who needs to trade internationally

2- What “They Want the Gold” means

“We are entering an era where all correlations mean nothing because financial markets have abused correlation between assets. In the future I think what will determine the price of an asset is going to be more and more based on the actual asset’s utility. Not a financial correlation or relationship to dollars  or stocks, or anything else used to measure global assets as merely dollar minions. 

When gold goes up in dollar terms in the future it goes up it will be because they want the gold not because someone is  shorting dollars. Remember correlations are useless in a real market. Think about oil. That's a real market in which they need the oil for obvious reasons.Gold hasn't been a real market for years. You didn't need the gold. You needed the benefits of the gold. But what happens when they need the actual gold?”

All correlations are man-made. When an option on amc has a two Delta, and goes in the money two days later that “2 delta” correlation was worthless. The world is changing. Non-Bayesian Statistics will lead you to ruin.

Continues here

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