Central Banks and Economic Indicators

Central banks globally are increasing their gold reserves as a hedge against potential currency crisis and inflation, acquiring a record 1,136 tons of gold in 2022 and adding another 483 tons in the first half of 2024. The spike in gold purchases is a response to the expanding money supply, which has quadrupled in the US since the early 2000s, driving investors to seek refuge in gold as a finite resource. The relationship between money supply growth and gold's value reflects a broader economic concern, with rising national debt further highlighting instability. The M2 to gold ratio can provide insights into whether gold is currently undervalued or overvalued, making it a critical factor in assessing the financial landscape.