Mario Draghi, President of the European Central Bank, was recently asked by Tekoa da Silva about the role of gold in central banks’ reserves around the world. Draghi’s short comments are an important reminder of why countries like China continue to stockpile physical gold at the same time that Wall Street banks are predicting its demise. Precious metals are one of the few havens from dramatic fluctuations in the price of the dollar.
“I never thought it wise to sell [gold]… For central banks, this is a reserve of safety; it is viewed by the country as such. In the case of non-dollar countries, it gives you fairly good protection against fluctuations of the dollar… Central banks which had started a program for selling gold a few years ago, substantially stopped… and by and large, they are not selling it any longer.”
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