28 May, 2022

Use of gold in crisis years

Today there are 3 main places to trade gold:

  • London over-the-counter market
  • US futures market (COMEX)
  • Shanghai Gold Exchange.

More than 90% of all world gold trading is concentrated on the above sites. Often, various exchanges buy up assets here and resell them on their sites. Every rich man strives to have a gold bar or coins, so this business is very profitable.

In past years, we noticed a trend where central banks and billionaires actively bought this asset to protect their savings before the global crisis. The fact is that such investments are considered the most reliable in terms of volatility. It often led to the fact that the price of gold continued to rise while the value of other assets fell rapidly.

2022 is an exception. Of course, some Central Banks of Asian and Middle Eastern countries continue to buy large reserves of gold. Still, most Western investors (individuals and mining company) have abandoned this idea due to the actions of the US government. It leads to the fact that the cost of gold began to fall for the first time during a crisis moment in the world economy. At the same time, mining gold continues to grow. This results in demand being lower than supply.

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