Data published last week shows that the Irish Central Bank added $88 million to its gold reserves in November 2021. This purchase is equivalent to €78 million and was completed at a time when the price of gold in euros hit a new record, after more than a year.
This purchase means that the financial institution has grown its holdings of gold by more than three tons in the last three months, which is roughly a 60% rise from the level it had maintained for more than 10 years.
In November, Ireland’s yearly inflation rate was 5.2%, with the Economic and Social Research Institute warning that the increase in prices in 2022 may be greater than what prior forecasts had shown.
Karl Whelan, a former economist at the country’s Federal Reserve and Central Bank, stated that the bank’s motive for this purchase was unclear, noting that it was probably associated with the precious metal being viewed as a useful hedge against inflation. Whelan, who is also an economics professor at University College Dublin, added that there was little historical evidence for the bank’s use of gold in this way.
The Irish Central Bank refused to give reasons for its interest in the precious metal, stating that the bank could not disclose any details of its asset management strategy as its transactions in gold were commercially sensitive. However, Gabriel Makhlouf, governor of the Ireland Central Bank, did warn that policy makers couldn’t afford to be complacent when it came to inflation. He proposed that the central bank would not hesitate to raise interest rates if inflation persisted or if evidence pointed to a need to do so.
Additionally, he stated that the country’s economy could reach full capacity in 2023, which would add to inflation pressures, while warning the government not to overspend in the economy.
This isn’t the only central bank adding to its gold reserves either. Data from the World Gold Council shows that during the first half of 2021, global gold reserves grew by more than 300 tons, which is nearly 39% higher than the five-year average for the period. The World Gold Council noted that this increase was driven mainly by an increase in central bankers’ appetite for gold, revealing that strong purchases for the precious metal were recorded in Brazil, Hungary and Thailand. Over in Singapore, gold reserves also increased by roughly 20%, with the country’s central bank noting that the purchase would secure its portfolio’s resiliency.
When central banks start stocking up on gold, other institutional players may also follow suit, and that could be to the benefit of precious metals extraction companies, such as StraightUp Resources Inc. (CSE: ST) (OTCQB: STUPF), due to the rise in prices that is sure to follow such market activity.
NOTE TO INVESTORS: The latest news and updates relating to StraightUp Resources Inc. (CSE: ST) (OTCQB: STUPF) are available in the company’s newsroom at https://ibn.fm/STUPF
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