Central banks bought a record amount of gold in 2022, probably to hedge against uncertain times for the global economy. Inflation hit record highs last year and central bankers in many parts of the world have had little success in trying to bring inflation under control. Is this the reason for the “flight” to gold?
Second half 2022
Especially in the second half of 2022, buying gold seems to have been a problem for central banks. Three-quarters of the 1,136 tons of gold purchased were withdrawn from the market in the second half of last year.
It is surprising that non-Western central banks in particular have opted for gold. Perhaps it is a reaction of various “enemies” of the West to the freezing of Russian dollar reserves.
China has also officially started buying gold again since November 2022. About 50% of purchases still cannot be attributed to specific countries.
In the current uncertain macroeconomic and geopolitical environment, gold is proving to be the safe haven of choice for central bankers. No wonder the shiny precious metal is making an impressive run for 2023. It’s up 11 percent since the start of the new year and 21.5 percent in the past six months.
Bitcoin is doing better
Gold’s performance can be described as impressive and the rise in gold price usually indicates that something is wrong in the economic arena. The same goes for Bitcoin, which will overtake gold by 2023. Bitcoin has gained a whopping 85.5% since early 2023.
After hitting local lows of $15,500 during the 2022 bear market, digital gold developed by Satoshi Nakamoto has now surged to $30,643.
It seems too early to talk about a new bull market at this point, but the turmoil in the financial system seems to be working in favor of the digital currency.
This year could well be the year in which bitcoin proves to be a worthy alternative to gold and a safe haven in times of economic turmoil. Especially at the start of the banking crisis in March 2023, the price of Bitcoin shot up like a digital explosion.
Source: Btc Direct
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
