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Understanding Gold’s Strong Performance and Central Bank Gold Buying

Gold has been breaking records recently, hitting all-time highs and showing resilience against market volatility. George Milling-Stanley attributes this strength to a mix of economic and geopolitical factors, as well as the behavior of central banks. In recent years, central banks worldwide, especially those in emerging markets, have been increasingly diversifying their reserves by purchasing gold instead of relying solely on the US dollar. This trend, which has been ongoing for over a decade, accelerated further following global tensions and concerns over US sanctions, as seen with Russia.

According to George, central bank gold buying is logical in the current environment. Unlike other assets, gold offers a universal value that isn’t tied to any one country, making it particularly attractive during uncertain times. For these reasons, central bank gold buying has reached record levels, with 2024’s first-half figures marking the highest ever recorded. This activity signals a shift in global economic attitudes, as more countries focus on financial independence by relying on gold as a stable store of wealth.

The Role of BRICS in Dollar Decoupling

A significant topic in the interview was the role of BRICS (Brazil, Russia, India, China, and South Africa) and their efforts to reduce dependency on the US dollar. This movement, often referred to as “dollar decoupling,” involves these countries exploring alternative ways to conduct international trade, with discussions on a possible BRICS-backed currency. While some anticipate a dramatic shift away from the dollar, George Milling-Stanley remains cautious, explaining that the erosion of the dollar’s dominance is likely to be gradual rather than sudden.

BRICS’ efforts to reduce dollar dependency highlight a broader trend in the international monetary system. While the dollar remains dominant, some countries are exploring options that offer more control over their financial systems, particularly amid global tensions. George pointed out that the allure of a BRICS-backed currency could be more theoretical than practical in the short term, but it underscores a growing shift towards diversifying international reserves—a trend central banks are clearly following with their increased gold buying.

Wealth Preservation: Why Gold is a Strategic Asset

For long-term investors, gold remains a powerful tool for wealth preservation, especially in times of economic uncertainty. George Milling-Stanley emphasized that gold’s primary role in a portfolio is not for quick gains but as a “protection plus performance” asset. Unlike other investments, gold offers unique benefits, such as protection against inflation, currency devaluation, and even stock market downturns. Ray Dalio, another respected figure in finance, echoes this sentiment, famously stating, “If you don’t own gold, you know neither history nor economics.”

Gold’s defensive properties make it particularly appealing to conservative investors who prioritize financial stability. For those unfamiliar with gold, George suggests focusing on it as a long-term strategic asset rather than trying to time the market. Given the current global and economic landscape, gold provides a hedge that can support financial well-being over the long term.

Why Silver May Be Riskier in Today’s Economy

While gold’s performance remains strong, silver’s outlook is more complex. The recent uptick in silver prices has drawn interest, yet George Milling-Stanley warns that silver’s performance is heavily tied to industrial demand, unlike gold, which acts as a store of value. Silver is widely used in industries like electronics, imaging, and water filtration, making its price more sensitive to economic conditions, particularly GDP growth.

With concerns about a potential economic slowdown, silver may face pressure if industrial demand declines. George advised cautious optimism, noting that silver’s price surge could be attributed to investors following gold’s lead. However, he stressed that silver’s industrial demand makes it a different kind of investment compared to gold’s wealth-preserving role.

Final Thoughts: Why Gold Matters Today

For ITM Trading’s audience, the discussion between Daniela Cambone and George Milling-Stanley serves as a reminder of gold’s unique position in a well-rounded portfolio. As central banks ramp up their gold buying and BRICS nations explore alternatives to the dollar, gold’s role as a reliable, protective asset is more relevant than ever. The current economic climate—with inflation concerns, geopolitical tensions, and currency fluctuations—reinforces the importance of holding gold for those looking to preserve wealth.

In times of uncertainty, owning gold isn’t just about investment returns; it’s about stability and protection. As we move forward, the trends discussed in this interview underline why gold continues to be a key asset in navigating economic challenges.

At ITM Trading, we are here to help you navigate these uncertain times. Whether you are looking to invest in gold, silver, or simply want more information on protecting your assets, our team of experts is ready to guide you. Don’t wait until it’s too late—start preparing today.