Quote from: abhiseshakana on January 14, 2020, 08:43:35 AM

Quote from: Hydrogen on January 13, 2020, 11:48:10 PM

We all know banks are hoarding gold atm. What their motives or long term plans are, I couldn't begin to guess.

Central Banks and Private Banks diversify deposits in managing their foreign exchange reserves. This deposit is a central bank asset that is stored in several reserve currencies such as dollars, euros or yen and is used to guarantee its obligations, namely the local currency issued, and the reserves of various banks held in the central bank by the government or financial institutions.

In terms of currency, the state also has foreign exchange reserves in gold (gold bars and contractual rights to gold bars). Foreign exchange reserves in the form of gold are intended as a buffer for liquidity to support the implementation of monetary policy and fulfillment of obligations in foreign currencies.

The simple idea is that central banks around the world are currently working to maintain a balanced proportion of their foreign exchange reserves to maintain the stability of a country's financial system. Because if they do not buy gold then the proportion of gold in foreign exchange reserves will decrease significantly because they lag far behind the US Dollar they have.

Gold is negatively correlated with US Dollar and it is very beneficial for central banks because they are holders of the US Dollar. By having gold in their reserves, they have a very positive hedge to protect their US Dollar positions.

In october of 2019, the dutch central bank was quoted as saying: "If The Entire System Collapses, Gold Will Be Needed To Start Over".

I made a thread on it, here:

https://bitcointalk.org/index.php?topic=5193372.msg52775202#msg52775202

I'm certain there are conspiracy theorists who believe banks recent hoarding of gold is in preparation of them crashing the global economy, to later restart and reshape it in whatever image they choose. I'd prefer not to get into that as its so heavily based on personal preference and so little about it can be proven or disproven.

With political and business dealings, there are marketing brochures that are written for mundanes, who are too illiterate to recognize the real reasons for things. Then there is a separate brochure, which are distributed exclusively to ruling elites, containing legitimate reasons and motives for everything.

When fiat was first adopted and a true gold standard was in place where every paper bill issued could be exchanged for gold. That was the only time in history fiat currencies were truly backed by a collateral asset. Since then the degree to which balance sheets are backed by precious metals, gold or anything else has significantly eroded to a point where it no longer really matters. And so the degree to which balance sheets and budgets are backed by gold sits currently at such a low percentage. All of those arguments about gold being necessary to collaterize finance/economies could somewhat be considered obsolete.