With the increase in inflation around the world, in 2022, the Federal Reserve Bank of America took some measures to reduce inflation. In today’s history, these measures have created problems for many institutions and organizations across America. Banks had to take loans, we witnessed the bankruptcy of banks that could not pay the loans received. We’ve seen a big jump in loans given to failing banks before they went bankrupt. Although the FED does not show this jump in the data it shares, FHLB, the governing body of the system where the loan is given, clearly expresses this in the documents it shares.
Federal Home Loan Banks (FHLB) showed in its Q1 2023 documents that the value of loans extended to small-scale banks exceeded $1Trillion. In addition, this showed us that the documents shared by the FED were not very transparent.
You can review the document and graphic from here.
What Are the States Doing?
In an article published by the Financial Times on April 23, 2023, we can see what the central banks of the countries are doing with gold over the years. We understand that before the Great Crisis of 1971, states bought gold at high values, and later on, after the 1971 US President Richard Nixon broke the relationship of gold with the US dollar, they constantly sold gold at high values. The same is the case in the 2000s, resulting in larger volumes of purchases. We can say that the reason for this situation is that the unlimitedly printed dollar loses its value and the measures taken by the US administration against inflation do not work. States have turned to gold, which is limited in number, in exchange for the unlimitedly printed dollar. From this point of view, we can understand that states attach importance to limited assets.
Of course, China is one of the states that love gold the most. China does not like that the US dollar is accepted all over the world and is used too much in trade. That’s why he started to change the currency used in the deals and trade with him to Gold or Yuan.
In the above news, it was announced that Argentina will now pay yuan instead of dollars for products imported from China. China’s purpose in making these agreements is to reduce the supremacy of the dollar and its use in trade.
What Does the Small Investor Do?
In a study conducted in the USA, the second most searches starting with the title “How” in the google search engine are related to the purchase of gold (“How to Buy Gold?”).
You can check the news about gold purchases on google trends from here.
In the image below, “How to buy Gold?” in the last 20 years. You can see the interest in the search.
We can see that the interest of small investors in gold has increased. While the central banks of the states continue to buy gold, small investors are also careful to buy gold.
