Central Bank of Hungary: ‘Gold is the ultimate store of value.’

Central Banking/Victor Mendex-Barreira interviews Robert Rekasi/11-19-2020

“It was a long-term national and economic policy strategy decision to increase the size of our gold holdings. The decision was driven by stability objectives; there were no investment considerations behind holding gold reserves. In normal circumstances, gold has a confidence-building feature, so it may play a stabilizing role and act as a major line of defense under extreme market conditions, in times of structural changes in the international financial system, or during deep geopolitical crises. The central bank also decided to repatriate overseas gold holdings. Holding precious metals within the country is consistent with international trends, enhances financial stability, and may strengthen market confidence in the Hungarian economy.”

USAGOLD note:  We referenced this report in this morning’s DMR and repost it here for those who may have missed it. Central banks, in short, hold gold for the very same reasons that private individuals do. Rekasi says central banks do not buy gold through ETFs but via over-the-counter transactions or through purchases from domestic producers. In other words, they buy the metal itself (not paper representations) for strategic safe-haven purposes and are not making a price bet. In this interview, Rekasi skillfully outlines the rationale for gold ownership in the context of the contemporary financial environment for individuals, funds and institutions alike. 

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