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In a Nutshell

21 Oct
hungary buying gold

In a Nutshell

Gold Market Discussion

In a Nutshell: Hungary is Buying Gold

Here’s a little noticed item that tells the whole story.

The central bank of Hungary has just announced a 1,000 percent increase in its gold holdings. 

That’s right.  It increased its gold reserves 10-fold!  And it did it all in the first two weeks of October!

Hungarian Parliament in Budapest

Here’s what’s going on:  The central banks of the world don’t mind fleecing their own citizens with their unbacked paper money.  They just don’t want to be fleeced by ours.

They see the handwriting on the wall.  So they are moving their reserves out of dollars. 

The Hungarian National Bank succinctly explained its move in an official statement. 

It is well worth reading, especially the passages I have emphasized:

Following the substantial increase in the Bank’s gold reserves in physical form, its repatriation has already taken place. The possession of precious metal within the country is in line with international trends, supports financial stability and strengthens market confidence in Hungary.

In keeping with the historical role of gold, gold remains one of the safest instruments in the world, and, even under normal market conditions, provides a stability and confidence-building function….

The role of gold reserves in the nation and in the nation’s economy strategy is becoming more and more appreciated while both the possession and the increase of nations’ precious metals holdings appears to be decisive international trends….

Gold is not only for extreme market environments, structural changes in the international financial system, and deeper geopolitical crises. Gold also has a confidence-building effect in normal times, that is, gold can play a role in stabilizing and defending. 

Gold is still considered to be one of the world’s safest assets, whose characteristics can be attributed to gold’s unique properties such as finite supply of physical gold, and lack of credit and counterparty risk given that gold is not a claim against a specific partner or country.

That’s the gold story in a nutshell.   And while the case it makes for owning gold needs no elaboration, note, too, that Hungary has taken physical possession of the gold it owns.

It is not buying gold ETFs, GDX or gold stocks, gold options, or futures contracts.  It wants to move out of paper and into real gold.

There was a time the foreign central banks were willing to leave their gold in storage with the US Federal Reserve.  No longer.  Germany, the Netherlands, Venezuela, Russia, China, Turkey, and Austria are all among the countries that have repatriated gold. 

Now Hungary is both aggressively acquiring gold and taking delivery of it. 

In a nutshell, we strongly suggest you do the same.

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”