U.S. Money Reserve Reviews the Reasons Why the Available Supply of Gold Could Become Increasingly Scarce
Gold mining efforts have escalated in recent decades — about two thirds of the 208,874 tons of gold that have been excavated throughout history have been mined since 1950, according to the World Gold Council.
However, production constraints — ranging from utility issues to worker strikes — mean that only so much gold can be mined each year.
As a result, the portfolio holders who want to purchase gold draw from the preexisting supply already in circulation, potentially competing for it with other entities — including central banks, which in recent years have expressed a strong interest in the precious metal.
After central banks began to purchase ample amounts of gold in 2009, the precious metal went on to comprise roughly 10% of all central bank foreign exchange assets by 2019, according to the Official Monetary and Financial Institutions Forum.
In 2022, central bank buying activity continued to accelerate. Banks bought 152% more gold than in 2021, the World Gold Council says — marking the highest central bank gold purchasing level since 1950.
While some gold purchased by central banks may find its way back onto the market when challenges arise and an influx of cash is needed, these institutions tend to hold on to that gold for some time, according to U.S. Money Reserve President Philip N. Diehl, a former director of the U.S. Mint.
“Gold often performs well during periods of strong economies; we saw that over much of the last 20 years,” Diehl says. “But it’s really a standout asset in hard times, during recessions and periods of political instability. For that reason, gold is often used as wealth insurance to offset losses in other parts of a portfolio. It provides an anchoring, stabilizing influence.”
If central bank–related gold buying continues to be strong, the available supply of gold could be in even more demand soon, potentially raising prices for the precious metal.
A survey of central banks the World Gold Council conducted in 2022 found that central banks value gold’s performance during crisis periods as well as its status as a long-term store of value.
For these same reasons, gold may appeal to portfolio holders. Several U.S. Money Reserve reviews suggest that gold does attract portfolio holders — including one written by Rich D., who says he considered three different companies before deciding to work with U.S. Money Reserve.
“As our country and the world [seem] to be in such turmoil, I knew I had to make a different choice with my savings to protect it,” Rich says in one of the U.S. Money Reserve reviews shared on the Better Business Bureau website. “Gold, I found, is the way.”
