Assurance in the dollar’s dominance ignores signs that countries are serious about seeking alternatives, according to Ruchir Sharma.
This is illustrated when taking account of recent trends in gold: the safe haven commodity has surged 20% in the last half year.
But demand is coming from central banks reducing their dollar holdings, not the “usual suspects” made up of large and small investors, the chair of Rockefeller International wrote in The Financial Times on Sunday.
In fact, central banks account for a record 33% of monthly global demand for gold and are buying more gold than at any time since data began in 1950, he added.
“This buying boom has helped push the price of gold to near-record levels and more than 50% higher than what models based on real interest rates would suggest,” said Sharma. “Clearly, something new is driving gold prices.”
Nine of the top 10 central banks buying gold are in developing countries, including China, Russia and India, he said.
Central banks are turning away from the US dollar and shifting to gold
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