Why governments are rushing to buy gold

Gold, historically viewed as a long-term hedge, has become relevant as a short-term hedge in today's economic climate, with gold prices rising by 10.6%, demand for physical gold rising by 10% to a 9-year high, and central government gold demand rising by 82% in 2022. The reasons for this increase in demand are due to the economic uncertainty caused by the S&P being down 20%, bonds down 13%, inflation allegedly at 5%, and the dollar being down 7% in the last 16 months. For individuals, buying gold provides a market hedge with no counterparty risk, and for governments, particularly BRIC nations, it is a way to reduce their reliance on the US dollar and create a quasi-gold standard. The US dollar's rolling devaluation and use as a weapon in conflicts like the Russia-Ukraine conflict have pushed central governments to invest heavily in gold.

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