Bullion in a CBDC World, given that the world is currently drowning in debt and unsaved for unfunded promise piles, it makes sense that governments would seek to debase their fiat currency units faster than ever. Having an intra-national fiat #CBDC system to give out supplemental payments to suffering citizens makes sense, all while ganging further control over the underlying populace. This week, China announced that the PBOC’s fiat CBDC yuan pilot program had launched digital apps for Android and Apple phones. And only last week, the government of Mexico announced that they will have a fiat Mexican peso program by 2024. How will further fiat currency digitization and debasement affect the bullion market to come? This week we will take a gander at the late November 2021 OMFIF report entitled “Central bank digital currencies and #Gold” implications for reserve managers.
Reports from India show that 2021 had the most significant gold bullion demand in about one decade. India imported around 1,050 metric tonnes of gold. Or over 33.7 million troy ounces. We have to go back to 2011 to find high gold import demand in India. Back when the Indian rupee price of gold began to run away to record high price levels. We are now nearly +50% higher in terms of the fiat rupee gold price in 2022, yet the Indian populace is still buying gold bullion tonnage in record volumes. To give you a further perspective of how large 1,050 metric tonnes of gold bullion is for India alone in one year.
That is almost the entire gold bullion pile registered and eligible that supposedly backstops the COMEX gold futures market, which still dominates the daily gold spot price fluctuations day-to-day. Further news on the New York Commodity Market Exchange, this week, the CME Group’s COMEX lowered margin requirements for both leveraged gold and silver futures contract trading. This is often taken as a signal that smaller-pocketed long traders may gain more traction in the coming weeks. Of course, you all recall the COMEX raising silver margin requirements in late January 2021, which according to the CFTC Chairman Rostin Benham, helped to “tamp down what could have been a much worse situation in the silver market.” We are now turning our attention to bullion in the coming fiat CBDC systems being launched this decade.
Silver American Eagle (BU)
This report was supported by the World Gold Council a subsidiary of the oldest central bank and fiat currency backstop in the central bank game, the Bank of England. Much of report is noncommittal and speculative forward guessing in nature, merely more a think piece on how gold’s role may change as the fiat CBDC comes into fruition. I’ll leave a link to it in the show notes below. Central bank digital currencies and gold: OMFIF https://www.omfif.org/wp-content/uploads/2021/11/Central-bank-digital-currencies-and-gold-1.pdf
