Why Does The BSP Hold Gold?
- Get link
- X
- Other Apps
In 2013, Ron Paul, former US congressman asked Ben Bernanke, former Chairman of the Federal Reserve why central banks held gold. The former fed chair answered that it's simply because it's a long-term tradition.
During the height of the Coronavirus lockdowns, gold prices went up rapidly. This trend did not go unnoticed among Filipinos. Cebuana Lhuillier reported high turnover of rematado (foreclosed) jewelry during that time period.
Perhaps due to the heightened interest of gold during this time, the Banko Sentral ng Pilipinas received several questions regarding the purchase of gold in the Philippines and in June of 2020 decided to release an infographic where they answer some common questions that we might have about gold.
Why does the BSP hold gold? The Banko Sentral ng Pilipinas gives us a more honest answer to this question compared to the Federal Reserve.
Gold is a real asset and no one's liability! It couldn't get any more honest than that. That means that the entire world may be falling apart but gold will still be money!
Here's what some economists have to say about gold:
“Gold is considered a real asset and no one’s liability, said Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines. “Gold can be buried underground for years and never lose its value.”
“Gold has been a reliable store of value for thousands of years and since ancient civilizations,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in an e-mailed reply to questions. Gold is more tangible and has an underlying value, unlike currency notes that are certificates of indebtedness of governments, he added.
Sources:
https://www.bsp.gov.ph/Lists/Infographics/Attachments/15/infogrfx_gold_and_the_bsp.pdf
https://www.bworldonline.com/jewels-keep-their-luster-amid-coronavirus-pandemic/
Related links:
https://business.inquirer.net/298108/filipino-dollar-millionaires-turn-to-gold-for-pandemic-security
https://newsinfo.inquirer.net/1329985/pandemic-forcing-desperate-trips-to-pawnshops
- Get link
- X
- Other Apps
Comments
Post a Comment