Why central banks are stockpiling gold

IN 1968, the London Bullion Market closed for two weeks. The world’s largest precious-metal market had run out of gold, drained by a five-month run on America’s stash by European central banks.

The crisis marked the beginning of the end for the Bretton Woods standard that had kept the dollar pegged to gold, and currencies elsewhere to the dollar, since 1944.

Now central banks are furiously buying gold again. In the third quarter alone 400 tonnes moved into their reserves. That has pushed the total from January to September to 670 tonnes, a pace unseen since the Bullion Market debacle. In May, Turkey snapped up almost 20 tonnes in one go. India and Qatar are also ravenous. The metal now makes up two-thirds of Uzbekistan’s reserves, months after it planned to reduce gold to under half. Kazakhstan is also doubling down.