Dynamics of the world gold market and the expected wave of the global financial and economic crisis

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Date
2022
Journal Title
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Ivane Javakhishvili Tbilisi State University Press
Abstract
By decision of the Bretton Woods International Monetary and Financial Conference of 1944, gold, along with the US dollar, was designated as the world's reserve currency. Central banks and finance ministries sought to accumulate gold in international reserves. The peak was reached in 1965, when, according to the International Monetary Fund, the total gold reserves of the world amounted to 37,124 tons, and the share of gold in the total international reserves of all countries of the world reached 54%. Already in the second half of the 1960s, signs of a crisis in the gold-dollar standard began. In 1976, a conference was held in Jamaica that abolished the gold dollar standard and replaced it with a paper dollar standard. Since that time, a rather strange, ambiguous situation has arisen. While the International Monetary Fund has recommended continuing to replace gold with US dollars in international reserves, countries have largely taken a neutral stance. However, since 2010 there has been a clear trend of central banks turning gold into net buyers. According to the World Gold Council, net purchases of gold by central banks (volumes of purchases excluding sales) in 2010- 2020 (in metric tons): 2010. - 79.1; 2011 - 480.8; 2012 - 569.3; 2013 - 619.3; 2014 - 601.2; 2015 - 579.6; 2016 - 394.9; 2017 - 378.6; 2018 - 656.2; 2019 - 605.4; 2020 - 254.9 Thus, the active purchase of gold by countries in recent years to replenish international reserves clearly indicates that gold is a much more reliable asset than fiat currencies, and it can be considered as one of the possible alternatives to the existing monetary and financial system
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Keywords
financial crisis, recession, foreign exchange reserves, gold, alternative monetary and financial system, quantitative easing, key interest rate, the great reset
Citation
International Scientific Conference Dedicated to the Establishment of the University and the 100th Anniversary of the Faculty of Economics and Business “Covid 19 Pandemic and Economics”, Tbilisi, 2022, pp. 383-395
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