Gold is becoming, once again, an alluring commodity for central banks that want to have an asset different than the U.S. dollar to be used as a store of value against economic uncertainty. El Salvador has recently announced the purchase of 13,999 troy ounces of gold valued at $50 million, which will now enter their foreign reserve numbers.
The Central Bank of El Salvador stated that the purchase was part of a diversification strategy aimed at strengthening its foreign reserves. This is the first purchase of this kind that El Salvador has completed since 1990, with President Bukele centering his efforts on adding bitcoin to the country’s strategic reserve instead. El Salvador’s strategic bitcoin reserve is comprised of 6,292 BTC valued at $696 million at the time of writing.
With this move, the country’s gold reserves increase to 58,105 troy ounces, valued at an estimated $207.4 million.
The bank reinforced the validity of gold as a valuable tool, highlighting that it serves as an “asset of universal strategic value, which contributes to supporting the long-term financial stability of El Salvador, protecting the economy from structural changes in international markets, and ensuring greater stability and confidence for the population and investors.”
The central bank declared that this purchase “reflects the commitment to strengthening the nation’s assets and ensuring that the country has diversified, secure, and long-term reserves.”
El Salvador is a latecomer to a trend in which large central banks from nations like China, Turkey, and India are purchasing millions of ounces of gold to diversify their reserves.
Gold has been on a tear this year, breaking price records several times and reaching historic levels, largely driven by investors seeking to leverage its safe haven characteristics in the face of increasing economic uncertainty.
Read more: El Salvador Moves Bitcoin for Safety Purposes: Is a Selloff Coming?
Read more: Strategist Warns Gold Surpassed US Treasuries as Reserve Asset: A Dollar Rebalancing Might Follow
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