The most recent central-bank buying began less than a year before Soros called bullion the “ultimate asset bubble” in January 2010. The 83-year-old sold his entire stake in the SPDR Gold Trust, the biggest gold-backed ETP, in the second quarter. Paulson cut his company’s stake by 53 percent in the period.
Venezuela holds 67 percent of its reserves in gold, the most among emerging-market countries, compared with less than 9 percent for Russia. While Russia’s central bank will continue buying, the pace may vary, former First Deputy Chairman Alexei Ulyukayev said in January. Bullion’s fluctuations failed to change the bank’s view on the role of gold in reserves, former Bank Rossii Chairman Sergey Ignatiev said in June.
“There’s been a perception that they are a contrary indicator when they buy and sell, but they’re not traders,” said Quincy Krosby, a market strategist for Newark, New Jersey- based Prudential Financial Inc., which oversees more than $1 trillion of assets. “Some central bankers have come to see gold as an alternative currency, certainly as a defense against potential inflationary pressures from the historical deployment of quantitative easing and low rates by global central banks.”