The Bundesbank Buys Gold for First Time Since Creation of the Euro.
In this report, I cover the early market action from London on Wednesday, October 23rd, 2019. I look briefly at the precious metals, the stock market, the dollar, the bond market and the price of WTI and Brent crude oil.
Today I look at the German Central Bank or the Bundesbank a little closer as it was reported yesterday that it had bought gold for the first time in twenty-one years. I will go over the history of the Bundesbank and why it has had a reputation for managing a sound currency in the past with the Deutschmark.
Bloomberg reported yesterday that the German Central Bank had bought 90'000 troy ounces of gold in September which is the equivalent of around $135 million. Even though it isn't a big amount for a Central Bank one could construe this action as being a message to the ECB that the Bundesbank does not approve of its current policy of money printing and negative interest rates.
My conclusion is that we will need to wait and see for future data to see if what the Buba did last month was just a one-off technical move or if it is really a warning for the ECB that they will not stand for the reckless monetary policy imposed by outgoing President Mario Draghi.
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