Yet, our government holds about 8,100 tons of gold valued at about $344 billion with most of this gold stored at Fort Knox in Kentucky. And since 1973, America's gold holdings have only contracted by 5%... so despite Bernanke's befuddlement with gold price movements, we continue to hold large reserves of bullion... because it continues to hold value in human minds and the U.S. is better off holding this precious metal than having none at all. I guess it's also sort of a doomsday backup.
So what is it about gold that makes it such a favorite???
I believe it is gold's allure as a lasting store of value. While policymakers such as Fed Chairman Bernanke may not completely understand gold price volatility, they still find value in preemptively holding it to shield their economies from inflation and continue to buy it despite a history of buying high and selling low. For example, central bankers reduced their holdings when the bullion reached a 20-year low in 1999 but became net buyers just before prices peaked in 2011... but these guys aren't stupid... their gold buying and selling decisions are based less on price but more on gold's strategic value in helping them manage the economy - so their purchases ignore near-term price volatility and focus on significantly long-term holding horizons, and these spurts of buying by central banks significantly impact gold supply and prices in the near term. https://www.a1mint.com/shop/