Hidden Central Bank Buying
Gold just plunged as much as $135 an ounce to a fresh low for the year. Most investors panicked or sold for cash. Central banks did the opposite. They kept buying hard and they hid most of it.
Joe Cavatoni of the World Gold Council sat down with Kitco’s Jeremy Szafron on November 12 and laid out the numbers. Official reports show only 120 tons of central bank purchases last quarter. The Council’s full estimate is 321 tons. That means 63 percent went unreported. “The most active buyers are either not reporting or reporting late,” Cavatoni said. They step in precisely when prices dip.
The drop itself makes sense once you understand gold’s dual role. On days of market stress gold is both a safe haven and a source of instant liquidity. When private equity and credit markets seize up and investors need cash right now, they sell the one asset that still trades cleanly. “Gold is a liquid asset through which you can do that,” Cavatoni explained. Americans stepped back this year while Europe and Asia stepped in. Eastern investors and central banks drove the earlier surge. Western investors are now the ones raising cash.
Central banks also earn a return on the metal they hold. They lend it into the London market through swaps and financing, covering storage costs and generating yield. That is the opposite of what most retail holders are told. Physical gold in the right hands can produce income while still serving as a reserve asset.
Looking ahead Cavatoni was direct. Gold “overshot” in January. The current pullback is closer to what the Council expected. For 2027 he sees the price “closer to 5,000 than 3,000.” Roughly $7 trillion sits in money market funds. Some of that cash is expected to rotate back into the metal once clarity returns on rates and risk.
The takeaway for anyone stacking physical is straightforward. Reported numbers understate official demand. The biggest buyers are accumulating on weakness and keeping it quiet. The same liquidity that forced retail sales is exactly what the strongest hands use to add more. The dip is not a signal to abandon the asset. It is the window central banks are using right now.
