The coronavirus pandemic has seemed to be the greatest calamity humanity has experienced in the 21st century. However, some analysts are warning that it was just a warm-up before the actual disaster. The pandemic, various crises, and geopolitical conflicts have forced central banks to brace for the worst and search for a reliable asset. Many central banks decided to buy gold and avoid the looming crisis.
Bloomberg analyst David Fickling called the current gold frenzy the preparation for a zombie apocalypse. He humorously outlined a straightforward instruction manual for surviving a zombie apocalypse. "Bullion does have one crucial advantage: unlike bonds, it doesn’t bind you into a relationship with an unreliable counterparty. In February, coordinated sanctions on Russia’s central bank vaporized most of the $498 billion in reserves sitting on its balance sheet. In a world where you can trust no one, it makes sense to bulletproof yourself with metal," Fickling stressed. This is why gold looks like an appealing alternative. However, the analysts also pointed out certain risks. Gold reserves can be blocked as the UK did with Venezuelan bullion reserves. "When the zombie apocalypse comes, even gold might not be enough to save you," he concluded.
Now, the biggest market players who are actively stacking up gold are Turkey, Egypt, Uzbekistan, India, and Iraq. In the third quarter alone, they bought as much gold as they usually did in a year. By racking up bullion reserves, some of these countries are trying to foster their weakening national currencies as well as demonstrate to the world their financial reliability as prudent borrowers. "No amount of gold buying, though, is going to convince anyone that the fiscally incontinent Egyptian government is a good credit," Fickling pinpointed. Therefore, it will be quite hard for central banks to avoid a zombie apocalypse scenario.
