Economist Steve Hanke: US Dollar Weaponization Has Powered Record Central Bank Gold Purchases

Steve Hanke, professor of applied economics at Johns Hopkins University, has discussed how U.S. policies have driven central bank gold purchases to record levels this year. In an interview, Hanke stated that these purchases were motivated by the weaponization of fiat currencies like the dollar, which has driven countries in “de-dollarization mode” to take refuge in gold.

Steve Hanke Believes Rise in Central Bank Gold Purchases Has to Do With U.S. Dollar Weaponization

Professor of Applied Economics at Johns Hopkins University Steve Hanke, a Bitcoin critic and dollarization proponent, has given his take on the return of gold as a reserve currency for central banks. In a recent interview on Jesse Day’s Commodity Culture, Hanke revealed his position about the future of gold as a reserve asset and how U.S. policies have influenced a rise in central bank gold purchases.

Hanke believes that the recent rise in U.S. sanctions, the weaponization of the U.S. dollar, and a climate of uncertainty have caused central banks to purchase gold at record levels.

He explained:

You never exactly know what these central banks are going to do, but the trend right now is a lot of central bank buying, and the reason behind this is that there is a lot of uncertainty, everything has become more politicized in the realm of fiat money.

As a result, central banks that had not been players in the gold market have now risen as significant buyers, more so those that are in what Hanke calls “de-dollarization mode” and want to reduce their exposure to the U.S. dollar due to the increasing enactment of sanctions.

Bullish Stance

Hanke emphasized that since the 9-11 events, the utilization of sanctions has been steadily increasing, but that in the Biden administration, they are “on steroids.” Hanke called this trend “utter stupidity,” causing countries like China and Poland to increase their gold purchases.

Poland, which has not traditionally been a strong gold buyer, has accumulated 105 tonnes of gold year-to-date, in line with its policy of having 20% of its reserves in gold, according to statements from National Bank of Poland (NBP) President Adam Glapiński.

This situation has caused Hanke to declare a bullish stance on gold for the future, explaining that from a fundamentals perspective, gold looks pretty strong, even if he is not a gold bug in the vein of Peter Schiff, another famous economist.

What do you think about the future of gold markets in relation to de-dollarization? Tell us in the comments section below.