It’s touché to know that gold’s glistening qualities are not only making fanboys out of retail investors looking to cash in big bucks, but sovereigns, too.
The latest country to fall under Old miss Gold’s spell is none other than Kenya.
On April 25, Kenyan Wall Street reported that the country’s central bank is looking to add gold to its foreign exchange reserve in hopes of giving its struggling reserves some buffer.
It’s not hard to see why.
Gold has been on a miraculous run, especially as other investment vehicles have dipped. For example, during US President Donald Trump’s reciprocal tariff rampage, stock indexes receded by more than a thousand points, bonds fell, and treasury yields tumbled. However, gold stuck out like the positive antithesis of a sore thumb.
The investment knight in shining armour hauled in over 180% in the last month, summing up an impressive rally that started in January to cross $3,000 for the first time in decades. Gold (in ounces) now costs $3,218.
Last week, the US dollar weakened by 9% due to uncertainty around Trump’s inspiring policy-making and the ongoing will-they-won’t-they situation with China. This drove up a gold cash grab, with investors backing the asset against piling up the greenback.
Kenya’s reserves are mostly US dollars, and with the currency weakening, this is making countries rethink their exposure to volatility. Ghana and Egypt have also been busy stacking bullion recently, following the playbook of hedging against economic shockwaves.
But will building gold mountains be a gem in sovereign investment holdings—or if the momentum dies off, will it turn into a gilded liability? Selling off or trimming gold holdings from reserves isn’t as quick as flicking a switch. If the shiny fever breaks, unloading big stashes could prove slow and price-challenging in thin markets.
But, well, an unspoken rule in finance: when the opportunity arises, you make gains first, figure out blowbacks later.
