Mennica Skarbowa S.A.

Author of the entry: Mennica Skarbowa
Date of entry: July 19, 2021

Brazil is one of the largest countries in the world, both in terms of area and population. However, it is classified as a moderately developed country. In the last year, the Brazilian economy has been particularly hard hit and severely affected by the COVID-19 pandemic sweeping across the globe. Despite many objective adversities, Brazil has now decided to expand its gold reserves.

Brazil is known around the world mainly for the carnival in Rio de Janeiro. Every year, the event attracts thousands of tourists from all over the world who want to learn and experience firsthand what it means to be a native Brazilian, with their hot blood, fiery samba, and true fiesta spirit. The country is also attractive to travelers who want to get to know the fifth largest country in terms of area and see with their own eyes, among other things, one of the seven wonders of the world – the statue of Jesus Christ. Of course, soccer fans are equally eager to visit this corner of the globe. Despite this, Brazil is not one of the countries that can boast a strong economic position.

Despite this, or perhaps precisely because of this, the Brazilian Central Bank decided to increase its gold reserves. For years, the precious metal has been considered a guarantee of security and stability for the country. Last month, Brazil made one of its largest gold purchases in years.

The Central Bank of Brazil, currently headed by Roberto Campos Neto, purchased 41.8 tons of gold in June this year. As a result, Brazil's gold reserves increased to 121.1 tons. Brazil purchased so much gold in one month that it increased its holdings by 52.7%. However, the value of the purchase has not been disclosed to the public. One thing is certain – Brazil has not made such a large monthly purchase of gold since December 2000. These figures are impressive and thought-provoking.

We have already written about central banks returning to the gold market. Demand for gold is not declining, both in the public sector and among individual consumers. The example of the last year and the experience of the pandemic are prompting everyone to manage their accumulated capital more prudently. In the turbulent waters of the crisis, we need to look for a safe haven – and gold has been just that for years.