When evaluating gold, forget the markets and look to the Central Banks.

If you are a trader or speculator in gold, by all means listen to the markets. Your task as a speculator is to make money from the ups and downs in the short-term price of gold.

However, if your primary aim is to own gold as a hard asset, you are playing a longer-term game. Sure, you want to buy low. But the weekly ups and downs in gold prices are of no concern to you. You’re in this for the long term. You are holding gold as a security against unforeseen calamities in the future.

If you are an owner of gold, rather than a speculator, you should ignore the noise coming from analysts, TV gurus and other self-appointed experts.

Instead, you should be looking for indicators that might signal longer-term movements in gold prices.

Right now, the best place to look for those indicators is in the actions of the world’s central banks. The central banks are the most powerful force in world finance right now.

But I don’t listen to what they SAY. Their role is to maintain confidence at just about any cost, so what they say rarely reflects the truth about what they really think.

Instead, I pay close attention to what the world’s central banks actually DO, particularly when it comes to gold.

And here is what they having been doing…

Since the start of the great recession, central banks have been quietly buying tons and tons of gold.

• Between the first quarter of 2009 and the first quarter of 2014, China’s central bank increased its gold reserves 75% to 1,054 tonnes.

• During the same time frame, Russia’s gold reserve rose by 98% to 1,040.71 tonnes,

• And India’s central bank increased its gold reserves 56% to 557 tonnes.

• Since the fourth quarter of 2010, Turkey has seen its gold reserves increase more than 315% to 483 tonnes.

• And Mexico’s central bank has increased its reserves by 1,640% to 122.75 tonnes over the same time frame.

Do you see a pattern here? And do you see how the bank’s actions run contrary to the optimistic messages they keep pumping out?

To me this is a huge buy signal for gold.

While the stock market is rising to new highs, based on rampant optimism and shaky foundations, the central banks are busy buying gold.

And for as long as the banks are buying gold, you and I should do the same.

We should all be busy buying physical gold bullion gold coins and bars, and storing them as protection against the time when the world’s financial system finally collapses.

Even the central banks anticipate that dire outcome.

Otherwise, why would they be buying so much physical gold?

About the author: DH Kenrick is a student of world economics and a committed gold enthusiast. Follow me on Google+

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