Why don't countries convert their reserves into gold?

Gold prices have increased globally and locally in the recent period due to economic changes that affected the whole world, and following inflation and the change in the original values of currencies, people resorted to investing in gold as a safe haven, which is the prevailing belief about ways to preserve and increase funds.

Years ago, the obstacles experienced by the global economy prompted some countries to consider safe receptacles for their financial reserves.

This faltering global financial situation reminded of the mortgage crisis that erupted in September 2008 in the United States, then spread to the countries of the world, at that time Iran resorted to converting all its reserves into gold, after the oil price fell by more than 60%.. Why did it not resort now to the same idea?

The shift to gold and inflation fears

Said the economist, Dr. Mahmoud Fawzi, all countries have 3 reserves, which are gold, monetary and oil, stressing that the three reserves are of great importance, and it is not advisable to dispense with any of them under any circumstances.

He pointed out that Iran's move previously was smart to avoid a crisis, but it is "exceptional", and it is not preferable to repeat it, explaining that gold is a safe haven that can never lose its value, but the need for oil and financial liquidity is also important.

He warned that the lack of financial liquidity, especially at a time when 90% of the world's countries depend on the strength of the dollar, will lead to exponential rises in inflation rates.

Countries buying gold will lose its value

The tendency of one country to convert its reserves into gold affects the economy, but several countries taking the same step may destroy the global economy.

The large demand for gold raises its price to huge numbers, but for days, which are the days of purchase and the decline in demand, it makes it lose what it has earned, so countries will buy gold at exorbitant prices, then they will find themselves losing, after the decline in the value of what they bought, in addition to a historical decline in the precious metal.

World gold prices

 Global gold prices rose, during today’s trading, Thursday, July 27, 2023, at the highest level in a week, amid the decline of the US dollar.

In related context you should to know that investing in gold did not give you any indication during influential events such as the Corona crisis or the Ukraine war, unlike the prevailing one, it did not profit globally, so people remained for about 15 years to compensate for their losses by investing in global gold.