Europe’s Central Banks Load Up On Gold
Jack Farchy
MONTREAL— Financial Times
European central banks have become net buyers of gold for the first time in more than two decades, the latest sign of how the turbulence in the currency and debt markets has revolutionized the bullion market.
The purchases are minuscule compared with the size of the global gold market, but highlight a remarkable turnround from a wave of heavy selling by European central banks.
The role of central banks in the gold market will be a central topic of debate at the annual London Bullion Market Association conference, the largest gathering of the gold industry, in Montreal this week. The switch from large selling to buying has helped propel the gold price more than 25 per cent higher so far this year, hitting a nominal record of $1,920 a troy ounce this month. The shift in Europe comes as central banks in emerging markets are also loading up on gold.
Mexico, Russia, South Korea and Thailand have all made large purchases this year, in a move to reduce their exposure to the dollar. Globally, central banks are set to buy more gold this year than at any time since the collapse of the Bretton Woods system 40 years ago -- the last time the value of the dollar was linked to gold.
“We’re going back to a time when gold is seen very much as money,” Jonathan Spall, director of precious metals sales at Barclays Capital, told FT.com in a video interview. “It has been a complete reversal of the attitudes we saw during the 1990s.”
European central banks have added about 25,000 ounces, or 0.8 tonnes, of gold to their reserves in the year to date, according to data from the European Central Bank and the International Monetary Fund.
That compares with average sales of almost 400 tonnes a year since 1999, as they swapped their non-yielding and unfashionable bullion for sovereign debt. Global gold consumption stands at about 4,500 tonnes a year.
Most of the buying in Europe was related to Estonia’s move to join the single currency bloc at the start of the year. The Estonian central bank bought gold to add to the ECB’s reserves, according to an ECB statement in January. Elsewhere, Malta bought 3,000 ounces.
Europe’s central banks have not been net buyers of gold since 1985, according to data from the World Gold Council.
“The motivation for European central banks to diversify out of gold into dollar-denominated assets has been negatively impacted by US fiscal and monetary policy,” said Natalie Dempster, head of government affairs at the mining industry-backed group.
A third round of quantitative easing would make the sale of gold “look less attractive than ever before”, she added.
The shift to buying comes as some politicians in the euro zone are calling for heavily indebted members such as Portugal, Spain or Italy to be forced to sell their gold reserves to reduce their debts. However, at current gold prices such a move would barely dent the countries’ debt piles, while analysts believe it would amplify investors’ concerns about the euro zone.
|
|
| GOLD |
| 24
hour $US Dollar price per ounce |
![[Most Recent Quotes from www.kitco.com]](http://kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
|
|
Weekly Commentaries |
By Bob Kirtley
www.gold-prices.biz
This year our screens, radio and the media in general will be dominated by politics as electioneering goes into overdrive in a massive attempt to convince us that their man has all the answers. Alas, the political machinery has long since lost our respect, but that will not deter them and so we must endure this attack on our senses from all directions.
[Read More]
By Frank Holmes,
After prices fell 10 percent in December, many investors wondered if the bull market in gold was running out of steam. That was before Federal Reserve Chairman Ben Bernanke swooped in with a “red cape” and fired the bulls back up. Since the Fed reassured the world that interest rates will remain at “exceptionally low levels” for another two years, gold has jumped more than three percent.
[Read More]
by Brittany Stepniak: Wealth Wire
Due to the latest phenomena in China, some experts are calling this the “Gold Era”.
The Chinese are buying gold in record numbers and the trend has been increasing exponentially within the past year as the race for wealth-guarding picks up pace.
[Read More]
By Eric McWhinnie
On Tuesday, China reported GDP growth of 8.9 percent in the last quarter of 2011, which is the slowest growth increase in more than two years. Although analysts were only expecting growth of 8.7 percent, the slowdown gave investors hope that the world’s second largest economy will inject more stimulus into its economy to fuel growth. As a result, gold jumped $24 to climb above $1,650 per ounce, while silver surged 60 cents to settle above $30 per ounce. However, investors should reign in expectations of more stimulus being unleashed in China during the early part of 2012.
[Read More]
Giuseppe L. Borrelli
Right now you need to understand that gold is beginning the twelfth year of major bull market; perhaps the most unprecedented bull market in our lifetime. Here's a quick snapshot of what that bull market has looked like since the 1999 bottom and the 2001 retest of that bottom:
[Read More]
Lorimer Wilson: Monknee.com
I am increasingly confident that the consequences of fragile sovereign debt, precious metals marketmanipulation, insufficient physical supply, and the need for a safe haven investment refuge, will contribute to rampant price inflation and drive precious metals bullion and mining stock to a parabolic peak price of $10,000 sometime in 2012 or 2013 at the latest.
[Read More]
Source: bullionvault
Investment demand for Gold Bars has risen in India and this is despite jewelry sales appearing subdued given the high price of the precious metal and the separate making charges involved with each piece of jewelry. Investors who had purchased Gold Bars two months ago are dipping into their savings yet again and purchasing bars and coins, said traders.
[Read More]
www.PreciousMetalsWarrants.com (“The Authority on Warrants”).
With all the interest in physical gold, silver and other commodities these days, and the large/mid-cap companies who mine the metals and the juniors who are exploring for them, it begs the question: “Why is no one writing about the merits of investing in the long-term warrants associated with a few of those companies?” Merits? Absolutely! Here is a primer on virtually all that you need to know about warrants and how to invest in them for major profits.
[Read More]
James Turk
(www.goldmoney.com)
Don’t own any gold or silver yet? New to the precious metals? Regardless whether you are a novice or seasoned veteran, the following seven points provide essential background information you can use to help determine whether the precious metals are right for you.
[Read More]
By: Jim Willie CB, GoldenJackass.com
What an incredible whirlwind of crisis from seven foul winds around the globe.
[Read More]
Jeff Clark, Casey Research
MOST PEOPLE who follow gold know the metal has a seasonal tendency to perform better in the fall and winter than in the spring and summer. Indeed, since 2001, the annual high for the Gold Price has occurred after Labor Day every year except two (2006 and 2008). Further, that peak was hit in November or December in seven of the last ten years, writes Jeff Clark, editor of Big Gold at Casey Research.
[Read More]
Jordan Roy-Byrne, The Daily Gold
"The gold stocks are slowly moving closer and closer to a major breakout, which would likely produce a multi-year acceleration that would set the stage for the birth of a bubble."
[Read More]
by Brittany Stepniak
James Steel, HSBC analyst, anticipates that gold will trade between $1,700 and $2,300 over the course of the following year. According to him, markets are likely to continue many series of volatile trading sessions for at least the next calendar year.
[Read More]
By Eric McWhinnie
Gold continues to rise as European debt worries linger on in the financial markets. gold and silver both climbed higher as the true sentiment about gold was revealed by Germany. As I write, gold is closing in on $1800, while silver is nearing $35. Although there are many rumors flying out of Europe regarding possible solutions, there is one topic that is not open for discussion.
[Read More]
Dan Denning
HERE'S A QUESTION. Don't you think China would be happy to lend Europe some of the trillions of Euros it needs to recapitalize its banks, save Greece, and prevent a crisis in Italian and Spanish bonds...as long as the Europeans posted gold as collateral for the loan? asks Dan Denning, editor of the Daily Reckoning Australia.
[Read More]
Al Korelin and Brien Lundin discuss the fundamentals supporting the precious metals bull market and why they’re not concerned with the recent correction.
Watch Video >>
The Gold Report
Reasons why the party may just be getting started (though the Gold Price could also fall more than many expect)...
DON'T SELL before the party really gets going, advises Edward Karr, CEO of Geneva-based investment group RAMPartners.
[Read More]
David Levenstein
Over the last few years we have seen some amazing developments occur in the global financial sector none of which are good or encouraging. The sovereign debt debacle in the Eurozone threatens the very existence of the euro as well as many banks. And, it is no news that the US is technically bankrupt. But, what amazes me more than anything else is the action taken by so called financial regulators, politicians and leading banking officials around the world.
[Read More]
Peter Schiff
Gold fell sharply off its peak after soaring just past $1,900. Volatility in commodity, currency, and equity markets has been very high recently, and these short-term price movements have Wall Street pundits in an uproar.
[Read More]
Author: Brian Sylvester
Austerity programmes across Europe, continued debt problems in the US and further political uncertainty all point to a continued uptrend in gold prices, says Brien Lundin. A Gold Report Interview.
[Read More]
Jack Farchy
MONTREAL— Financial Times
European central banks have become net buyers of gold for the first time in more than two decades, the latest sign of how the turbulence in the currency and debt markets has revolutionized the bullion market.
[Read More]
|
Follow Us On:
CONTACT US | ABOUT US
|
