Central Bank buying and selling updates
December 19, 2006
Central Bank buying and selling activity over the past quarter has been updated as of today by the IMF.
We’ve seen continued selling, albeit quite slowed from previous years, from European Central Banks who are looking to diversify their reserve holdings away from being so heavily weighted in gold. France, Spain and Portugal are the leading sellers over the past few months. The interesting part to focus on for the selling banks is that the selling totals have continued to slow and the sellers are running out of gold they will part with at these price levels. Spain, Portugal and France have sold off nearly 530 tonnes of gold in the last three years. They can’t keep selling at this rate much longer.
On the positive side, Russian gold reserves have gone up nearly 10 tonnes over the same period. As the old saying goes, “they’re putting their money where their mouth is” and the Russians have begun to increase their reserve exposure to gold since stating publicly earlier this year that they would double their reserves exposure from 5% to 10% of their total holdings.
Remember too that generally these buy/sell figures are also reported on a 3-9 month lag, with the exception of ECB captive banks, who report on time sales according to ECB regulations. So there could be additional information on buyers out in the market that still has yet to surface on official bank tallies.
Sales are continuing to slow. The central bank buying we’ve been waiting on is beginning to emerge in the market. This will significantly impact the supply/demand equation in the market to the benefit of rising prices in the future.
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