Monday , 25 September 2017


Central Bank Gold Purchases up 17% – Here’s Why You Should Jump in or Top Up Too

…[C]entral banks, as a group,…added more to their reserves in 2012 than [at any Gold_introtime] since 1964….[Purchases were up at least] 17% more than what was added in 2011 [see table of purchases by country below], which was, itself, a year of record buying….[Why?] Because they see [significant inflation coming and] a significant shift coming with the status of the dollar, and they need to protect themselves against those risks.

So writes Jeff Clark (www.caseyresearch.com) in edited excerpts from his original article* entitled Whom to Believe on Gold: Central Banks or Bloomberg?.

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Clark goes on to say in further edited excerpts:

Central Bank Net Purchases of Gold Reserves by Country

The first table below lists the countries that have added to their gold reserves this year.The second table…tallies those that have been selling. You’ll see how recently each country has reported, along with its percentage increase.

Changes in Central Bank Gold Reserves in 2012 (Million Troy Ounces)
Year-End 2011
YTD 2012
Last Reported
Net Change
Percent Change
Countries Increasing Reserves
Turkey
6.28
11.56
Dec
5.283
84.1%
Russia
28.39
30.79
Dec
2.405
8.5%
Bank for International Settlements
15.6
16.71
Dec
1.114
7.1%
Brazil
1.08
2.16
Dec
1.08
100.0%
Philippines
5.12
6.2
Nov
1.079
21.1%
Kazakhstan
2.64
3.71
Dec
1.07
40.5%
South Korea
1.75
2.71
Nov
0.965
54.9%
Iraq
0.19
0.96
Nov
0.773
405.3%
México
3.41
4
Dec
0.596
17.3%
Paraguay
0.021
0.263
Sept
0.242
1152.4%
Ukraine
0.9
1.14
Dec
0.239
26.7%
Belarus
1.21
1.37
Dec
0.164
13.2%
Tajikistan
0.15
0.2
Dec
0.05
33.3%
Brunei
0.06
0.09
Oct
0.031
50.0%
Mozambique
0.08
0.11
Oct
0.025
37.5%
Serbia
0.46
0.48
Nov
0.022
4.3%
Jordan
0.41
0.43
May
0.02
4.9%
Kyrgyz Republic
0.08
0.1
Dec
0.014
25.0%
Greece
3.59
3.6
Dec
0.008
0.3%
Mongolia
0.11
0.12
Nov
0.004
9.1%
Suriname
0.071
0.074
Dec
0.003
4.2%
South Africa
4.02
4.02
Nov
0.003
0.0%
Moldova
0
0.002
Dec
0.002
Bulgaria
1.28
1.28
Dec
0.001
0.0%
Pakistan
2.071
2.072
Dec
0.001
0.0%
Subtotal Gross Increases
15.2
Changes in Central Bank Gold Reserves in 2012 (Million Troy Ounces)
Year-End 2011
YTD 2012
Last Reported
Net Change
Percent Change
Countries Decreasing Reserves
Sri Lanka
0.32
0.12
Sept
-0.204
-62.5%
Germany
109.19
109.04
Dec
-0.159
-0.1%
Czech Republic
0.4
0.37
Dec
-0.028
-7.5%
Macedonia
0.22
0.22
Dec
-0.001
0.0%
France
78.3
78.3
Dec
-0.001
0.0%
Malta
0.01
0.01
Dec
-0.001
0.0%
Subtotal Gross Decreases
-0.39
Total Net Change
14.8
Sources: IMF, CPM Group. Data as of 1-31-13.

 

[As is summarized above,] the net increase in central bank gold buying for 2012 was 14.8 million troy ounces – and that’s before the final 2012 figures are in for all countries.

Central Bank Gold Reserve Growth

Here’s a picture of total central bank reserves since the financial crisis hit.

WorldCentralBanksHaveBeenBuyingGoldAggressivelySince2008 01 gold silver general

Whatever gold’s price movements, positive or negative, central bank officials have continued adding a lot of ounces to their reserves but this understates the case…[Why?] because most of the data exclude China, as well as a few other small countries. China last officially reported gold reserves in 2009, so the totals in the chart since then exclude whatever its purchases might have been…

China’s Gold Reserves Substantial

Based on data about gold imports through Hong Kong and the fact that, for the most part, Chinese production doesn’t leave the country, it…[would seem that China’s addition to reserves is growing at a rapid rate as the following information attests].

  • The Chinese central bank holds an official 1,054 tonnes of gold in its reserves.
  • Gold imports through Hong Kong in December alone hit a record high of 109.8 tonnes.
  • Imports for 2012 also hit a record high of 572.5 tonnes.
  • If you add 2012 mine production – remember that China is now the world’s largest gold producer – roughly 970 tonnes of gold was delivered to various entities within the country last year.
  • Cumulative imports since 2001 have reached 1,352 tonnes.
  • Since 2001, imports plus production total a whopping 4,793 tonnes.

…Jim Rickards, a highly respected author and hedge fund manager, said last month that China has probably already accumulated between 2,000 and 3,000 tonnes of additional gold reserves…

$2,500-$3,000 Gold by 2014 and to $7,000 in 2015

Jim thinks the next big catalyst for gold will be an announcement from China about its reserve position. Here’s what he told me in late December:

“The catalyst for a spike into the $2,500 to $3,000 price range for gold will be an announcement by China, probably in late 2013 or 2014, that they have acquired 4,000 tonnes or more in their official reserve position. This will put China on an equal footing with the US in terms of a gold-to-GDP ratio, and validate gold as the real foundation of the international monetary system. Once that position is validated, gold will move to the $7,000 range in 2015 and beyond.”

Even if Jim’s estimate is high or China doesn’t make an announcement until later, it’s clear that central banks around the world are buying gold in record quantities… [Why? Because:]

1. central bankers…know what it means to run the printing presses the way the U.S. has since 2008, even if price inflation is not immediately obvious. It’s no surprise they want to hedge their bets, moving more reserves into something with actual value… something that can’t be debased by a few computer keystrokes by an increasingly unfriendly government…

2. central banks…expect the dollar to move inexorably lower. It doesn’t matter that it’s been holding up against other currencies or that the economy might be getting better. They’re buying gold in record amounts because they see a significant shift coming with the status of the dollar, and they need to protect themselves against that risk….

Conclusion

Clearly we should take notice. If central banks are preparing for a major change in the value of the dollar, shouldn’t we? The fact remains that the US dollar cannot and will not survive the ongoing abuse heaped upon it by government planners and federal officials. That not only means the gold price will rise, but that many, if not most currencies, will lose a significant amount of purchasing power. This has direct implications for all of us.

Embrace the messages central bankers are telling us – the ones they tell with their actions, not their words. Buy gold. Your financial future may very well depend upon it.

Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.

*http://www.caseyresearch.com/articles/whom-believe-gold-central-banks-or-bloomberg

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