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Central Bank gold purchases - an assessment of the impact

Central Bank gold purchases - an assessment of the impact

After yesterday's report on the latest Central Bank gold purchases, Jeffrey Nichols analyses the impact of such buying on the global gold market and its underpinning of the gold price

Author: Jeffrey Nichols
Posted: Wednesday , 25 Apr 2012

A recent survey of central-bank reserve managers predicted that the most significant change in their official reserve holdings over the next 10 years will be their intentional accumulation of gold.

In fact, central-bank reserve managers are already moving in this direction, expanding their reported bullion reserves by 439.7 tons last year - the biggest annual increase in almost five decades . . . and this doesn't count significant purchases that remain unreported.

Central banks, taking advantage of depressed market prices, were again big buyers of gold this past March according to statistics just issued by the International Monetary Fund. Reported official gold holdings increased by 49.8 metric tons last month and 55.1 tons during the first quarter.

However, it is quite likely that actual central bank gold reserves rose considerably more as some countries, led by China, choose not to report or otherwise publicize their gold market activities.

Among those central banks reporting to the IMF, Mexico was perhaps last month's most notable buyer, adding some 16.8 tons this past March on top of the 98.8 tons purchased in 2011...
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