Central Banks in Scramble to Buy Gold
Enviado: 17/11/2011 18:37By Rhiannon Hoyle
Bloomberg
It seems there’s a few mystery buyers in the gold market, and they have been snapping up bullion tons at a time.
These unknown purchasers are none other than central banks, with the official sector having swooped in to secure a net haul of almost 150 tons of the shiny yellow metal in the third quarter—almost seven times as much as was bought in the year-earlier period.
While a number of these banks have been named, having officially reported their gold buying activity to the International Monetary Fund, a significant proportion of the sum is yet to be attributed to specific countries, due to confidentiality reasons.
According to the World Gold Council, the official sector bought 148.4 metric tons in the third quarter. It is the highest level recorded since central banks became a net buyer of the precious metal in the second quarter of 2009, after two decades of net sales.
The WGC—an industry association representing 22 gold miners, including Barrick Gold Corp., Newmont Mining Corp. and AngloGold Ashanti—attributed 15 tons of the purchases to Russia, 14 tons to Bolivia and 25 tons to Thailand.
While it openly states that other major purchases have been made by a number of countries’ central banks, it said they “cannot currently be identified due to confidentiality restrictions.”
Gold traders and analysts have been stunned by the final figure provided for the quarter. Most say it was around 100 tons above what they had originally tallied.
Bullion dealer GoldCore suggested a number of central banks may be quietly and gradually accumulating large quantities of bullion.
“They are not declaring their purchases due to concerns that this may further devalue their currency reserves, which are mostly in U.S. dollars and also in euros, and would result in them having to pay higher gold prices for their new gold reserves,” it said.
The figures that are officially reported to the IMF aren’t independently audited, and thus there have long been suggestions of both over- and under-reporting by a number of countries, analysts say.
In an interview, Marcus Grubb, managing director of investment at the WGC, added:
“While one can account for some of the purchases—from Thailand, Bolivia, Russia etcetera–there is an unaccounted amount out there. A clue probably lies in the fact that a lot of [recent] buying has been from central banks that have been in surplus, [in regions] like Asia and Latin America.”
There has long been market speculation of purchases by China, as the country’s economy and trade surplus has charged ahead of most others. Other growing economies like India have also had their name thrown in the mix, as central bank officials around the world have spoken of the need for countries to diversify their portfolios.
Purchases may have possibly come from Kazakhstan too, from domestic production, a senior industry participant said.
According to the WGC, China has just 1.7% of its total foreign reserves in gold, compared to the U.S.’ 76% and Germany’s 73%. India, meanwhile, has 9%, Peru has 3.8% and Brazil just 0.5%. Kazakhstan has 11.3%.
“No doubt we will find out [where this buying has come from] by the end of the year,” Mr. Grubb said in the interview with Dow Jones.
In the meantime, the news should prove a very bullish signal for the market, which is already benefiting from low real interest rates and continued economic uncertainty.
“And no doubt the market will be busy speculating on the identity of such buyers” for many weeks to come, UBS analyst Edel Tully said.
Bloomberg
It seems there’s a few mystery buyers in the gold market, and they have been snapping up bullion tons at a time.
These unknown purchasers are none other than central banks, with the official sector having swooped in to secure a net haul of almost 150 tons of the shiny yellow metal in the third quarter—almost seven times as much as was bought in the year-earlier period.
While a number of these banks have been named, having officially reported their gold buying activity to the International Monetary Fund, a significant proportion of the sum is yet to be attributed to specific countries, due to confidentiality reasons.
According to the World Gold Council, the official sector bought 148.4 metric tons in the third quarter. It is the highest level recorded since central banks became a net buyer of the precious metal in the second quarter of 2009, after two decades of net sales.
The WGC—an industry association representing 22 gold miners, including Barrick Gold Corp., Newmont Mining Corp. and AngloGold Ashanti—attributed 15 tons of the purchases to Russia, 14 tons to Bolivia and 25 tons to Thailand.
While it openly states that other major purchases have been made by a number of countries’ central banks, it said they “cannot currently be identified due to confidentiality restrictions.”
Gold traders and analysts have been stunned by the final figure provided for the quarter. Most say it was around 100 tons above what they had originally tallied.
Bullion dealer GoldCore suggested a number of central banks may be quietly and gradually accumulating large quantities of bullion.
“They are not declaring their purchases due to concerns that this may further devalue their currency reserves, which are mostly in U.S. dollars and also in euros, and would result in them having to pay higher gold prices for their new gold reserves,” it said.
The figures that are officially reported to the IMF aren’t independently audited, and thus there have long been suggestions of both over- and under-reporting by a number of countries, analysts say.
In an interview, Marcus Grubb, managing director of investment at the WGC, added:
“While one can account for some of the purchases—from Thailand, Bolivia, Russia etcetera–there is an unaccounted amount out there. A clue probably lies in the fact that a lot of [recent] buying has been from central banks that have been in surplus, [in regions] like Asia and Latin America.”
There has long been market speculation of purchases by China, as the country’s economy and trade surplus has charged ahead of most others. Other growing economies like India have also had their name thrown in the mix, as central bank officials around the world have spoken of the need for countries to diversify their portfolios.
Purchases may have possibly come from Kazakhstan too, from domestic production, a senior industry participant said.
According to the WGC, China has just 1.7% of its total foreign reserves in gold, compared to the U.S.’ 76% and Germany’s 73%. India, meanwhile, has 9%, Peru has 3.8% and Brazil just 0.5%. Kazakhstan has 11.3%.
“No doubt we will find out [where this buying has come from] by the end of the year,” Mr. Grubb said in the interview with Dow Jones.
In the meantime, the news should prove a very bullish signal for the market, which is already benefiting from low real interest rates and continued economic uncertainty.
“And no doubt the market will be busy speculating on the identity of such buyers” for many weeks to come, UBS analyst Edel Tully said.