A Central Bank Bidding War for Gold?

Gold
Gold has rallied to new record nominal highs (in dollars, euros and pounds) and is currently trading at $1,176.40/oz, £705/oz and €784/oz respectively. New levels of resistance and support are $1,186/oz and $1,158.43/oz.

Reports from the Financial Chronicle that the Indian central bank may buy the rest of the IMF gold reserves of just over 201.3 tonnes (their recent 200 tonne purchase has resulted in a gain of $800 million dollars so far) has contributed to weakness in the dollar and to new record nominal highs today. With the Chinese, Russian and other central banks (particularly large creditor nations) are looking to also increase their gold reserves (which remain meagre compared to the US and most European gold reserves) there is the possibility of a bidding war for gold which could send the price much higher in 2010.

http://en.wikipedia.org/wiki/Gold_reserves

The average gold reserves as a percentage of total foreign exchange and gold reserves, of major industrial nations the US, Japan, ECB, UK, Germany, Italy, France and Switzerland are over 37% (with the Federal Reserve being at 78.9%). Whereas the increasingly powerful creditor nations China, Russia, India, Taiwan, South Korea, Hong Kong, Brazil and Singapore have a tiny average of 2.2%. This sets the stage for markedly higher gold prices in the coming months as does increasing investment demand (retail, HNWs, hedge fund and pension funds) which will likely continue to overcome the substantial fall in jewellery demand. This substantial investment demand could possibly lead to a 1970s style parabolic rise in the gold price (gold rose some 25 times from 1971 to 1980) and thus the inflation adjusted high of $2,300/oz remains a realistic long term possibility.

Silver
Silver is currently trading at $18.64/oz, £11.21/oz and €12.42/oz.

Platinum Group Metals
Platinum is $1,461/oz, palladium is $373/oz and rhodium is $2,525/$2,625/oz.

Disclosure: no positions

Comments

[dieuwer]

IMF sells 10 tonnes of gold to Sri Lanka

www.google.com/hostedn...

2009 Nov 25 07:02 PM

[DormRoom]

yes, and let's not forget the most important trend this year: the global expansion in money supply by the majority of the world's banks is vastly greater than the current projection for gold in development or production; or in other words to maintain the historical ratio of gold oz: world currencies, we need to find, develop, and produce a heck of a lot more gold.

2009 Nov 25 07:16 PM

[The Geoffster]

Blue Horseshoe loves gold.

2009 Nov 25 08:10 PM

[gambitrader]

I find it interesting to constantly see the US's gold hoard never changing, countries are constantly obtaining more, or offloading some, however the US figures remain constant. I just don't believe they have this gold. Or is their agenda to hoard it till they get gold to a value where they can sell the bulk of it to pay down their debts, since
they are the only ones who can drive gold higher through destruction of the USD?

2009 Nov 25 11:45 PM

[Swashbuckler]

But not near as much as he loves Anacot Steel.


On Nov 25 08:10 PM The Geoffster wrote:

> Blue Horseshoe loves gold.

2009 Nov 25 11:49 PM

[DONE_SONZ]

Sounds like the central banks are finally starting to figure out what's going on in the world.

2009 Nov 26 06:48 AM

[FMOTL]

I,m with you on that one gambitrader, anyone who stil believes all that gold is in Fort Knox untouched since the 1950,s just as well believe in the tooth fairy ! Care to invest in some rather expensive tungsten anyone ? America eh ! nation of gullible muppets <not you tho Ron Paul>.At least in the UK the moronic Brown had the decency to tell the plebs he was gonna do them a favor and sell their useless gold for them and buy valuable paper dollars and euros !

2009 Nov 26 07:57 AM

[5142152-337]

PROVE IT TO ME, PLEASE! Show me that the US has 8.333 in gold. PROVE IT!

2009 Nov 27 08:35 AM