Far from suppressing the gold price, central bank buying may be propping it up. After a decade...


Far from suppressing the gold price, central bank buying may be propping it up. After a decade of selling, central banks were big buyers in 2011 as ETF demand for the metal slowed. Traditional buying (jewellery) has yet to recover to pre-crisis levels. What happens to gold if official buying slows?

From other sites
Comments (8)
  • rwalton401
    , contributor
    Comments (14) | Send Message
     
    Central banks are buying gold because they know it is worth something. They do not know if the foreign currencies they own - or even if their own currency - will be worth anything once the debt bomb explodes!
    10 Jul 2012, 11:16 AM Reply Like
  • Cameron
    , contributor
    Comments (4) | Send Message
     
    Where can I find a link showing a chart of global central bank net purchases of gold ?
    10 Jul 2012, 11:29 AM Reply Like
  • johnshaboom
    , contributor
    Comment (1) | Send Message
     
    Interesting thought. However they have more interest in keeping gold prices down. So they can keep the capital in the financial system. If you want over 30k in cash you have to order it 3 days in advance. Banks are short and capital.
    10 Jul 2012, 11:53 AM Reply Like
  • brassey
    , contributor
    Comments (4) | Send Message
     
    sellers at the bottom and buyers at the top; nobody mentions that idea about the donkey cb's
    10 Jul 2012, 11:57 AM Reply Like
  • goldmember steve
    , contributor
    Comments (58) | Send Message
     
    Cameron, this may be of help. :-)

     

    http://bit.ly/Ne0n4r
    10 Jul 2012, 12:10 PM Reply Like
  • goldmember steve
    , contributor
    Comments (58) | Send Message
     
    http://bit.ly/O0j5IA
    10 Jul 2012, 12:48 PM Reply Like
  • Ray Lopez
    , contributor
    Comments (1809) | Send Message
     
    "Traditional buying (jewellery) has yet to recover to pre-crisis levels. What happens to gold if official buying slows? "

     

    So let's be a contrarian and answer these two questions. First, if jewellery picks up to pre-crisis demand levels, it will help raise the price of gold. Second, if central banks are really contrary indicators (as historically they are) then "if official buying slows" it means the price of gold will go up, not down, by definition. So while we are in a short term lull in the price of gold now, long term gold will go up in price, from a contrarian point of view.
    11 Jul 2012, 01:54 AM Reply Like
  • sean.parmelee
    , contributor
    Comments (791) | Send Message
     
    Being contrarian to a contrarian hypothetical means assuming the status quo.
    11 Jul 2012, 11:33 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs