World Gold Council's Grubb: Gold To Continue Higher In 2013 Amid China Recovery, Record Central Bank Buying

Nov. 23, 2012 1:49 PM ETGLD, IAU, FTAG, PHYS, LPAL, IPAL1 Comment
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Hard Assets Investor

By Sumit Roy

WGC’s managing director of investment discusses the outlook for gold.

Marcus Grubb is the managing director of investment for the World Gold Council, where he leads both investment research and product innovation, as well as marketing efforts surrounding gold's role as an asset class. Grubb has more than 20 years' experience in global banking, including expertise in stocks, swaps and derivatives.

After the release of the World Gold Council's quarterly Gold Demand Trends survey, HardAssetsInvestor’s Sumit Roy spoke with Grubb to get more details on the particulars of some of the report's more surprising conclusions.

Hard Assets Investor: Central bank gold demand looked strong again last quarter and seems on pace to exceed last year’s five-decade high. Which central banks are buying? And what influences their purchase decision?

Marcus Grubb: Yes, absolutely. On the face of it, central bank net purchases of gold fell 31 percent when compared with Q3 2011. But actually, 97.6 tons is a great number. And it means that through the end of September, this year is an even better year than last year; and last year was a record year. To the end of September, central banks have now bought 373.9 tons. Last year through September, they bought 343.9. So we’re looking at another 450-500-ton year for central banks, which is a record since the ’60s.

The most recent name that’s popped in, after many years of not buying gold, is Brazil. Brazil’s buying confirms a trend we’ve seen. If you look back over this year and in this quarter, the buyers are Latin American countries — Mexico, Bolivia, now Brazil; they are Central Asian countries — Russia, Kazakhstan, Ukraine; and Far Eastern countries such as Thailand, Philippines and South Korea. The developing country central banks are the ones doing the purchasing.

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