Central Bank Gold Buying Back On Track

Jul. 21, 2016 9:20 AM ETSPDR Gold Trust ETF (GLD)4 Comments
Lawrence Williams profile picture
Lawrence Williams


  • The Russian central bank has announced an 18.7 tonne increase in its gold reserves in June after only expanding them by 3 tonnes in May.
  • This follows on from China announcing a 15 tonne rise in its central bank gold reserve in June following a zero increase in May.
  • Overall rises in central bank gold holdings for the full year look like coming in at around 300-350 tonnes, down from over 560 tonnes in 2015.

Central Bank gold buying has been put forward as one of the key gold demand elements in the metal's supply/demand fundamentals. In reality, though, for the past couple of years or so there have only been two central bank gold buyers of any real significance - Russia and China - which between them had been announcing month-on-month purchases equivalent to around 400 tonnes a year, ever since China started announcing its monthly gold holding increases from the middle of 2015. There have been some other buyers, which have reported sporadic rises, or falls, in their reserves, while the only other regular gold buyer has been Kazakhstan, taking in about 2.5-3 tonnes a month which amounts to approximately the monthly production from its own gold mining industry.

So when in May Russian gold buying fell to a paltry 3 tonnes and China announced a zero increase in its reserves, analysts wondered whether this signified an almost total cutback from the world's principal central bank gold buyers, which would throw their supply/demand projections for the year into total disarray.

However, in June things seem to be getting back on track with respect to Chinese and Russian gold buying. First China announced a return to increasing its gold reserves by 15 tonnes that month - see: Chinese Central Bank Gold Buying Is Back - and now the Russian central bank has announced a good increase in its gold reserves too, also for June. Analysts may still have to reduce their overall central bank buying forecasts for the year, though - particularly as Venezuela has been having to sell a significant proportion of its gold to meet its international debt commitments. (So far this year it has reported sales of around 67 tonnes.) At this stage of the year we would estimate net central bank gold buying for the year at

This article was written by

Lawrence Williams profile picture
Former CEO of Mining Journal Ltd. and subsequently Editor and General Manager of Mineweb.com - a position relinquished in October 2012 to continue as a freelance writer. Graduate mining engineer from London's Royal School of Mines (part of London University) - has worked on gold, platinum and uranium mines in South Africa, copper in Zambia, uranium in Canada and holds a South African Mine Manager's Certificate. Joined Mining Journal originally as Financial Editor and worked for the company for over 30 years spending 13 years as CEO. Particular follower of the gold and platinum market and has written numerous articles on precious metals for Mining Journal and Mineweb and has also written for London's Financial Times as well as for other media and publications including SeekingAlpha. Is a regular writer for for sharpspixley.com . Also write articles for U.S. Gold Bureau.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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