Skip to comments.Central Banks Buy Most Gold in 50 Years
Posted on 02/16/2013 4:52:14 AM PST by Diana in Wisconsin
It was a year of many records for the gold market.
No, gold prices didnt reach an absolute record high in 2012 as some had forecasted, but it was still a year of many records for the gold market, according to the World Gold Councils latest Demand Trends report. In fact, gold prices averaged $1722 during the last three months of the year, the WGC said. Thats a record quarterly price.
Unfortunately for bulls, gold demand on a volume basis didnt reach a record. Indeed, it fell by 4 percent to 4,406 metric tons. However, on a value basis, annual demand totaled a record $236 billion due to the high gold price.
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way...” ~ Charles Dickens
The UK and European central banks went on a gold reserve selling binge ten years ago. Especially Gordon Browne, then the UK Chancellor of Exchequer, the idiot who later became Prime Minister
These same central banks are still fiat money committed and addicted FOREVER and are not now buying their gold back. The current central bank buying is massive but done by Russia China India and other nations. Brazil maybe etc etc. They see gold in their future
Our Federal Reserve and the US Treasury hate gold because when gold looks good the US Dollar looks bad
You can’t eat it. You can’t melt it down to make bullets to shoot werewolves.
But you can use it to fight a proxy currency war.
Then why is the price of gold on a significant downward trend? Something smells fishy ...
I'm not a gold expert or bug or bear or even an amateur. But looking at the global economic slump (heck even Walmart sales are down significantly), maybe there's not enough demand for goods to buy with it (e.g., oil)?
Just blue-skying, I really don't know (obviously).
The price of paper gold and physical gold aren’t always the same. Lots of gold on paper being manipulated that doesn’t really exist. http://www.zerohedge.com/contributed/2013-02-15/gold-leaps-backwardation
But as of last night I think that the $1550-ish area from a few months ago that many writers on gold have mentioned as a magnet for this drop is more likely to be the bottom than $1600. Why? Because last night, our old friend Jim Cramer made a point to talk it up on his "Mad Money" show, complete with props:
"How Cramer Is Playing Gold" (gold commentary starts at about 1:10)
It is a far far better thing than I have ever done
LOL that’s my tradng plan; whatever Cramer says, do the opposite.
Fishy indeed. Let’s get you caught up to the long-standing consensus in the goldbug community:
“Consider for a moment the remarkably high volume of COMEX contracts traded during the days when the spot prices for gold and/or silver were driven sharply lower.
“An illusion of weakness tends to prevail in these situations because the majority of precious metal traders do not seem to understand the difference between a paper claim and the real thing, nor do they seem to realize that only paper contracts or claims are being sold when the price of the precious metals drops not the actual metal itself. Basically, the futures contract seller cannot be forced to deliver physical metal, and so sellers can simply settle their profit or loss on the trade in cash.
“Furthermore, the fact that such price drops are typically initiated by the dumping of huge swaths of paper contracts by proprietary traders working at giant bullion banks that are too big to bail and/or fail, makes them seem more like manipulative attempts to scare the precious metals market into a selling panic.
“No one is actually selling real bullion during these allegedly not-for-profit-led precious metal sell-offs. Instead, the paper market is moving the metal prices as the tail seemingly wags the dog.
“On the surface, the alleged not-for-profit seller(s) has created the illusion of a bear market fanned by a slew of market experts who fall right into line by describing a hundred reasons why the selling might have occurred without ever getting close to stating the real reasons that the crash happened.
“Practically every notable move lower comes from concentrated short sellers intentionally destabilizing the market to force precious metal prices down, although the so-called exports never seem to see it this way. Furthermore, no matter how blatant the sudden dumping is, it is almost always painted and viewed publically as a ‘longs selling’ event.
“If all of that were not enough, predictable sell-offs almost always occur after margin announcements. As a case in point, maintenance margins were lowered last week, thereby providing an incentive for unsuspecting momentum or technical oriented longs to enter the market.
“As usual, these weak longs were quickly harvested in less than two trading sessions after the margin announcement was made. Traders operating on margin face considerable pressure to put up more money or exit their positions typically ultimately dumping their positions at a loss. This is exactly why this harvesting goes on month after month.”
Nah. I’ve been on this roller coaster for 13+ years now. My holdings in G&S have quadrupled in that time. I ain’t bailin’ now. ;)
Aren't you suppose to buy low?
The banks know what is going on as they are part of it all. They know the money supply has been diluted and Uncle Sugar is going broke fast.
“Then why is the price of gold on a significant downward trend?”
Banks buy in bulk and get bulk pricing. Spot gold prices are consumer prices. Consumers are running out of money to buy gold and are also diverting their money to prepping, so there is less money for buying gold. This makes demand weaker and therefore prices weaker.
If I go with gold, it has to be physical and in my hands. Not some synthetic paper that says “Trust us, this is as good as gold”.
I couldn’t agree more!