There
is evidence that central banks in several regions of the World are building up
their gold reserves. What is published are the official purchases.
A
large part of these Central Bank purchases of gold bullion are not disclosed.
They are undertaken through third party contracting companies, with utmost
discretion.
USZ
dollar holdings and USZ dollar denominated debt instruments are in effect being
traded in for gold, which in turn puts pressure on the USZ dollar.
In
turn, both China and Russia have boosted domestic production of gold, a large
share of which is being purchased by their central banks:
It
has long been assumed that China is surreptitiously building up its gold
reserves through buying local production. Russia is another major gold miner
where the Central bank has been purchasing gold from another state entity,
Gokhran, which is the marketing arm and central repository for the country’s
mined gold production. Now it has been reported by Bloomberg that the
Venezuelan Central Bank director, Jose Khan, has said that country will boost
its gold reserves through purchasing more than half the gold produced from its
rapidly growing domestic gold mining industry.
In
Russia, for example, Gokhran sold some 30 tonnes of gold to the Central Bank in
an internal accounting exercise late last year. In part, so it was said at the
time, the direct sale was made rather than placing the metal on the open market
and perhaps adversely affecting the gold price.
China
is currently the world’s largest gold producer and last year it confirmed it
had raised its own Central Bank gold holdings by more than 450 tonnes over the
previous six years. Mineweb.com – The world’s premier mining and mining
investment website Venezuela taking own gold production into Central Bank
reserves – GOLD NEWS | Mineweb
The
450 tons figure corresponds to an increase in the gold reserves of the central
bank from 600 tons in 2003 to 1054 tons in 2009. If we go by official
statements, China’s gold reserves are increasing by approximately 10 percent
per annum.
China
has risen to now be the largest gold producing nation in the world at around
270 tonnes. The amount bought in by the government initially looks like 90
tonnes per annum or just under, 2 tonnes a week. Before 2003 the announcement
by the Chinese central bank that gold reserves had been doubled to 600 tonnes,
accounted for similar purchases before that date. Why so small an amount you
may well ask? We think local and national issues clouded the central bank’s
view as it was the government that bought the gold since 2003 and have now
placed it on the central bank’s Balance Sheet. So we would conclude that the
government has ensured central bank gold purchasing must continue. “How will
Chinese Central Bank Gold Buying affect the Gold Price short & Long-Term?”
by Julian Phillips. FSO Editorial 05/07/2009
Russia’s
Central bank holdings are in excess of 20 million troy ounces (January 2010)
The
diagram below shows a significant increase in monthly purchases by the the RCB
since June 2009.
Central
Banks in the Middle East are also building up their gold reserves, while
reducing their dollar forex holding.
Gold
reserves of GCC states is less than 5 percent:
Dubai
International Financial Centre Authority economists released a report yesterday
calling for local countries to build gold reserves, according to The National.
GCC
states should boost their foreign reserve holdings of gold to help shield their
billions of dollars of assets from turbulence in global currency markets, say
economists at the Dubai International Financial Centre Authority (DIFCA).
Diversifying
more of their reserves from US dollars to the yellow metal would help to offer
central banks in the region higher investment returns, said Dr Nasser Saidi,
the chief economist of DIFCA, and Dr Fabio Scacciavillani, the director of
macroeconomics and statistics at the authority.
“When
you have a great deal of economic uncertainty, going into paper assets,
whatever they may be – stocks, bonds, other types of equity – is not
attractive,” said Dr Saidi. “That makes gold more attractive.”
Declines
in the dollar during recent months have dented the value of GCC oil revenues,
which are predominantly weighted in the greenback. GCC urged to boost goldreserves
According
to a report in People`s Daily;
The
latest rankings of gold reserves show that, as of mid-December, the United
States remains the top country and the Chinese mainland is ranked sixth with
1,054 tons of reserves, the World Gold Council announced recently.
Russia
climbed to eighth place because its gold reserves increased by 167.5 tons since
December 2009. The top ten in 2010 remains the same compared to the rankings of
the same period of last year. And Saudi Arabia squeezed to the top 20.
Developing
countries and regions, including Saudi Arabia and South Africa, have become the
main force driving the gold reserve increase. … .
It
should be understood that actual purchases of physical gold are not the only
factor in explaining the movement of gold prices. The gold market is marked by
organized speculation by large scale financial institutions.
The
gold market is characterised by numerous paper instruments, gold index funds,
gold certificates, OTC gold derivatives (including options, swaps and
forwards), which play a strong role, particularly in short-term movement of
gold prices. The recent increase and subsequent decline of gold prices are the
result of manipulation by powerful financial actors.
Prof.
Michel Chossudovsky
![Pakistan Cyber Force [Official]](http://feeds.feedburner.com/PakistanCyberForce.2.gif)
