Why Have Central Banks Become Net-Buyers of Gold?

[Silver2012]

In my opinion, central banks becoming net-buyers of gold since 2011 is one of the most long term bullish factors for the yellow metal. One thing that is less clear however is the reason for this buying spree. Are they anticipating some seismic shift in the monetary system? Maybe a departing from the USD as the world reserve currency? Or maybe a complete and utter financial meltdown of epic proportions. More information below.

[youtube]http://www.youtube.com/watch?v=q2SWhWfwFEQ[/youtube]

Source: WGC

 

[Old Codger]

I don't think the RBA is buying gold.

They are too busy buying US Treasury Bonds.

OC

 

[Ronnie 666]

Yes they are sitting on their pile of gold (80T) almost all held "safely" by the BOE
Dont ask for it back as none of us will live long enough to see that !!!

 

[Ronnie 666]

From RBA website

Gold and foreign exchange $56,9 Billion (assets)

80T of Au is about $3.5 Billion

Not a pretty sight

 

[Old Codger]

Last I heard they were sitting on US$33 billion of US Treasuries. i presume in your $56.9 Billion.



OC

 

[Ronnie 666]

Last I heard they were sitting on US$33 billion of US Treasuries. i presume in your $56.9 Billion.



OC

Yes I presume they have toxic BOE gilts and other paper to get them up to the $50Billion mark.

 

[TreasureHunter]

If China holds 1.3 % of its reserves in gold, then it has a lot more buying to do to reach the Germany-France 60-70 % range.

Brazil with its 0.2 % is way below.

 

[Pirocco]

Central banks seem to like paying high prices for gold when they buy and getting low prices for gold when they sell: they want to punish people that stack gold in an attempt to evade their fiatcurrencies-based theft.
When alot of those people want to buy gold, central banks push/hold the price up, as to make them receive less ounces gold.
When alot of those people want to sell gold, central banks push/hold the price down, as to make them receive less fiatcurrency.
That's why.

 

[Old Codger]

"If China holds 1.3 % of its reserves in gold, then it has a lot more buying to do to reach the Germany-France 60-70 % range."


As always, China is telling lies.

They have banned all export of domestic production, nearly 400 tons i think, and are buying every ounce they can get their hands on. They have a LOT more gold than they are letting on, and i expect a world shattering announcement in the months ahead. No real idea when.


OC

 

[Pirocco]

If China holds 1.3 % of its reserves in gold, then it has a lot more buying to do to reach the Germany-France 60-70 % range.

Brazil with its 0.2 % is way below.

Where does that Germany-France % origin from?
The European Central Bank has just 15% of its reserves in gold (and that even includes swapped).

 

[Holdfast]

Shanghai Gold exchange

Statistics

http://www.sge.sh/publish/sgeen/statistics/index.htm



*SGE Price - Daily
http://www.sge.sh/publish/sgeen/sge_price/sge_price_daily/index.htm

*SGE Price - Monthly
http://www.sge.sh/publish/sgeen/sge_price/sge_price_monthly/index.htm


Includes Delivery Volume

 

[Old Codger]

I am no expert, but i would expect that it will take China a fair while to get the gold they need to FULLY back the Yuan as a Reserve Currency.

On that day, the price of Gold will have to go to something over $10,000 an ounce, and it will be impossible for any Reserve Bank, such as the RBA, to try to get its hands on any.

It will cost the same to buy on the open market as to confiscate what we have here.

JMO


OC

 

[TreasureHunter]

If China holds 1.3 % of its reserves in gold, then it has a lot more buying to do to reach the Germany-France 60-70 % range.

Brazil with its 0.2 % is way below.

Where does that Germany-France % origin from?
The European Central Bank has just 15% of its reserves in gold (and that even includes swapped).

From the video... ask Silver 2012 for the source of his figures.

 

[Pirocco]

If China holds 1.3 % of its reserves in gold, then it has a lot more buying to do to reach the Germany-France 60-70 % range.

Brazil with its 0.2 % is way below.

Where does that Germany-France % origin from?
The European Central Bank has just 15% of its reserves in gold (and that even includes swapped).

From the video... ask Silver 2012 for the source of his figures.

The thing is, those 60-70% figures are % of Forex reserves, being the reserves in foreign currency, not own currency. Country states/central banks' Forex reserves are only a part of their reserves, so countries with a bigger pool Forex reserves will tend to have lower gold/Forex ratio's.
Just look at the numbers on https://en.wikipedia.org/wiki/Official_gold_reserves
Germany has 3,390.6 tonnes gold as 66% of Forex reserves (so non euro currency)
France has 2,435.4 tonnes gold as 65% of Forex reserves. (so non euro currency)
US has 8,133.5 tonnes gold as 70% of Forex reserves (so non dollar currency)
China has 1,054.1 tonnes gold as 1% of Forex reserves.(so non yuan currency)
Take for ex Germany/China, Germany has 3 times the amount gold of China.
But the % of Forex of the Germany is 66 times the % of Forex of China.
For example, China can reach the same gold to Forex ratio as Germany, not by buying more gold but instead just lowering its foreign currency reserves.
So claiming that China would have to 'catch up' their %, well they can, without buying gold.
So I then wonder about the topics questions answer. Take for ex the US dollar reserves in the world. The total now is two times the 2008 total, ex China has now double dollar Forex reserves than in 2008. So this alone halved their gold to Forex ratio, without any purchasing/selling of gold involved.
And this example case makes your claim "If China holds 1.3 % of its reserves in gold, then it has a lot more buying to do to reach the Germany-France 60-70 % range." as a 'NOT has to'.