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Commodities
Central Banks Buying Gold
FNArena News - February 08 2007
By Greg Peel
Gold dealer Blanchard & Co reports the latest IMF statistics indicate the central banks of Russia, Kazakhstan, Greece and The Philippines have all added to gold reserves recently. Of the four, Russia had often talked of gold purchases, but the other three are a surprise to the market.
Russia added 7.45t to reserves, Kazakhstan 7.38t, Greece 3.56t and Philippines 1.4t.
Blanchard & Co notes the trend of central bank gold activity is shifting towards the buy side, as the above purchases come not long after the Central Bank Gold Agreement banks failed to meet their selling quota in 2006. This is a bullish sign, says Blanchard's CEO Donald W. Doyle.
UK commodity specialist Natexis has also joined the chorus of gold bulls, suggesting any price weakness should be seen as a buying opportunity. While demand from the jewellery sector has not been particularly strong, buying does reappear if gold drifts towards US$600/oz.
The supply side is also supportive, notes Natexis, and gold scrap supply is not expected to hit the market until US$700/oz is breached. A higher gold price is gaining market acceptance. The key driving factor will be an increase in activity from the investment community, the analysts suggest.
Our archive tells no lies. FNArena warned its readers well before the price of crude oil peaked in 2008 the speculator bubble would deflate with devastating
consequences for those holding oil company shares. In August we warned the most severe correction in modern history was forthcoming for natural resources.
In 2007 we warned the problem with US subprime mortgages would prove much bigger than experts and media were anticipating (among other things).
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