Tuesday, June 21, 2005

Central Bank Gold Sales

On the 20th of June Bloomberg ran an article that suggested the gold price may rise on speculation Central Banks will reduce gold sales.

15 European central banks agreed to limit gold sales and gold lending to 500 tons a year for the next 5 years in Septemeber last year. European central banks had already sold 346 tons of gold by April 1 2005.

That is about 13 tons a week, London-based researcher GFMS Ltd. estimates.

"If that rate of gold sales by Central banks was maintained, Central Banks that accounted for most of a 23 percent rise in gold supply in the first quarter will reach their sales target this week" Claudia Carpenter of Bloomberg said.

``They cannot keep selling at this rate,'' said Ian MacDonald, managing director of precious metals trading in New York for International Assets Holding Corp. ``We should really be asking where the gold is going to come from to meet growing investor demand.''

``The central bank issue is an important one for the next six months,'' said William O'Neill, a partner at Logic Advisors LLC, a commodity consulting company in New Jersey. Even if the sales target isn't met this week, the central banks ``will be selling less in coming weeks,'' he said.

Claudia Carpenter of Bloomberg said "Central banks are the biggest holders of gold, with 31,822 tons, or 1 billion ounces, in their vaults at the end of 2003, according to the International Monetary Fund."

Bill Murphey of GATA.ORG points out that the 31,822 tons or 1 billion ounces in central bank vaults figure assumes that the central banks have not sold any gold in close to a decade, nor lent/swapped any out.

Murphey says "this is a LUDICROUS number, yet the one bandied about so often by the establishment. The central banks are lucky if they have 14,000 tonnes left. The discrepancy is astounding and a featured reason WHY GATA has been silenced by those allied with the powerful Gold Cartel. For the world to know what GATA knows and believe it, there would be a gold buying panic."

"The price of gold will soar to ration future demand" says Murphey.

Murphey highlights that gold demand exceeds gold mine and scrap gold supply by more than 1500 tonnes per year. GATA suggests that this shortfall is filled by Central Bank Gold Sales.

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