Monday, May 23, 2011

Central Banks are Buyers of Gold

According to the statistics for the World Gold Council, New Zealand owns no gold in their Central Bank vaults.

There's plenty in the ground, but that's a contentious issue with our '100% pure' profile worldwide.

That's a shame, as there are plenty of ways of digging up this wealth without ruining the environment. But perception is everything in advertising.

Worldwide, though, the Central Banks, that can see the writing on the wall with fiat currencies, are buying gold by the truckload. Mexico bought 93 tons last month. The Chinese also know they have to have gold . They are not only keeping their own mined supply but buying on the open market. The Chinese are also snapping up junior mining shares. Those small startup mining companies that risk capital to search for gold and silver.

Since the debacle of Gordon Brown's sale of 395 tons of gold from the Bank of England 10 years ago (known as Gordon Brown's Blunder as he sold at the very bottom of the gold market), to now when Central Banks have been buyers and not sellers, the currency situation has worsened.

According to the WGC, China and India accounted for 56% of the 2011 first-quarter's 981.3 tonnes of Gold Bullion demand. US demand fell from the end of 2010. This is telling.

"Chinese appetite for gold has increased rapidly over the past few years," says Albert Cheng, managing director for the Far East at the WGC.

Inflation in China and India is rampant and citizens there can see the writing on the wall for their paper currencies. They are rapidly swapping those notes with real money. Demand for gold and silver coins and bars are also at an all time high in many western countries. In fact it has been reported that there are shortages occurring in the silver market.

If you had financial interest in a country that was about to default, and that country had gold reserves what would you accept as payment? Paper of gold?

The end game of this current way we account for our goods and services wordwide may be about to change. Perhaps a return to a gold standard, that arguable kept prices stable when it has been in play historically (and when Governments didn't meddle with it)

It has been said that the 'smart money' people are always the first to see trends and to shift their capital base from one 'failing' asset class to the next that will out perform the old. Central Banks created this fiat money system. They were very smart. It worked well for them. Now they are shifting sovereign wealth away from fiat money to monetary assets.

What does this say to you? Follow the smart money?

NB Interesting times in Greece. Will this be the week tat Greece falls under the weight of it's own debt and defaults?

Gold in New Zealand dollars: $1905.45 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $44.14 per oz
Previous all time high: $48.58
per oz

Articles of interest:

John Rubino: Get Ready For Accelerating Devaluation of All Fiat Currencies

See article here 

China Becomes World’s Largest Gold Buyer

See article here

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001

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