Youlikelyheard that the Central Bank Gold Agreement was extended by thesignatorybanks last month. This is the agreement where central banksaround theworld agree to limit sales and to do so in an orderlyfashion so as tonot disrupt prices.
While most writers focused onthe fact that the agreement seta lower limit (400 tonnes per year, downfrom 500) – clearly a bullishindicator – I think there’s a more obviousfact many are overlookingthat’s even more bullish.
Inthe first two, five-year agreements, CBGA signatories sold4,000 tonnesof gold, or approximately 141 million ounces. This is anincredibleamount of gold to dump on the market; it’s equivalent toalmost twoentire years of global production. Based on an average goldsellingprice over those 10 years of $600, this equals approximately$84.6billion of gold.
This amount of sales should’ve had a hugely depressing effect on such a small market. After all, the gold 
issmaller than the market cap of Walmart. If I had asked you inadvance ofthose sales to estimate the price of gold once all the metalhad hit themarket, you probably would have said it would have losthalf its valuefrom its $252 levels (when the selling started), ormore. In otherwords, a price around $125 per ounce.
But what happened during those 10 years? The gold price soared,risingfrom a 1999 low of $252 to its current price of $950, close toaquadruple. I wonder what the price would be if central banks had been hoarding gold, like us, instead of selling it?
Nowthat the CBGA has agreed to sell even less gold, thedepressing effectsales have on the price will lessen. Add in the factthat sentimentamong central banks is shifting from anti-gold topro-gold, and I thinkit won’t be long before $1,000 is the new floorof the gold price andnot the ceiling.
Yes, the fun is just beginning.
Andwhile gold is likely to move up, gold-related investments– such aslarge-cap gold producers and near-producers – can give youeven more ofan upside.