RE: Gold buyingPaper gold under pressure while central banks continue to buy physical
May 12th, 2011.
Kenneth Schortgen Jr
https://www.examiner.com/finance-examiner-in-national/paper-gold-under-pressure-while-central-banks-continue-to-buy-physical
Paper gold has been under pressure for nearly two weeks as the commodities exchanges raise margin requirements to undermine the investors, speculators, and hedge funds who seek safety from a falling dollar. However, the physical gold market has experienced little change in prices as central banks in Mexico, Russia, and Thailand have actually increased their gold holdings by large amounts.
On May 12th, the World Gold Council commented on the IMF's May report of International Finance Statistics, and in the document, several countries bought enough of the metal to move higher on the world listings.
As of the IMF’s May release of its International Financial Statistics, several countries have reported additional purchases of gold. Notably, Mexico reported to the IMF that it acquired 14.8 and 78.5 tonnes of gold in February and March, respectively. This was a significant increase in its gold holdings, raising Mexico’s position in the table to the 34th largest holder of gold with 100.2 tonnes.
Additionally, Thailand also reported an increase in its gold reserves of 9.3 tonnes in March, raising its total gold holdings to 108.9 tonnes. This follows an acquisition of 15 tonnes in July of last year. Finally, Russia continues to regularly add gold to its reserves, adding 22.5 tonnes between January and March. Russia is the 8thlargest holder of gold. – World Gold Council via Zerohedge
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The importance of this information is to show investors the difference between the markets desire for paper precious metals versus holding physical gold. The physical market has much less supply, and compared to the recent fall in future spot prices (Paper), physical sales from dealers and individuals show that prices are at least $10 more than what the paper market is reporting.
The other future trend to watch is China's call last week to increase their central bank gold holdings by as much as seven times their current amount. China is looking to move away from their dollar reserve holdings and instead, purchase physical commodities and materials to include increasing their gold holdings by several tons. This is a primary reason why other central banks are buying physical gold now, in case China impacts the market price in the future with large purchases.
As the exchanges, Treasury Department, Federal Reserve, and regulators continue to put pressure on the paper gold markets, central banks around the world are welcoming this manipulation by the US commodity markets as it helps them to accumulate much more physical gold, and grow their holdings at a cheaper price.