Central Banks Moving the Gold Market?https://cawidgets.morningstar.ca/ArticleTemplate/ArticleGL.aspx?id=537867
The central banks have been snapping up bullion in recent years, sometimes purchasing huge tonnages of gold that can total more than 5% or even 10% of annual mine supply. We think they use three main purchase methods to avoid disrupting the bullion market: trading off-market with other central banks, purchasing gold through third parties such as sovereign wealth funds, and purchasing domestic mine supply before it goes on the global gold market.
The fact that central banks can use the last two purchase methods to make "stealth" purchases of bullion holds interesting implications--it means that actual official sector demand might currently be much larger than the reported figures. After all, China, Saudi Arabia, and any other nations looking to buy gold to diversify their reserves would have an incentive to keep their purchases hidden from the public eye so as to avoid distorting gold prices upward before they can complete their purchase program. We know that China and Saudi Arabia have made stealth purchases of bullion in the past, so it is reasonable to assume that they will continue to do so as long as they are looking to accumulate the yellow metal