The Feds and the central banks continue with their programme of selling gold and driving gold prices lower. So who are the real winners?

Gold has made continuous and steady progress over the last four years. The banks have an arrangement to sell a stated amount each year and they religiously stick to their programme of selling despite gold prices going up. Why? Surely one of those bankers is bright enough to say hang on, I think we should be holding for the time being. I don’t expect Britain to do so as Gordon Brown has demonstrated just how thick he is by selling 60% of the British gold reserves at the bottom of the market. Is the demand for currency by each individual government so great that they have no choice but to sell gold in order to feed their ill thought through budgets plans? We know that the public sector is expanding as though they believe that they actually produce something, but just how long can this go on?

In any business enterprise your capital most be preserved for future investment. If government spends its reserves on merely supporting itself then we are in bigger trouble than even we at Gold Prices could have imagined. But I guess you all new that. I read Peter Grandich the other day and he is talking about the next recession in America making 1929 look like a walk in the park. I try to be positive at all times but I’m starting to wonder if we are actually getting close to the edge.

Anyway lets consider the timing of this recent sell off. Gold has been sold down from $640 to around $577 as we write. In two weeks time the window for the central banks to sell will have come to an end for this year. Over in India the harvest season is reaching its conclusion and the wedding season is about to begin. The worlds biggest consumers are about to load up on gold, and what a wonderful opportunity for them. Gold, thanks to the west is now $100 cheaper than it was only a month or so ago. If we keep doing this then we are transferring real wealth from the west to the east. Are we doing this by accident or have I lost the plot? Good luck to the new owners for they have acquired a good bargain.

What will these bankers say to each other when gold hits $850? or $1000? ‘My word, who could have predicted that’?

15 September 2006