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« Tracking Gold | Main | Gold Mining Stocks: A Questionable Performance »
Wednesday
Aug312011

International Monetary Fund: Central Banks still acquiring Gold

CMI Logo.JPG

Good Day Team,

First up is a plug for a site called cmi-gold-silver.com just for those who may not know of its existence. Headquartered in Phoenix, Arizona, CMI Gold & Silver Inc. is one of the oldest gold and silver dealers in the United States and has played a major role in introducing investors to the gold and silver markets. Although domiciled in Phoenix, Arizona, CMIGS buys and sells gold and silver with investors across the United States.

As another source of information you can register with them and from time they will send you articles of Interest, just as they alerted us to this one below which was carried by Reuters. We do advocate that you read as widely as possible in order to gain a balanced view of the state of play and therefore your investments should be more soundly based.

Russia Central Bank.JPG






LONDON

, Aug 31 (Reuters) - Colombia joined the ranks of official sector gold buyers in July for the first time in 13 years, along with Russia, mirroring the trend among emerging central banks to diversify their currency portfolios.

International Monetary Fund data released on Wednesday showed Russia, which is already the world's eighth largest official holder of bullion, raised its reserves by 4.42 tonnes in July to 841.131 tonnes, while Colombia added 2.3 tonnes to bring its reserves to 9.14 tonnes, its first increase since March 1998.

The gold price , which on Wednesday was last down 0.6 percent at $1,826.49 an ounce at 1145 GMT, has risen by nearly 30 percent this year, fuelled by a sagging dollar, waning confidence in the resilience of the global economy and purchases by central banks, particularly in emerging market (EM) countries, over the past few years.

"Not all of this is new net buying ... but it is a powerful source of demand for gold coming through from the central bank community and sends a number of messages, one of them is dollar holdings of EM countries are too high and they need to re-balance those and gold is the big beneficiary of that," said Deutsche Bank analyst Michael Lewis.

"This is still a very weak dollar environment where people do want to diversify."

While the dollar has fallen by over 6 percent this year against a basket ofcurrencies , global equities have lost nearly 7 percent , while hedge funds have fallen by a similar amount in 2011, according to the HFRX Global Fund Index.

Russia alone has added over 51 tonnes to its reserves this year and has doubled the size of its holdings in the last four years. Other major buyers this year include Mexico with over 100 tonnes, Thailand with 28 tonnes and South Korea with around 25 tonnes.

The data showed Kazakhstan cut its holdings by 3.11 tonnes to 67.323 tonnes, while Tajikistan reduced by 1.19 tonnes to 1.841 tonnes and Mexico by 0.19 tonnes to 105.690 tonnes, meaning that net purchases by central banks amounted 2.24 tonnes in July, worth about $132 million at current prices.

The largest official buyers of gold since 2007 have been China, which boosted its holdings by over 450 tonnes, Russia, with some 400 tonnes and India with 200 tonnes. (Reporting by Amanda Cooper; editing by Anthony Barker)

The above all sounds positive for the gold prices, in our humble opinion. Be warned though, this is going to a very bumpy ride and is not for the faint hearted. If you are new to this sector and wish to get involved, look to acquiring both physical gold and silver as your first step. You may then wish to acquire some good quality stocks and when you are ready to take a real swipe, a few well thought out options trades should keep your adrenalin flowing.





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sk chart return on SK OptionTrader Model Port 22 aug 2011.JPG



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So, the question is: Are you going to make the decision to join us today.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

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