Central Banks now buying Gold

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The Russian Central bank is buying up to 1000 tonnes of gold, to double its gold holdings from 500 tonnes, most of which, 377 tonnes, is lent out.

http://en.rian.ru/russia/20051128/42241821.html

The news of Russian central bank gold buying is getting more press. Either the Russian buying, or the news of the Russians buying, is likely responsible for the recent run up in gold prices.

Analysis: The Russians have $165 billion in their central bank reserves.
500 tonnes x 32,152 oz/tonne = 16,076,000 oz. That's 16 million oz.
At $524/oz., 500 tonnes will be worth $8,423,824,000 That's $8.4 billion dollars.

That's not much money, and it's a lot of gold!

The Russians are only planning on putting 5% of their central bank reserves into gold.

Why is this such a big deal? The world has lots of dollars & not much gold.

Five hundred tonnes is huge in the gold world. World mine supply is a mere 2500 tonnes annually. Total gold mined in all of human history is a mere 150,000 tonnes. Source: gold.org

To put 16 million ounces of gold into context, as to how much that is, Barrick, the second largest gold mining company in the world, hedged, that is, presold, about 13 million oz. of gold at prices around $330/oz. At $524/oz., that's a loss of about $2.5 billion dollars. Barrick could go bankrupt from this "gold debt". If you own Barrick, or any of the other hedged gold miners such as Placer Dome, I strongly recommend that you sell them, and buy unhedged stocks, or exploration companies, or physical metal, instead. Barrick can no longer afford to buy 13 million oz. of gold to settle this gold debt, because it would take more cash than Barrick has.

However, buying 16 million oz. of gold will be no problem for the Russians. They have $165 billion dollars to diversify out of.

Let me continue to put 500 tonnes (16 mil. oz.) into perspective:

European central banks agreed to limit their gold selling to 400 tonnes per year, back in 1999. At this announcement back in the fall of 1999, it caused a $70 spike upwards in the gold price, and you can see this spike on any gold chart. Why the spike? Because people realized that the gold selling (and gold lending) by central banks was going to be slowing down. And it has.

And now it has reversed, and is turning into central bank gold buying.

Argentina, South Korea, & South Africa are also gold buyers now.

And now, China, and perhaps all of Asia!

Here's a news article on that:
Asian central banks likely to increase gold reserves!
http://english.peopledaily.com.cn/200512/01/eng20051201_224958.html

The official China news source, the "People's Daily Online", reported that "Asian central banks are likely to increase gold reserves."

Quote: "Russia, Argentina and South Africa have decided this month to increase their gold reserves, which reversed the selling trend in six years by world central banks, especially European ones. It is only a question of time for Asian central banks to follow and buy in gold: they hold 2.6 trillion US dollars in foreign exchange reserves, and able to change more of them into gold as a hedge against US dollar falls."

So, how much gold can $2.6 trillion U.S. dollars, held by Asian central banks, buy? More gold than exists in the world! Remember, all the gold ever mined in the history of the world is 150,000 tonnes.

Let's convert that to ounces, shall we?

all the gold ever mined in the history of the world:
150,000 tonnes x 32,152oz./tonne = 4.8 billion ounces.
At current prices of $524/oz., that's 2.5 trillion dollars!

So, what we have is the Russians buying about $8.4 billion worth of gold, and this is causing the gold price to move up.

And now, Asia is going to spend a portion of $2.6 trillion, that's TRILLION, or $2,600 billion, on gold?

Where do you think gold prices are headed? At this point, guessing a final top is ridiculous, but you can know for certain that in the coming months and years, gold is going to go way, way, way up from here. Probably well beyond $10,000 to $30,000/oz.

And Asia's $2.6 trillion is nothing compared to the size of the bond markets. We have $22 trillion in U.S. bonds that could also be sold for gold. After all, big money is FORCED to seek out returns, and protect itself from being devalued.
And Japan alone has about $10 trillion dollars worth of yen that could also buy gold.

What will spook the bond market? Who knows, but it may well be the default of General Motors on almost $300 billion worth of bonds.

I saw Kudlow on CNBC this afternoon, who was mystified by the rise in the gold price. He asked a woman on the show, "Would you be selling gold now?" She responded, "Yes, I would be selling gold now... but I don't have any gold to sell." Classic!

Kudlow concluded that with the new computer age, and with free trade, both pushing down wages and consumer prices, that he couldn't see inflation like we had under Jimmy Carter. What Kudlow fails to realize is that inflation is not rising wages and consumer prices. Inflation is the creation of unbacked paper money, which has happened in the past that is fraud that will be revealed.

Kudlow was also saying "how could the bond market be wrong", given low interest rates, especially in the long bonds, which is now an "inverted yield curve". What Kudlow fails to realize is that acorns can grow into big oak trees, but oak trees cannot grow to the moon. There is an upper limit on growth, especially in big, big things, such as the $22 trillion bond market. It has to go down in value, by definition, if you study compound growth rates. You just can't keep compounding liquid wealth (that competes with gold) that has overgrown the limits of gold, even if you pretend that gold does not exist. Because other people may not choose to live in fantasy land, and because gold does exist, and because other people (that you may do business with) will choose gold, such as all of Asia.

The fact is that bonds and gold are competing asset classes. With gold heading up about 20% per year now for 4 years since 2001 from $255/oz., and no top in sight, why would any sane person choose to hold bonds paying 4%, when inflation is about 7-8%? Bonds are guaranteed to go down in value, and will be forced to buy gold for the returns. It's as simple as that.

Bonds lose money in two ways: Bonds ARE NOW losing value, as the interest rate remains low, since the interest rate is below the rate of inflation. As interest rates MUST RISE, bond values will go down even further.

Now, please don't misunderstand me. Don't go out and buy gold tomorrow, based on what I've written, unless you have well over a billion dollars to invest. If you have less than that, you'd probably do better to buy silver, instead, due to the feared silver shortage caused by 60 years of industrial consumption. A billionaire would have trouble buying that much silver. As gold will go up, silver stands to go up much faster, at a greater percentage rate.

Silver is like the acorn, gold is like a young sapling. The acorn will grow at a much faster rate, and in the end, they may be both the same size!

www.silverstockreport.com

December 8, 2005
Silver Stock Report by Jason Hommel
 
Metalli preziosi inarrestabili anche oggi.......
 
GOLD UP $5 IN TOKYO - MIDAS TECHNICAL ALERT
To: xxxxxxxxxxxxxxx

Le Metropole Members,

GOLD UP $5 IN TOKYO - MIDAS TECHNICAL ALERT

The Feb Comex gold contract, which is the nearby pivotal
one now on the continuation charts, has taken out its high
of 1981 of $535 on a quarterly basis. This breakthrough is
of big picture importance. What is of note is the next significant
resistance for gold on a quarterly basis on the continuation charts is all
the way up to $612.

Frank Veneroso confirmed tonight what MIDAS and GATA have
been saying for some time. The Gold Cartel has lost control
of the gold market. This was also confirmed to us the other
day by one of the members who sat on the Board of one of
the 12 Fed banks. This Board member has loaded his own boat
(big numbers) with physical gold and expects the price to
reach $900 to $1,000 within 3 years. This, from a
conservative banker.

One of the most critical dynamics of the gold market at
the moment confirms what GATA has said all along ... and
what no one in the gold mainstream gold world will even
admit exists. There is a MASSIVE Gold Cartel short position,
one they cannot get out of. The bums are trapped. These
white-collar thugs, who have violated US anti-trust laws
for so many years, have cooked their own goose.

I sent the following today to Ted David of CNBC, which
is like dropping an email into a black hole, but we
(GATA ARMY) have to keep up the good ole college try. I
included the Russian/GR 21 stuff I have been pounding
away on for weeks ... and these notes (facts):

*Since Gold Rush 21 gold rose $95 - YET, the dollar rose
from 87 to 91 and oil fell from $68 to $60 per barrel.
Almost no one thought that possible a year ago. The key
to the gold market is surging physical market buying
overtaking the Gold Cartel's ability to suppress the price.

*For years GATA stated the price of gold could rally $100
and the dollar do nothing as The Gold Cartel lost control
of their price rigging scheme. Few, if anyone else, thought
that possible. (It has done that.)

*The Central banks have less than half the gold they say
they have. Over the last decade they have surreptitiously
lent out this missing gold in order to suppress the price.
This calculation is based on studies by three GATA
consultants.

*One of the major factors in the gold market today is the
gold short position ... more than 10,000 tonnes in a market
with a 1500 tonne yearly supply/demand deficit and only
2500 tonnes per year coming out of the mines. The shorts
are trapped. Cannot get out. There are mega-derivatives
tied to those shorts. GATA knows this because of the
Bank For International Settlement derivatives numbers.

*A Gold derivatives neutron bomb will go off. Could happen at any time.

*Price prediction: Adam Fleming, former Chairman of Harmony
Gold and now Chairman of Wits Gold, said at Gold Rush 21
that he is looking for $3,000 to $5,000 per ounce. I concur.
 
:D :D :D :D :D :D :D :D :D

Extraordinary Margins on Gold and Gold Options 2005. 12. 12

At the Precious Metals Market Management Committee held on December 12, 2005, the decisions were made to impose Extraordinary Margins for existing and newly established positions in the gold market on December 14 for all the contract months.

Lifting of the Extraordinary Margins will be determined taking into considerations of the price movements, and will be notified as soon as the decesion is made.

http://www.tocom.or.jp/news/2005/20051212_02.html
 
If i have to Sell Gold to the bank , they will give the same price as i am having from the market or they have their own criteria of buying Gold.
 
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