Gold (GC : NASDAQ : US$1719.90), Net Change: -54.40, % Change: -3.07%
Banking on gold! The World Gold Council (WGC) released its quarterly report, showing that central banks made their largest
purchases of gold in decades in third quarter, taking advantage of a sharp drop in prices during September. According to the
WGC, central banks bought 148.4 metric tonnes in the third quarter, almost seven times as much as was bought in the yearearlier
period, and the highest level recorded since central banks became a net buyer of the precious metal in the second quarter
of 2009, after two decades of net sales. While the WGC did not reveal the identity of the central banks that purchased the gold
during the quarter, it did note, "A slew of new entrants emerged wishing to bolster gold holdings." The WGC said that central
banks are set to buy more gold this year than at any time since the collapse of the Bretton Woods system 40 years ago, led by
emerging markets looking to diversify their growing foreign exchange reserves. The Wall Street Journal highlighted that gold
traders and analysts have been stunned by the final figure provided for the quarter. Most say it was around 100 tonnes above
what they had originally tallied. Bullion dealer GoldCore suggested a number of central banks may be quietly and gradually
accumulating large quantities of bullion, adding, "They are not declaring their purchases due to concerns that this may further
devalue their currency reserves, which are mostly in U.S. dollars and also in euros, and would result in them having to pay
higher gold prices for their new gold reserves." Marcus Grubb, managing director of investment at the WGC, stated, "While one
can account for some of the purchases – from Thailand, Bolivia, Russia etcetera – there is an unaccounted amount out there. A
clue probably lies in the fact that a lot of recent buying has been from central banks that have been in surplus, in regions like
Asia and Latin America.” According to the WGC, China has just 1.7% of its total foreign reserves in gold, compared to the
U.S.’ 76% and Germany’s 73%. India, meanwhile, has 9.0%, Peru has 3.8% and Brazil just 0.5%. Kazakhstan has 11.3%.