Are Central Banks Signaling a Sentiment Shift in Gold?
Over the last couple of weeks there has been some news stories that suggest Gold is a more valuable asset than Central Banks are willing to admit. According to an article on Yahoo Finance, there is a possibility that the European Central Bank will buy Gold as one of its unconventional monetary policy measures. (Source:Yahoo Finance 11/18/2014)
In another development, the Dutch Central Bank has recently shipped 122.5 tons of Gold from vaults in New York to its headquarters in Amsterdam. “With this adjustment the Dutch Central Bank joins other banks that are keeping a larger share of their Gold supply in their own country”, the bank said in a statement. (Source: ZeroHedge 11/21/2014)
The bank further admitted that it may also contribute to a positive confidence effect with the public. So, it appears as though the public is recognizing that Gold ownership is a direct reflection on a countries sovereignty.
Will the French Join in on Gold Repatriation?
Marine Le Pen, leader of the Right-Wing National Front political party in France has sent a letter to the Governor of the French Central Bank, demanding that France repatriate their Gold.
What is interesting about her letter is that she is recommending a gradual re-allocation of foreign exchange reserves of the Bank of France by buying Gold at each significant decrease in the price of an ounce with a recommendation of 20%. (Source: ZeroHedge 11/25/2014)
So now a trend is starting to develop amongst some Central Banks who are possibly not only repatriating their Gold but also increasing the percentage of Gold held as reserves. This sends a clear message about the real value of Gold in a world of fiat money. Even if the Swiss Gold vote does not pass this weekend, sentiment about Gold is gradually shifting that will eventually lead to higher prices.
What about East?
The real story about the Gold market is how truly global it is. We have referenced in the past the strong demand from Asian and BRICS countries. According to an article on GoldSilverWorlds.com, Russia added 18.7 tons of Gold to its reserves in October. While India’s Gold imports jumped to 106 tons for the month.
Its been well documented about China’s appetite for Gold which will likely continue to be strong. It would be ironic if Central Banks ultimately were the one’s who created the momentum for Gold to resume its bull market.
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