Sharp Increase in Central Bank Gold Reserves: South Korea Up 17-Fold & Thailand 15.5% in 2 Months!
Asian central banks are escalating their gold purchases. They have to dramatically reduce their huge USD reserves or risk getting smashed easily 50% when everyone starts to get out of the USD. South Korea alone has US$311B of reserves. China has easily US$1.5T if not more. The problem is: there are no safe fiat currencies, some of you may argue that the Swiss Franc is safe. There is no way the Swiss Franc can absorbed all the trillions of dollars and not crater the Swiss economy. In the end, when all alternatives have been exhausted, it will go into gold !
–
Sharp Increase in Central Bank Gold Reserves – South Korea Up 17-Fold & Thailand 15.5% in 2 Months
Gold is higher in all currencies today except for the Swiss franc and is trading at USD 1,629.20, EUR 1,147.30, GBP 1,000.20 and CHF 1,270.10 per ounce. Gold’s London AM fix was USD 1,624.00, EUR 1,145.28, GBP 997.30 (10:41 GMT). Gold reached new record nominal highs in euros and Canadian dollars yesterday at EUR 1,149.60/oz and CAD 1,566.48/oz yesterday and remains close to these record highs today, and close to record highs in most fiat currencies.
–
South Korea bolsters gold reserves
By Christian Oliver in Seoul and Jack Farchy in London, http://www.ft.com/
South Korea, holder of the world’s seventh-biggest foreign exchange reserves, has almost tripled its gold reserves during the past two months, becoming the latest emerging economy to turn to bullion. The Bank of Korea said on Tuesday that it had purchased 25 tonnes of gold – worth $1.24bn – in its first acquisition of the precious metal since the Asian financial crisis of 1997-1998, when Korean citizens donated gold jewellery to the bank to help the nation through a period of economic emergency.
–
Gold Prices Spike on Safe-Haven Appeal, South Korea Buy
By Alix Steel, http://www.thestreet.com/
NEW YORK (TheStreet ) — Gold prices hit record highs Tuesday as the Bank of Korea bought more gold and as the Senate passed the debt ceiling deal. Gold for December delivery popped $22.80 to close at $1,644.50 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,646.80 and as low as $1,618.80 while the spot gold price was skyrocketing almost $30, according to Kitco’s gold index.
….
Beyond the safe-haven appeal of the yellow metal on a down day for stocks, Bank of Korea announced it has bought 25 tons of gold over the past two months. The stake is valued at $1.24 billion, or roughly $1,550 an ounce, and it marks the country’s first gold purchase since 1998. Central banks tend to buy gold when they need to diversify or increase their holdings as mandated by the government and are not necessarily market timers, but they do buy as a long-term investment.
–
The purchase brings Korea’s total gold holdings to almost 40 tons, still a fraction of the bank’s total reserves compared to the U.S. or Portugal, which hold 74% and 84% of their reserves in gold, respectively, according to the World Gold Council.
–
The news does underscore the fact that central banks have become net buyers of gold, however, adding a huge floor under the gold market and reminding investors that countries are purchasing large quantities. Official sector buying in the first quarter was 129 tons, according to the World Gold Council’s Gold Demand Trends report, led by Mexico which bought 93 tons.
–
“There has been a fundamental shift in the behavior of central banks,” says Natalie Dempster, head of government affairs for the World Gold Council. “Central banks on the whole have been net sellers of gold for the past two decades.”
–
Since the second quarter of 2009, however, central banks from emerging market countries have transitioned into net buyers. One of the biggest buyers is China. Over the past five years, the country increased its gold holdings to 1,054 tons from 600 tons. China currently holds only 1.6% of its reserves in gold. Dempster says that if the continent were to reallocate its holdings to 3%, it would need to buy 1,000 tons of gold.
end