Gold News

Central Bank Gold Reserves Broadly Unchanged

A quiet couple of months in the official sector...

THE LATEST update from the World Gold Council on official sector Gold Bullion reserves shows that August saw some central banks reporting increased holdings while a couple of others showed reductions – but overall reported central bank holdings were just about flat – a far cry from the situation for a number of years when Central banks were major sellers of hundreds of tonnes a year of the yellow metal, writes Lawrence Williams at MineWeb.

According to the WGC, Thailand was the biggest net purchaser and reported an increase in its gold reserves of 9.3 tonnes in August, raising its total gold holdings to 136.9 tonnes. This follows an acquisition of 28 tonnes in the first half of the year. Bolivia reported an increase of 7.0 tonnes in its gold reserves. The last acquisition Bolivia reported was in December of 2010 when it also reported a 7.0 tonne increase. Finally, Russia continues to regularly add gold to its reserves, adding 8.0 tonnes between July and August.

On the central bank sales side during this same period, the WGC shows both the Philippines and Sri Lanka reported reductions in gold reserves of 10.3 and 9.3 tonnes, respectively. The WGC did point out, however that the Philippines buys locally produced gold and may sell or retain gold for its reserves. Sri Lanka's sale is most likely related to trading activity as it has been actively buying and selling gold since 2009.

Most significantly, the latest figures show no significant selling by the signatory central banks in Year 3 of the third central bank Gold Agreement (CBGA3). In this update, the ECB reported the sale of 181 million Euros or approximately 4.6 tonnes of gold, which "reflected the sale of gold commemorative coins by one Eurosystem central bank".

Thus overall the net reported gold sale/purchases of gold during the latest period were broadly insignificant with purchases mostly cancelled out by sales. However one does not know if this is shows the full picture as some central banks tend to be a little circumspect in making their gold purchases known. 

It is broadly believed that China, for example, the world's largest gold producer and which has just reported another monthly increase in production (see China's gold output rises 6% in Aug, peaks at 31.89 t), takes its own mined gold into government coffers, but only declares this in its official reserve figures as and when it feels is timely to do so. 

Indeed GFMS, the specialist gold consultancy now part of the Thomson Reuters Group, has recently just upped its estimate for central bank purchases this year to 500 tonnes, from 336 tonnes previously.

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Founded in 1999 as part of the Johannesburg-listed MoneyWeb media group, Mineweb is one of the world's leading sources of mining and metals-investment news, comment and analysis. Managed since 2003 by professional mining engineer Lawrence Williams – formerly of Mining Journal, and with more than 30 years' technical and financial experience in the sector – MineWeb provides thorough, international coverage of the natural resources industry.

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