Gold Hoarding Peacocks
Central banks worldwide are flaunting the size of their Gold Bar reserves...
TODAY we add a new phrase to our gold bubble lexicon – "Peacocking", writes Addison Wiggin from Baltimore, Maryland for The Daily Reckoning.
How else would you explain Saudi Arabia "restating" its Gold Bar reserves this week, right as the spot price found an all-time high of $1265 an ounce...?
Last week, SAMA, the Saudi sovereign wealth fund, held 143 tonnes of gold. Today – 322 tonnes! The Saudis gave little explanation other than a humble "adjustment of the SAMA's gold accounts." But 100 per cent...? That's some adjustment.
China did the same thing roughly a year ago. Having not reported its Gold Bar holdings in six years, the Chinese quietly announced they were holding over 1000 tonnes of the metal, double what the world expected.
But in a world dripping with debts and sovereign risk, it should come as no surprise to see governments strutting and letting unfurl their share of the world's most sought-after "commodity". It's a game. Who's got the biggest...umm...vault, so to speak. And the US still claims to have the fullest rack, with 8133 tonnes of gold buried somewhere in the national backyard, a pole position the US has held since the end of the Second World War.
Around the world, central bank purchases of gold reached 425 tonnes last year – the first stockpile expansion since 1988 and the largest since 1964. The Russians led the way, increasing their gold holdings by 142 tonnes – a 29% boost – last year alone.
You can expect that trend to continue. At a conference last week, Yin Zhongqing, vice chairman of the finance committee for the People's Congress, suggested the Chinese government increase its holdings in oil and gold.
"The government should also cut overseas debt holdings and increase equity investments," Yin advised. "China should adjust the asset structure of its foreign reserves and achieve the goals of making the investment safe, liquid, and preserving and adding value."
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