Excerpts from 7/11 Investor's Business Daily:
But lost in the uproar over the Australian sale is that central banks haven't dumped that much gold.
"Truth be told, there have only been 3 big (central bank) gold sales," said George Milling-Stanley, manager of gold market analysis
at the World Gold Council in New York, an international assoc. of producers.
Besides Australia, the Netherlands early this year announced it sold 300 tons last year, and Belgium sold 200 tons last year....
"And some central banks see themselves in a finacial-world leadership role - the FED, Bank of Japan, Bank of England, Bank of France and Bundesbank," he added. "They don't want to destabilize the market." Some of those central banks, including the FED, are barred by their own rules from selling or leasing gold. That takes some of the biggest players out of the game.
The central banks, though, have added to the confusion and created an exaggerated sense of gold sales, Milling-Stanley said. "Earlier, the Swiss National Bank suggested it might sell some gold, but has since backed off," he said. "It turns out they prefer to get income by leasing it out. Yet many were left with the impression that they did (sell)."
Milling-stanley has another theory. He says the biggest selling power in gold is coming not from central banks but from speculators. He cites the Commodities Futures Trading Commission's weekly commitment of traders report. It showed a fat surge in "spec" shorts as of Joly 1. He adds that the cash and forward markets are from 3 to 10 times larger than Comex gold trading. "So it seems to me spec shorts now stand at an all-time record.".....
With all the focus on supply, much of the market seems to have forgotten about demand, argues Milling-Stanley."Demand (for bullion) in the first quarter was an all-time record for any quarter," he said. "What's unusual is that you'd expect the fourth quarter to be the strongest. That's the Christmas quarter."
The demand surge is coming from emerging markets. There, gold is far more popular as a store of wealth. |
