Bobby, if I understand it correctly, European Central Banks can't sell gold after 1997 to balance their budget for the EMU. They may still sell gold to do other things. However, I can't see them dumping large quantities, since they see what the "Australian effect" was. Perhaps the recent currency crisis in the far East may also dampen the desire to dump gold.
As you point out, once people realize that BreX, etc isn't going to supply any gold, and demand has been outstripping supply for over 10 years, the price of gold should go up.
As was pointed out in recent news articles, a lot of countries that dumped gold, devauled their currencies. When Canada had gold, our dollar was worth $1.05 US, now it is 72 cents. I know there are other reasons for this. The only other interesting thing is that the only country that doesn't sell gold, the US, has seen its currency appreciate in value.
Although, central banks will hold less gold in the future, the demand for gold jewelry keeps rising.
One newsletter article pointed out that if you had bought gold at $420, 10 years ago and sold it last week at $320, it was not profitable. But he failed to point out that if you had bought IBM stock and sold it 6 months ago, you would have done about the same.
BTW, I never did own BreX stock. |
