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European Central Banks Have Stopped Selling Gold

Mac Slavo
September 27th, 2010
SHTFplan.com
Comments (40)

The experts tell us that gold is a relic and has no intrinsic value whatsoever. But there’s at least on group of bankers out there that may be changing their tune – the world’s central bankers.

It’s clear that some banks have been stocking up on gold – namely the Chinese, Russians and Indians – over the course of the last couple of years. As the IMF has sold of tons of gold to fund stimulus and bailout programs with fiat paper, emerging economies are hedging their reserve holdings with physical assets like gold, as well as the purchase of international companies in the mining and energy sectors. If and when fiat currencies collapse, hard assets will never go to zero.

And though we have not heard about how the Federal Reserve is managing its gold reserves, which many presume to be almost empty because we haven’t had an audit of the United States’ gold holding in several decades, European Central bankers may be realizing that they better have possession of something other than printing presses and toxic mortgage assets if the SHTF:

Europes central banks have all but halted sales of their gold reserves, ending a run of large disposals each year for more than a decade.

In the CBGA [Central Bank Gold Agreement] year to September, which expired on Sunday, the signatories sold 6.2 tons, down 96 per cent, according to provisional data.

The sales are the lowest since the agreement was signed in 1999 and well below the peak of 497 tons in 2004-05.

The shift away from gold selling comes as European central banks reassess gold amid the financial crisis and Europes sovereign debt crisis.

In the 1990s and 2000s, central banks swapped their non- yielding bullion for sovereign debt, which gives a steady annual return. But now, central banks and investors are seeking the security of gold.

Although many central banks declined to detail their sales plans, the responses of some, along with numerous interviews with bankers and consultants, suggest it is unlikely there will be a return to the trend of the past decade, when CBGA signatories sold on average 388 tons a year.

source: CNBC

On its face, the fact that central banks have chosen not to unload gold is a positive sign for the longer-term bull trend which has been in place since 2002 and will likely continue for years to come.

However, as we have seen in the past, when central banks and politicians make a significant financial move, it usually ends up being a contra-indicator. Take, for example, Prime Minister Gordon Brown, who sold approximately 60% of Britain’s gold between 1999 and 2002 when he served as the economic head of the country. Gold, of course, rose some 400% in the following eight years.

While we don’t necessarily believe gold is now going to take a deflationary turn and completely collapse just because central banks are no longer selling, we caution readers that it may not necessarily mean that gold is about to explode in the near term.

Of course, with the economic recession having ended in June 2009, according to the National Bureau of Economic Research, anything can happen going forward. We suspect that the much advertised “double-dip” is now in effect and we will continue to experience problems in housing, employment and economic growth in general. This may lead to another stock market crash at some point in the future and adversely affect precious metals like gold and silver during a selling panic.

In the long-term, however, we feel strongly that the decision by European Central Banks to hold on to their gold is a good one. Unless you are a short-term trader looking for quick profits, we suggest taking the ECB’s recent moves as an insider recommendation to hold on to personal stores of precious metals and precious metals mining stocks. As we’ve opined in the past, gold is has not yet reached dangerous bubble levels and uncertainty with the global economy and global governance will continue to drive the metals higher going forward.

Hat tip Airborne 71

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Author: Mac Slavo
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Date: September 27th, 2010
Website: www.SHTFplan.com

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40 Comments...

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  1. TnAndy says:

    Central banks are interesting.   On the one hand, they sold gold…for what ?….they paper they originally printed ?  Why ?  Couldn’t they just run the press a bit harder ?

    Oh…yeah…..they sold it to make it seem like their paper is more valuable by holding down the price of gold in paper terms…kill that canary.

    But any time they want their gold back, all they have to do is dip into their bottomless bucket of paper, and POOF…..the gold re-appears in their vaults.

    Unless, of course, they screw up, and faith gets lost in the paper.

    But there is always Plan B:  Make the stuff illegal and/or tax it so high, the ordinary peons of the world have to use their paper script.

    Yeah…..the Mafia ain’t got NOTHING on Central Banksters….

  2. Rick Halsen says:

    Comments…..

    “A gold and silver piece in hand is better than getting Comexed in the tush.”

    That’s all I have to say about this matter, and I RH, endorse this message.

    RH

  3. GMAFB says:

    Gold and silver must be in a bubble…

  4. manos says:

    Here in Greece the central bank has run out of golden coins since March 2010. The usual golden coin to be sold here is the British pound which can be bought in 268 euros.
    But now it’s over.
    The only place to find golden coins now is the blak market or the jewelery shops.
    With a big surprise i received a present from my father for my daughter’s birthday. A $20 golden double eagle. It belonged to my grandmother and it’s valued around 1300 euros.
    I wish i could find more.

    Be safe everybody.

  5. TnAndy says:

    Manos,

    Do you mean the British Sovereign coin maybe, not the pound ?

    They sell for about 330 US here right now…about 245 Euros.

    Coin contains just shy of 1/4 ounce of gold.

  6. manos says:

    TnAndy,

    Exactly. We call them pounds in brief.  Today’s official central bank site has 264,16 euros per coin.
    http://www.bankofgreece.gr/Pages/el/Markets/LIRA/DispItem.aspx?FltFld=ID&FltVal=235
    On the right column the second price from the top is the price which the banks sells. The left column has the price which the banks buys: 218,88.
    Which means that 264,16 – 218,88 = 45,28 is the bank’s profit from just one transaction. Not counting the commision which is around 5% of the 264,16.
    Spooky ah?
    Those bankers. Are the same worldwide. That’s why the system has reached to this point.

  7. mrs mushroom says:

    go to NIA website for ratings of gold dealers.

    buy anv or slw stock now ( or their call options)

    when the market crashes buy short etf’s tza, faz, srty.

    gold 1500, silver 25 by years end…

  8. TnAndy says:

    Wow Manos…..those guys don’t need a gun for robbery, huh ?

    Your bank is twice the spread + commission ?

    Popular online dealer here:  Buy 222, sell 244 ( Euro pricing ), shipping is a few bucks.

    http://www.apmex.com/Product/17/Great_Britain_Gold_Sovereigns___AU_or_Better__AGW_2354.aspx

  9. Tina says:

    Am I missing something here? Isn’t this simple supply and demand….if they have stopped selling and everyone wants it ….the price WILL be driven up dramatically…plain and simple

    Also….why is this such a discussion…to buy…or not to buy PM’s. when you have people like Soros buying and the Europeans not selling any…..what more do you need….do you all need to be hit in the head with a hammer to realize that it’s a good idea to have some in your hand??? 

  10. Airborne71 says:

    Your Welcome Mac !

  11. DurangoKidd says:

    Open a precious metals account with Johnson Mathey, and you can transfer your gold to Switzerland at a moments notice! Well, maybe not that fast, but fast enough.

  12. Tom says:

    Gold does sleep, but just woke up.  Have you noticed….

  13. DurangoKidd says:

    Its wedding time of year in India, Tom. They buy gold for the wedding, we buy chocolate for Valentines Day. It’s all about global demand. That’s why there is no “bubble”.

  14. wooba says:

    Central banks for the most part are owned/controlled by the very banks that have just looted the planet. Whatever they do wont be of any benefit to me. I give their press releases as much time as the ones from from people like bernanke. Who cares what they do or think.

  15. Jane says:

    You’re smarter than Gordon Brown who sold 60 % of Britain’s gold for over $300.00 an ounce. 

    Mac said: “Prime Minister Gordon Brown, who sold approximately 60% of Britain’s gold between 1999 and 2002 when he served as the economic head of the country….” 

    Britain was total destroyed because the costs of going to wars (like Russian did in the ‘90s) and politicians lining their own pockets.
     

    Never trust politicians unless you can print your own money!
     

  16. digitalcommando says:

    DOUBLE BALONEY..you guys are real smart and you believe these central bank lies. if these banks aren’t selling gold then they don’t have any gold. period. the gold they had has been transfered to the private vaults of the bankers and their political buddies in exchange for worthless paper money.LET’S FACE IT. fort knox  has been refusing an audit for decades. WHY? 

    NEVER BELIEVE ANY GOVERNMENT!!!

    NEVER BELIEVR ANY BANKER!!! 

  17. wooba says:

    Britain would be in the toilet completely if it had not been for the north sea oil reserves. I know a norwegian, thinks his country is so great because of the prosperity. But wait till the oil runs out there…
    Same with us in Australia too. We’ll be back to eating possum and kangaroo meat in a few decades

  18. Jane says:

    Wooba  and Anyone else that may know:

    What happens does the metal detector tell you which types of metal it’s detecting? Such as Copper, gold, silver or lead?  Can it be set to look for certain types of metal? And how deep it can detect?

    Because I studied that Gen. Sherman had his soldiers search for silver in the south during Civil War by using metal detectors.

  19. digitalcommando says:

    jane,

    electronic metal detectors had not been invented yet during the time of the u.s. civil war. they cannot differentiate between metallic elements. when hiding metals always protect them as well as possible from snooping metal detectors…(usually by hiding metals within or near other metals i.e., inside a metal  air conditioner box.)

  20. wooba says:

    Like digital commando said Jane. If you want to hide them underground like I prefer for most of my stash, then go under the edge of a concrete slab, down beside a cloths hoist or near a similar fixed object that has metal in it. OR if your on abundant land, get an auger and drill a deeeeep hole. Metal detectors can sniff out quite deeply but only an expert could work one to find something over a half meter deep.

    And for God’s sake make a map of where you hid it all.

    Then hide the map lol

  21. eugend66 says:

    Comments….. Don`t forget that central bankers are different
    from central bankers.

  22. Gods Creation says:

    Who cares what any central bank or government does?    I pay them no mind and ask them for no permission to live my life.

    Anything that comes from the news media, especially if it involves a CB or Government, is a lie based upon a lie and distributed by a lie.

    Forget about the criminals and what they are doing.  Take it upon yourself to take care of yourself.

    Gold is nothing.  You are everything.

  23. Jane says:

    Awesome! as always great ideas come from great minds, thanks you.  I am planning to move soon.  I am totally broke and have nothing to bury; I recently helped my father to pay off his mortgage before he left to Canada.  

    I don’t like debt, because it makes you worry constantly and make you age faster. 
     
    I just want people to be aware of what may happen.  Thanks again.

  24. Tom says:

    What does roo meat taste like?  I’ve been served snake & rabbit eyeball in survival school along with anything green we could sneak up on.  Gator is served many places down south.  Quail & fish would be my choice of wild meat.  Was expecting a longer consolidation on metals but look at today, wow!

  25. Sam says:

    Comments…..Has anybody noticed the tandem increase of gold and Euro against the  Dollar, what does that tell you. As I said here before many times bet against the Euro and you will lose, regardless of what the media says about  Europe’s  economy. In my view betting against the Euro is like going against gold. You’ll see what I mean as this whole thing plays out.

  26. wooba says:

    “Gold is nothing, you are everything”??

    Sounds like new-age stuff GC. Truth is WE are nothing, just a little part of God’s creation in an overpopulated world. True contentment begins with humility. But I want to live!! Eat and prosper. So I need money to do that in this world, and Gold is money.

    You have gold, you ARE a central bank. Your own little central bank.

    In Australia we feed roo meat to our animals. I have seen it in restaurants for double the price of fillet steak but I have never eaten it. Hope I never have to. It’s pet food and tourist food.

  27. Sam says:

    Comments…..””Gold is nothing, you are everything”” That’s correct for if money is the measure of labor and gold is real money, and in order to attain this wealth by honest sweat you must stay healthy. Therefore health is wealth, and you truly are everything.

  28. Jane says:

    Wooba,

    You seem like a strong advocate for gold.  Well, how do I know you don’t work for Goldline?  Okay, you can tell us your little secret we promise we won’t tell.  But you’re so right though.

    GOLD IS REAL MONEY AND CAN NOT BE DUPLICATED, PRINTED OR FORGED LIKE MONEY.

    About rat problems: 

    What do you kill rat with? People say sticky traps do not work.  I don’t have this problem but I have to ask before they shut down the internet.
     

  29. Tom says:

    I disagree Sam. The dollar is backed by nothing and the Euro is backed by even less. It’s a race to the bottom.  When the dollar is allowed to tank the Euro will not stand up more than short term.  China is not ready to control the world money but they do want to be the next super power in other aspects except growing their own food.  It is cheaper for them to buy their own food abroad that does not require their own water use.  Therefore there own inherent problem is their growth of people.

  30. Sam says:

    Comments…..Tom, I’ve spent time in China, and recently have spent time in europe. China will never be a super power, it’s a slave driven economy producing absolute garbage in order to fill the shelves of the likes of Walmart, you couldn’t give me a made in China product. As for Europe it has a very strong industrial base united under the EU flag. Europe has a highly educated work force, the problems you hear in the media abut the EU countries (pigs) having financial problems means nothing for in the big picture these countries make up a very small portion of Europe’s GDP. But soon it will become evident that all these problems and their source will be tracked back to the US. banks. So while America breaks apart and the truth becomes evident to the world, the US. will be isolated from the world as it self destructs. What I see is Europe will take over as the next super power and the Euro will be the next reserve currency of the world. Might seem a little far fetched a this time, but wait a few years and see, gold will be 3000 and the Dollar will only buy a half Euro.

  31. DurangoKidd says:

    Tom:  I agree with you. Both the dollar and the euro have the same problem. These currencies are too strong when compared to other currencies, consequently profit margins are higher in third world countries selling products to a global market, therefore manufacturing will move from China to Viet Nam etc, before ever returning to the USA.

    The dollar and the euro must depreciate in value by inflation to reach a competitive parity with other world currencies. By then, gold will top $3,000 an oz in dollars. In Swiss Francs, it will be less.

    Oil and gas, precious metals, and other commodities with global values will increase in price as the dollar plummets: by a thousand cuts and not a collapse.

    It may feel like a collapse to the American consumer who will not be able to purchase products from abroad,  (think the Sweatshirt Index or, $18.00 per sweatshirt from WalMart) but should still be able to buy American products for consumption at a reasonable price. When Obama pledged to increase exports by 25%, astute individuals understood he intended to inflate the dollar by 50%. That’s why the printing presses are running non-stop.

    If that were not enough to push the price of gold up (at least in terms of dollars) central banksters are buying tons and tons and tons of gold. If central banksters are buying massive amounts of gold, you know they intend to leave the masses with reams of worthless paper. 

    People who do not understand why gold will reach such high prices, should read the SHTF America, Econ Page to understand what is happening to gold and what the NWO intends to do with it, and to you!

  32. manos says:

    I agree with Tom regarding euro.
    Living in Europe i see the problems that slowly (or faster maybe?) start to rise.
    There is nothing in common to begin with. Greece is crap. They bailed out an already bankrupt state. From what it seems Portugal and Ireland are next.
    It’s like a puzzle in which you take out a couple of pieces and the whole game disendegrates.
    The rising of euro is a fraud in my opinion, because the EU leaders are trying to hold this “construction” not to fall apart. They would do anything.

  33. Sam says:

    Comments…..Fellows, earlier this year when the Euro fell to 1.18 and the media pundits were still bashing it claiming it will reach parity with the dollar, I posted here many times ” Bet against the Euro and you will lose”. Today the  Euro 1.36 and rising. As I said before Gold and the Euro will increase in tandem against the dollar in the near future. Let’s wait and see, time is usually the best teller of truth.
    Good luck to you all, hope you have some gold put aside and you’re living close to a good water source, cause that’s the only thing more precious than that old metal when SHTF.

  34. DurangoKidd says:

    Sam I don’t disagree with what you have posted about Europe, but how does that highly educated, strong manufacturing base compete against weak global currencies?

    Everyone appreciates a quality product, but when the middle classes of America and Europe have had their earnings collapsed by “free trade” and their purchasing power halved by illegal immigration to boot, how will the Euro compete?

    Even the Swiss are worried about having too strong  a currency.

  35. Sam says:

    Comments…..DK, I’m in business and all I can tell is  weak global currencies usually come hand in hand with weak economies and poor products, you can compete with high quality, costs more money no doubt, but people with smarts know their still getting more value. So to answer your question they compete with quality and efficiency, tell me one item you purchased that was made in China or Taiwan that gave you satisfaction as a consumer.
    Example I sell a product made in Houston, Texas into the Canadian market for twice as much as the local Canadian product, why? Quality my friend, the weaker Canadian currency didn’t make a difference, sure when the Canadian dollar rises it makes them happy because the save a bundle on the exchange but it hardly ever stops the sale.
    A well educated work force and strong manufacturing base will always compete, but politics and greed took that way from the American people, now Americans  consume Chinese made garbage and produce very little.

  36. DurangoKidd says:

    I appreciate what you are saying Sam, and at the high end that argument holds true, and individual products such as Bentley’s, Mercedes’ and Ferrari’s will confirm. Also aircraft, some machine parts, and high tech instruments.

    The wealthy can always buy what they want when they want. But at the mass market consumer level, currency exchange rates  do make the difference and we see it in our trade deficit every month.

    Both the dollar and the euro must decline in value through inflation for either to compete globally, because China is not going to accept parity anytime soon, and after China, there’s Viet Nam; and after Viet Nam there will be Nigeria, etc, etc,

    Big Business will move the means of production (factories) to wherever they can maximize profit by taking advantage of currency exchange and cheap labor. The middle class in America and Europe may not comprehend that yet, but it will dawn on them soon enough.

    It may be garbage but that’s all the middle class can afford. And soon, even less.

  37. Sam says:

    Comments…..The middle class did fine prior to shipping their factories to China, that’s what I meant earlier when I said politics and greed took away their productive edge. A strong self sufficient economy doesn’t have to compete with anyone, just like a self sufficient indivdual. As for the vain high end articles you mentioned above, that’s just the kind of stuff the elite like to show off.

  38. overtheedge says:

    Comments…..The word has it that the currency wars are beginning. The QE done by the Fed has prompted investors to buy stocks in Brazil causing them problems with thier central bank having to buy up US notes.  This mandates additional printing of currency by Brazil. The same problem is happening in other countries.

    We can look forward to QE II and with gold @$1300+ and silver over $22, the future is getting pretty dismal. Both gold and silver will go up while purchasing power of world currencies will decline. It’s gonna be a race to the bottom.

    Are there any options other than QE II? Well yes. Wage and price controls coupled with rationing. Putting the controls on will create shortages as suppliers refuse to put goods on the open market. Gold and silver will vanish from the open market. The black market will emerge and this will prompt politicians to pass laws against black marketeers and hoarding. Anyone wanna guess what will happen with the rationing scheme?

    Many  grumble about the outrageous premiums already on gold and silver coinage, but it will get worse.  The retailers haven’t got a choice and with the coming ObamaCare legislation, $600 in annual transactions per buyer and seller will require 1099s. This will spur secondary sales to escalate in price on the (soon to be called) black market. The US mint has halted all sales of gold coins for the year.

    Options? Get what you can now. Keep this thought always in mind, nothing worth having will ever get cheaper until the reset is completed. The last depression lasted close to 25 years. No, it didn’t end with WWII.

    I noticed on the major online auction site that raw gold is already selling at a premium over melt value. I can forsee the IRS accessing the sales records. On top of that, they are already auctioning fake gold nuggets. Caveat emptor. They already outlawed gold dredging in California and Oregon might be next.