Gold Selling By Swiss Banks Insignificant

Let us consider:

155,000 tonnes of gold were produced in the whole world, in the entire history of mankind.
2500 tonnes of gold are produced by the world’s mines each year.
5000 tonnes of gold are actually traded each year (best estimate).
500 tonnes of gold are sold each year by European Central banks under the “Central Bank Gold Agreement”. (CBGA)

Recent news of Swiss gold sales of 250 tonnes over two years will fall under the existing, known CBGA. Thus, there is no material change in the status of the gold market.

Swiss sales of 250 tonnes are a non event, and will not remotely satisfy China’s oft-repeated desire and need for 2871 tonnes of gold (equal to $60 billion).

Do also consider that many Central Banks such as Portugal have leased out as much as 70% of their gold (http://gata.org/node/4194), hence that gold cannot be sold twice (or so we are taught).

The above makes headlines such as “Swiss sales dash hopes of gold recovery” only play a better hand into the cards of the gold hoarders.

I quote the famous words from Graham and Dodd,The force of a correction is equal and opposite to the delusion that preceded it.”

After a 20 year bear market, and nominal fiat-currency creation at its best, I’d say that $2000 gold would just be breaking even.

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One Response to “”

  1. Ulema Says:

    Well written article.

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