Central Banks No Longer Selling Gold (Duh Factor: 10/10)

Tyler Durden's picture

Something funny (and quite revolutionary) happened during the CBGA's (Central Bank Gold Agreement) year ending this Sunday - the group of 15 signatory banks sold a mere 6.2 tonnes of gold, a massive 96% decline from the year earlier, according to provisional data.This means that unlike in the past, when it was central banker prerogative #1 to sell some gold and every year just to keep all the longs on their toes, this year the trend has finally changed. As the FT reports, "the sales are the lowest since the agreement was signed in 1999 and well below the peak of 497 tonnes in 2004-05." And yes, we do love the FT's brilliant summation of the change in mindset: "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." Hm, when all of Europe (as well as America) is a smoldering heap of bearer bonds that will never get paid, and China is putting up a building today, only to blow it up yesterday, and boast a GDP growth rate of one gajillion, the FT may want to change the bolded assumption. Back to the Captain Obvious narrative of the original article: "The lack of heavy selling is important for gold prices both because a
significant source of supply has been withdrawn from the market, and
because it has given psychological support to the gold price. On Friday,
bullion hit a record of $1,300 an ounce." So market zero supply, and demand that is growing exponentially, means higher prices, eh? All those Voodoo 101 classes, and Poison Ivy college loans sure are paying off in droves...

More from the FT, on why CB sales are now and will be, a thing of the past:

European central banks are unlikely to sell much more gold in the new CBGA year, according to a survey by the Financial Times.

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 tonnes a year.

The central banks of Sweden, Slovakia, Ireland and Slovenia said they had no plans to sell, while Switzerland reiterated a previous statement to the same effect.

The CBGA was first signed after gold miners protested that central banks’ rush to sell was depressing prices.

And here is a purdy pretty chart that confirms what every regular reader of this hyperventilating website has known for almost two years now. Also it turns out "fettle" does not mean 'exponentially surging prices' in UKish, even though it should.

h/t JBH

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MarketTruth's picture

My only main gripe with the above article is that it does not mention the hundreds of tons central banks purchased during the same time period. Yes, of course central banks are net buyers to a very large extent now.

midtowng's picture

True. The Washington Agreement countries are largely just Europe. The Asian CB's were net buyers over the last several years.

Hammurabi's picture

you work hard TD, time to sleep thanks

Threeggg's picture

2nd that

I see the news on the tape and come here to see you already have it.

wtf !

No rest for the ..................?

Gold up against "everything" right now and this news will cause trouble for expiry tomorrow


MsCreant's picture

this news will cause trouble for expiry tomorrow

I beg your pardon. Don't mean to be rude. I am savoring this statement. If it drops, I'm gonna laugh my ass off as I go to my dealer for more. Hell, maybe I'll "buy on margin." 

umop episdn's picture

You, me, and a whole bunch of other people! The shorts are screwed as the fear of currency collapse has taken root in many minds--too many to cover over with bankster paper. Burn, paper, burn! I can haz party!

Hephasteus's picture

No he's saying that this could be the first month that it expires in a position they don't want and can't handle. If it expires above 1300 then a bunch of shorts have to sell at 1300 while the price is above 1300. Which means the naked shorts gotta go out in the market and buy up gold at 1350 1400 and sell it at 1300. Which means no more bribing with 1350 to 1450 dollars to settle in dollars. They have to up to 1700 range to get people to take failed delivery. The gold market has become a viable legal blackmail market that enough people will jump into it that there's not enough hit men to stop.

Snidley Whipsnae's picture

Either way, we win. I would love to see JPM/GS shorts taken to the wood shed.

Watching the chart...buying on the slightest dips is strong...Especially in silver where JPM shorts are concentrated.

What was it Dick Fuld said?..."I'm gonna skull f**k those shorts".

gookempucky's picture

As the woman with the wooden eye said-

I will keep an eye out for you.....  ;)

MsCreant's picture

This discussion is heady stuff.

What_Me_Worry's picture

Chart should be titled:

"Top 12 Liars of World Gold Holdings"

anonnn's picture

"Holdings" does not equal ownership. It is "holdings", as "in account for". Nor is it necessarily unencumbered .

So... US 8134 tons means?... 

Where is Kingdom of Saudi Arabia? My guess their gold is stored [holdings] in NY/London/Schweiz?

Hephasteus's picture

Yes but the allocated accounts are just as empty as the unallocated accounts. Which puts holders of GLD and PYHS on the same ground as kings and sovereigns.

Bendromeda Strain's picture

Why would you equate Eric Sprott with HSBC? The whole point of PHYS is that it isn't GLD.

Geoff-UK's picture

The amount of FRNs needed to short the shit out of PHYS is orders of magnitude lower than amount needed to short physical on the commodities exchanges.


Expect Bernake et al to fist Eric Sprott soon.  Figuratively and/or literally.

truont's picture

Yup, there is now only one central bank now selling gold.

Only one central bank with enough blatant contempt for the people it professes to serve.

Which one?

Hint:  IMF selling 400 tonnes this year.

Which central bank does the IMF receive the lion's share of its gold pledges from????

DoChenRollingBearing's picture

I have formed my own little Central Bank w/gold as well as my own Hedge Fund (FOFOA-style).  Buy gold and never let it go (except maybe to your children).

straightershooter's picture

Show me the Gold!


Rumors running wild that central banks do not have any gold left for sale.

Call your congressman/woman/senator/whatever and ask, no, demand that Bernanke show the gold held in some funny place named notsville?


Show me the gold, stupid!!


truont's picture

I just love the chart showing the composition of world reserves.

It used to be 60% gold/40% FX.

Now it is about 10% gold/90% FX, and it has bottomed, and starting to climb in favor of gold.

Mean reversion is sure a bitch, eh Bernanke?

Temporalist's picture

How strange that the CBs timed the sales when the POG was the lowest, and are buying at all time highs.  For those that can't read into the sarcasm - either they are stupid or suppressed the price intentionally.

Some economic leaders.  Only lemmings would follow these "Masters of the Universe" - and right off the cliff.

doolittlegeorge's picture

$1300...must prevent 1300...must prevent 1300...must prevent 13000 oops...1300.

tip e. canoe's picture

that is, if the CB's are paying the same price as the advertised spot.

truont's picture

"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."

What is the point of swapping "non-yielding" gold bullion for sovereign debt that provides a nominal rate of return, but a negative real rate of return?

Looks like the world's central bankers just woke up to the smell of burning toast.

doolittlegeorge's picture

interesting.  and when the Japanese went "yen deval" nobody jumped in.  It is the opposite of the 80's and 90's when currency interventions were exclusively a coordinated affair.  This is economic war medieval style as it's "every trading bloc for itself."  Worst path to prosperity but, hey, welcome to "bailout nation" and its consequences.

Perseid.Rocks's picture

Jim Rickards had some interesting discussion about gold recently when he was interviewed by Eric King.

Starting at about 13:35 here

Starting at about 12:43 here

sinner's picture

I am reminded of the words said by ANOTHER, many years ago:

One last note: No form of paper wealth will survive the financial crush once the CBs stop selling!


StychoKiller's picture

Ya gotta wonder just how much real/tangible vs. origami wealth/value there is in the World Economy, what with China blowing up perfectly good buildings and all...

sinner's picture

Thanks anonn. Looking at the date for those words, October 09 1997, just under 13 years ago!

AUD's picture

"central banks swapped their non-yielding bullion"

This is a load of bull, central banks have been loaning up to every last ounce in their vault for years, earning interest in gold.

If the gold doesn't circulate, the lights go out.

fresbee's picture

"On Friday, bullion hit a record of $1,300 an ounce." So market zero supply, and demand that is growing exponentially, means higher prices, eh? All those Voodoo 101 classes, and Poison Ivy college loans sure are paying off in droves..."


Again you guys get it wrong. If that CB bank news was so relevant then Gold would already have rocketed.

Gold prices are not free to move as they wish. They are very much under tight control of FED and the cabal and there are many back hand channels through which they control the prices. 


As a citizen, I simply do not ever want to see Gold at $2000 or whatever other stratosphere numbers that are thrown. Gold can destroy trade and bring down the whole system of prosperity that the world has enjoyed. I am great believer in controlling Gold prices and pegging it to the reserve currency. The ECB does this exercise annually which is why I have the greatest amount of confidence in EURO. 


Coming back to Gold, Gold will never freely trade as its very existence is dangerous to human society. 


But shorterm it is being allowed to go up in steps and no one knows till what price. 1400? 1500? 1600? Noidea but it will stop rising the day the CB and BIS decide to enough is enough. 


Snidley Whipsnae's picture

People that think like you...that the Fed is a benefit to human society and gold a menace...are exactly what is wrong with human society.

The Fed is a human construct gone awry. Gold/Silver are naturally occuring elements. It's the human constructs that cause the problems.

Pining for the Fjords's picture

"Gold will never freely trade as its very existence is dangerous to human society"

This is the signal that you are joking, right?  The very existance of a substance used by people to store wealth and facilitate trade for 6,000 years is anathama to human society?  Are you sure you are not thinking of the ring of power there, Gollum?

Womb Service's picture

...and the quantitative cheesing of Zero Hedge continues. Bates? Is that you?

doolittlegeorge's picture

damn ZH'ers trying to cause the price of gold to soar.  who on earth could possibly support such an evil plan!

fresbee's picture

unfortunately you guys will never agree. You think Gold can keep going up cause M3 is rising and QE2 and all other apparent reasons. 

But once the cycle is over, Gold will crash like rock to the bottom even while there will 100s of zerohedge kind of sites shouting for $100,000 and $200k  for Gold. Some will also be holding the physical. They will be the worst hit.



Snidley Whipsnae's picture

Your glorious Fed and the bullion banks are going down in flames and you are predicting that gold holders will be hit the worst?

Perhaps you understand less about what is happening to the world of paper fiat than you think? You believe that another round of QE will heal all? You believe that world currencies competeing for bottom of the barrel is going to work out well? People and soverigns are buying gold because they are scared of fiat...and they should be. All paper is a short on gold. People holding physical will fair for better than those holding any form of paper.

'It ain't what you don't know that hurts you, it's what you are sure you know that just ain't so.' Mark Twain

fresbee's picture

That funny.


Bullion Banks will never go down. They are more powerful than all of us put together. If not US, European Bullion Banks will continue to control the price of Gold.

Am backing the banks here. 

But I do believe the FED will allow the Gold to keep creeping to 1500 and that is the end of the gold run. Not a chance in the world for Gold to get out of control. Am woring for a hedge fund and I know that FED/ECB/BoE/BIS are determined not to let it get out of the bag. 

Now you can write emotionally charged articles of how Gold is a measure of wealth and how it will expose the FED and all that BS. 




Bendromeda Strain's picture

Instead of the humorous "Jon Nadler", it would appear that the real deal has finally arrived. Enjoy your Rentendollars, paper man. Read Greenspan's 1966 speech Gold & Economic Freedom, with an effort toward comprehension.

EscapeKey's picture

Is this the new angle?

So, MasterBates disappeared, the JB disappeared, and now we get a new "angle" on Gold takedown? Claiming the FED has brought stability, etc, when in actuality, it has brought with it inflation, inflation, insider dealings, and more inflation.


MsCreant's picture

You forgot moral hazard and the ruin of civilization itself.

RockyRacoon's picture

...and the sun will go dark.  I think you left that part out.

Paper CRUSHer's picture



"Sergeant Tyler,they've stopped firing........i think they're outta ammo,SIR"


"You're forgetting one thing"

"What's that Serg'?"

"THE GLD ETF,............over 1000 tonnes of .9999(Fine)Caliber Munitions baby"

"Shit Serg',d'ya seriously think they'll deploy all o'that shit?"

"Why sure soldier,why not"

"But Sir,that Gold belongs to many of our american patriots Sir,remember"





Goldenballs's picture

You can,t see the Gold and Silver for the smoke coming from the Comex.As for nations reserves you can,t see those as your not allowed to.Very interesting time we live in.

Snidley Whipsnae's picture

Today is expiry. The battle began last night in overseas trading and will rage throughout the day today.

Whoever wins today, and I am pulling for the longs, must remember that this is but one battle.

PMs are the safe haven now. They are returning to their historic role as a store of value and they can be a transactional currency. PMs will win the war, regardless of who wins the battle today.

We need some cheerleaders...dressed in skimpy gold and silver...with matching pom poms. :)

Silverhog's picture

Buying Gold is my way of giving the Federal Reserve the finger. All of the give aways, freebies, bailouts and endless spending programs that my vote has never be able to stop continue. So I'm changing money, the dollar is dung in my view. It's not just investing in Gold, its my hope that the dollar becomes completely worthless and removes the spending power from these crooks.