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Central Banks Buy The Second Most Gold In 50 Years: A Look At Who's Buying

Tyler Durden's picture




 

In 2014, the price of gold, expressed in US Dollars, went absolutely nowhere (even if its increase in RUB - not to mention many other rapidly devaluing currencies - was a stark surge of 83%). The reason: for the second year in a row, concentrated selling of "paper" gold which saw some 159 tonnes of outflows from gold-backed ETFs, primarily in the US. This however, is a substantial slowdown from the 880 tonnes of gold ETF outflows in 2013, selling which started in earnest when the price of gold peaked just shy of $2000 on September 6, 2011... the day the SNB instituted its now failed currency control attempt to set a 1.20 EURCHF floor.

Furthermore, ever since the SNB's stunning defeat in the currency wars one months ago (as noted above, the price of gold peaked hours before the SNB instituted its now defunct EURCHF floor in September 2011, and the result was an epic selling of gold-backed ETFs), sentiment expressed via paper gold has turned "tentatively positive" in the words of the World Gold Council, and so far in 2015, ETFs have seen inflows of around 60 tonnes, the vast majority (over 90%) of which has been into US-based funds.

 

And while one can debate just what was the net demand/supply for various other sectors such as jewelry, technology, and physical (not paper) gold investment, one thing is clear: central banks went on a shopping spree. According to the latest World Gold Council data, in 2014 the world's central banks went on a golden shopping binge to take advantage of the ongoing dumping in paper ETF gold, resulting in bank net purchases amounted to 477 tonnes over the past year, a 17% above 2013’s 409 tonnes. This was the second highest year of central bank net purchases for 50 years, coming second only to the 544 tonnes added to global gold reserves in 2012.

Who took the biggest advantage of the depressed gold price? One name sticks out: spot it on the chart below:

From the WGC:

Russia had by far the greatest appetite amongst those who raised gold reserves. The country accumulated an additional 173t (36% of total central bank demand in 2014) over a turbulent 12 months. 2014 was bookended by tension and uncertainty for the country: geopolitical antagonism with the Ukraine, and the resulting international sanctions, at the beginning of the year was followed by severe economic distress towards the end.

 

Kazakhstan (48t), Iraq (48t) and Azerbaijan (10t) were also notable for the size of purchases made. Fortification and diversification of reserves, namely away from the US dollar, continues to be the driving force behind this activity.

Who sold? Why the latest foreign-policy debacle for the US state department, of course: Ukraine.

While purchases continue unabated, sales remained insignificant. Ukraine was the only central bank to significantly decrease gold reserves, falling 44% to 24 tonnes, as well-documented geopolitical struggles impacted economic performance. Further, sales under the Central Bank Gold Agreement (CBGA) were minimal: the final year of the third agreement only saw 6.8 tonnes, while the first year of the fourth agreement8 has seen less than half a tonne sold thus far.

If that was all there was, Russia could actually be thankful to Ukraine for essentially transferring over its gold from Kiev to Moscow. But there is much more here than meets the eye, and the biggest wildcard remains as usual China. Because after its gold-buying splurge, Russia currently has - according to official data - more gold, 1,208.2 tonnes in its, and certainly not the NY Fed's vault - than China. The problem, is that China's gold holdings were last updated officially in early 2009.

And as everyone following the physical gold space knows, there are really just two key, outstanding questions:

  1. What is the updated total inventory of Chinese gold holdings (estimated to be somewhere between 3,000 and 6,000 or more tonnes), and
  2. Just what is the PBOC waiting for and when will it reveal this number

With global geopolitical events moving ever faster, and with "developed world" central banks increasingly losing control almost on a daily basis, China may have to answer both questions relatively soon.

 

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Thu, 02/12/2015 - 20:21 | 5778449 actionjacksonbrownie
actionjacksonbrownie's picture

Since this report doesn't include China - the biggest hoarder of gold in the world - it is pretty much useless, like most reports from the WGC.

Thu, 02/12/2015 - 20:23 | 5778457 SickDollar
SickDollar's picture

how about this and U quote

"And as everyone following the physical gold space knows, there are really just two key, outstanding questions:

  1. What is the updated total inventory of Chinese gold holdings (estimated to be somewhere between 3,000 and 6,000 or more tonnes), and
  2. Just what is the PBOC waiting for and when will it reveal this number  "
Thu, 02/12/2015 - 20:28 | 5778470 jaap
jaap's picture

Since this report does include USA with 8,133.5 tons - the biggest hoarder of paper gold in the world - it is pretty much useless, like most reports from the WGC

Thu, 02/12/2015 - 20:29 | 5778487 Silver Short Seller
Silver Short Seller's picture

All this buying and gold is still at $1220. Gold is what you buy when a permabear blog tells you that rising oil is bad for the economy and then a few months later says falling oil prices is bad for the economy.

Thu, 02/12/2015 - 21:24 | 5778634 Mr. Magoo
Mr. Magoo's picture

Gold is what you buy at the fictional paper price of 1220 until one day all that's left to buy will be paper

Thu, 02/12/2015 - 22:16 | 5778824 Took Red Pill
Took Red Pill's picture

Someday soon the paper price will have to catch up to the physical. And that will be a BIG adjustment!

Thu, 02/12/2015 - 23:10 | 5779028 Save_America1st
Save_America1st's picture

China is not listed because they don't tell anyone how much they're buying even though everyone knows it's more than any other countries combined year over year.

Interesting that 3 others on the list are also part of the Shanghai Cooperation Organization along with China:

https://en.wikipedia.org/wiki/Shanghai_Cooperation_Organisation

The "stans" are very strategic locations for Russia and China within this emerging organizational powerhouse.

I wonder if they will soon reel in Turkey from NATO and Greece as well.  That would be a major coupe against the West. 

READ THIS ARTICLE:

http://thewealthwatchman.com/united-eurasia-pt-2-the-powerful-organization-that-no-ones-talking-about/

Thu, 02/12/2015 - 20:36 | 5778508 philipat
philipat's picture

WGC won't even accept Chinese wholesale demand = SGE oftake, or about 2,200 Tonnes in2014, despite this equivalence having ben confirmed by Official Chinese sources, WGC continues to state Chinese wholesale demand at less than half the actual amount without ANY explanation for the discrepancy. The only remaining question is why would any Gold producer continue to pay good money to be a member of such an "Advocacy" Organisation which seems actively engaged in supressing the very product is it was established to promote?

Thu, 02/12/2015 - 21:14 | 5778610 Fun Facts
Fun Facts's picture

The World Gold Council was chartered to tell lies about gold.

In true orwellian form it should be called the Anti Gold Council or maybe the Rothschild syndicate owned gold council.

Thu, 02/12/2015 - 23:05 | 5779007 philipat
philipat's picture

....Agree, but which reinforces my question as to why any Organisation with an interest in an advancing Gold price would pay good moey to be a member of this Orgaisatio? If all the Miners resiged, that would leave behind only the BB's and the TBTF's, so at least then the real Agenda of WGC would be obvious for all to see?

Thu, 02/12/2015 - 20:24 | 5778459 El Hosel
Thu, 02/12/2015 - 20:24 | 5778462 chairman of the...
chairman of the bored's picture

The de-golding of America continues...10k and 14k..

Thu, 02/12/2015 - 22:20 | 5778837 besnook
besnook's picture

ssshhhh

Thu, 02/12/2015 - 20:24 | 5778465 El Oregonian
El Oregonian's picture

Those Barbarian relic banksters.

Thu, 02/12/2015 - 20:26 | 5778472 seek
seek's picture

I'd say there's a third outstanding question:

3. Just what price are CBs actually paying for the gold they're buying?

Thu, 02/12/2015 - 20:40 | 5778524 WillyGroper
WillyGroper's picture

4. Who are they stealing it from?

Faber seems to think any private gold holdings will be seized by jackboots.

Thu, 02/12/2015 - 20:54 | 5778553 ejmoosa
ejmoosa's picture

I heard those gold holdings will come with lead piercings.

Thu, 02/12/2015 - 20:57 | 5778560 Kaiser Sousa
Kaiser Sousa's picture

5) Should the muppets continue to save in their worthless curreny's, or do what they r doing?

how do u know when a central banker is lying???
when he tells u that Gold and Silver r not money....

DEATH TO THE MONEYCHANGERS.

Thu, 02/12/2015 - 21:41 | 5778702 AL_SWEARENGEN
AL_SWEARENGEN's picture

You know Sousa, with all the bankers who have died by accident or treachery over the past few years, that bold message you often exemplify strangely has been playing out..

Thu, 02/12/2015 - 22:26 | 5778859 Kaiser Sousa
Kaiser Sousa's picture

yeah but not a satisfactory pace Al...

cheers.

Thu, 02/12/2015 - 20:28 | 5778476 nosoeawe
nosoeawe's picture

Central Banksters, regardless of country of origin, are all fucking criminals. 

Fri, 02/13/2015 - 00:25 | 5779283 turnoffthewater
turnoffthewater's picture

Too bad I'm only allowed one up arrow. +1000

Thu, 02/12/2015 - 20:29 | 5778481 Soul Glow
Soul Glow's picture

Russia making waves in all directions.

Thu, 02/12/2015 - 20:29 | 5778483 hotrod
hotrod's picture

Peter Hug at Kitco says only crazy people by gold.  Says the dumbasses think it is going to 10,000.

Thu, 02/12/2015 - 20:35 | 5778510 El Hosel
El Hosel's picture

It will go to 10,000 but only the very young dumbasses will be around to see it.

Thu, 02/12/2015 - 23:50 | 5779200 Son of Captain Nemo
Son of Captain Nemo's picture

It will go to 10,000 but only the very young dumbasses will be around to see it.

I think I've said this elsewhere.

We'll probably all be dead before the "reset button" gets pushed. It will be like 9/11 but with heavier demolition equipment that melts entire cities instead of just skyscrapers!  After that 10,000 GLD won't really matter too much!

These fuckers have been in charge for too long and they don't care who they take with them when they take their biggest loss!

Thu, 02/12/2015 - 20:51 | 5778539 RaceToTheBottom
RaceToTheBottom's picture

You are correct, no one by's gold, but many people buy gold.

Thu, 02/12/2015 - 21:44 | 5778717 lunaticfringe
lunaticfringe's picture

10,000 seems low. Is this before or after the G7 gets done printing another 20 or 30 trillion?

Thu, 02/12/2015 - 20:31 | 5778493 eddiebe
eddiebe's picture

China has to answer nothing.

Thu, 02/12/2015 - 20:31 | 5778494 eddiebe
eddiebe's picture

China has to answer nothing.

Thu, 02/12/2015 - 20:32 | 5778495 hotrod
hotrod's picture

Remember back in late 90s and early 2000s when central banks would annouce their intent to sell and the Gold market would crash.  Amazing that demand has really been good for many years and  now CBs buy yet Gold is flat.

Thu, 02/12/2015 - 21:11 | 5778605 Jorgen
Jorgen's picture

"Amazing that demand has really been good for many years and  now CBs buy yet Gold is flat."

Most, if not all, of Russia's gold purchases mentioned in the article was most likely from her local mines.

http://www.goldfacts.org/en/economic_impact/countries/russia/

Thu, 02/12/2015 - 21:23 | 5778631 Fun Facts
Fun Facts's picture

Gold is in a long term uptrend from $5 an ounce.

Thu, 02/12/2015 - 21:46 | 5778723 lunaticfringe
lunaticfringe's picture

+1000.

Thu, 02/12/2015 - 20:36 | 5778511 Creepy A. Cracker
Creepy A. Cracker's picture

Buying up... prices down. 

Black is white... up is down.

Thu, 02/12/2015 - 20:37 | 5778512 sam i am
sam i am's picture

200 year old monument in Poltava. The place of the Battle of Poltava, (June 27 [July 8, New Style], 1709), the decisive victory of Peter I the Great of Russia over Charles XII of Sweden in the Great Northern War.

The fascist authorities of former Ukraine, now Nulandstan, started to dismantle the 200 year old monument.

 http://mary-555.livejournal.com/314440.html

More about this piece of monumental art that is about to be looted: http://www.tourism.poltava.ua/eng/monuments/Monument_of_Glory/

Are there any international authorities watching for the safety of the work of arts in war zones?  

Thu, 02/12/2015 - 20:45 | 5778531 Son of Captain Nemo
Son of Captain Nemo's picture

Because after its gold-buying splurge, Russia currently has - according to official data - more gold, 1,208.2 tonnes in its, and certainly not the NY Fed's vault - than China. The problem, is that China's gold holdings were last updated officially in early 2009.

Hmmm?....

I wonder if this has anything to do with a U.S. Senator getting caught here recently using old file footage again to start a war with that Country you just mentioned buyin up all that gold at rock bottom prices???

Thought sending U.S. special forces and mercs along with cluster munitions and white phosphorous would have been a good reason not to try this stunt anymore given what the President and that Senator from Arizona did in openly admitting they started a coup and provided weapons without authorization from Congress?  

Getting closer!!!

Thu, 02/12/2015 - 20:52 | 5778547 1stepcloser
1stepcloser's picture

Where are the tradition ETFs...

Thu, 02/12/2015 - 21:00 | 5778571 kelley805
kelley805's picture

Though the large financial institutions have backed away from collateralizing mortgages, they are now doing it for commodities such as gold, silver and oil.  Here is one example.

https://www.google.com/search?q=jpmorgan+precious+metals+as+collateral&i...

The problem is not the collateral but the reselling of the same assets. In 2007 one financial firm sold 610 out of 3,400 CDOs more than once. That is nearly 18%.  Let me repeat.  More than once.

Because buyers are dealing with paper not physical assets, how do they know they are trading real, actual commodities? If the markets started to go down and everyone wanted their physical commodities such as gold, what if there was not enough gold to meet all the obligations?  Would there be an international panic?

For more on CDOs and BTOs go to

 http://michaelekelley.com/2015/01/28/remember-cdos-theyre-baaaack/

Thu, 02/12/2015 - 21:01 | 5778572 kchrisc
kchrisc's picture

Paper is "hot," gold is not.

What will you be holding when the dollar goes poof?

The banksters need to repay us.

 

More gold, and silver, for the banksters to repay us with in addition to heads.

Thu, 02/12/2015 - 21:07 | 5778591 harrybrown
harrybrown's picture

does anyone really believe any of the figures blurbed out by the IMF WGC et al.
just stack blind rather than on any notion they put forward.... 100% RIGGED

Fook'em all & keep taking phyzlivery

Thu, 02/12/2015 - 21:11 | 5778603 JuliaS
JuliaS's picture

Fight the bank and protect yourself form the bank, by buyng gold from the bank just like the bank!

/sarc

Thu, 02/12/2015 - 21:17 | 5778619 gwar5
gwar5's picture

But..... are they buying moar paaaaay-purrrr gold? Or are they taking duhlivery?

 

I assume it was physical delivery of tungsten-free, good delivery, gold bars. If so, that kind of buying may eventually cause the USD price of gold to go up. We shall see. The adventure continues....

I was just in Thailand and you can still buy 96.5% gold chains and other baubles for just a little over the spot price. Enjoy!

 

Thu, 02/12/2015 - 21:20 | 5778627 Consuelo
Consuelo's picture

If & when China does hold an 'event' to reveal to the world just what it has stored in its golden closet, rest assured it wont' be an amount that just barely eclipses the next biggest holder or three.

Thu, 02/12/2015 - 21:23 | 5778630 demur
demur's picture

Hmmm, my gut just churned this out. The WGGC (World government gold commision) cant allow the facts out or else runs to gold ensue. China and India depend on Ameica for trade, hence no disclosure. Natonalistic Russia on the other hand, won't play the US/EU propaganda/blackmail game, a declaration of war on goverall street. No wonder Ukraine is in US fueled fire and monopolistic prestitutes pointing at Putin. 

Thu, 02/12/2015 - 21:42 | 5778705 falconflight
falconflight's picture

To the ZH GeoWash daisy chain...the Bank of Israel is buying almost no gold.  What do they know that the other central banks don't.  Or has the ZWO cut the Temple out of the loop?  Just asking

Thu, 02/12/2015 - 22:36 | 5778891 besnook
besnook's picture

like the usa and japan(i think they have a secret stash given historyand culture) israel is totally vested in the fiat scheme where gold truly is worthless theoretically as a store of value. reality trumps that hypothesis but nevertheless there are always thoughts and actions on the extreme.

everyone forgets the chinese are the original bankers. while they didn't have derivatives in their previous heyday, the chinese are pretty good at money math. if they are collecting gold i'd listen to their reasoning.

Thu, 02/12/2015 - 22:28 | 5778866 besnook
besnook's picture

so the enemy, russia, is one of those crazy gold hoarders but china, our ally(creditor), the biggest gold hoarder(does state mined gold go to the sge?), is not.

got it. who says these people aren't transparent?

Fri, 02/13/2015 - 00:02 | 5779237 bluskyes
bluskyes's picture

Iraq, and Kazakhstan were the countries whose purchases jumped out at me.

Fri, 02/13/2015 - 00:20 | 5779274 cwsuisse
cwsuisse's picture

The gold holding statistics of all countries which do not enter physical holdings separate from gold receivables are not telling anything of relevance. As long as the central banks are not audited there is simply no information to rely on. We know from US unemployment, GDP and CPI statistics that data is obfuscated to the point that the public does not understand anylonger what is going on. The same is true for the PM sector. 

Fri, 02/13/2015 - 03:19 | 5779584 DIGrif
DIGrif's picture

What you say is true, but I do know one thing...Why is the dollar strengthening and the price of gold either moving sideways or going up too? Think about it for a bit. The answer is of course that the price of gold is being supressed by the stong dollar, but it can not supress it fully, hence we get the slow rise. However, what happens when the dollar regains it's ballance with other currencies or the FED breaks out QE4 in an attempt to devalue the dollar? Yep, Gold is going to shoot off like a rocket. Silver too for that matter.

Fri, 02/13/2015 - 01:38 | 5779442 noben
noben's picture

China is gonna XX everybody and use its gold to buy a seat at the SDR table.

Historically speaking, China only looks after its own interests and those of its frontier. Anything else would be a huge deviation from its roots and norms.

Fri, 02/13/2015 - 02:36 | 5779526 hedgiex
hedgiex's picture

All you need is Creditor Nations to hold gold and tell the World that their currencies are backed by some percentage of gold and not ziltch. Their fait currencies shall have more credibility.

Of course, you too have to stop the citizens from hoarding gold by Law to support the currency's transferability and as a store of value.

There lie the fear of debtor nations' central banks. Last to fall in the $ hegemony is US, the peripherals including EC are forced to fall in line btw gold backed currencies and US$.

You cannot discount Putin having a diversification strategy of gold backed currencies and Oil and let this be a catalyst and model.

This is going to be fun to watch as the chess game continues.

Fri, 02/13/2015 - 09:22 | 5780005 Mike Honcho
Mike Honcho's picture

In the west this is classic do as I say not as I do.  Hammered down as an old school relic but still a main factor in a countries wealth.

Mexico doesnt need gold, they got sweet loans from the IMF.

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