Gold To Top $2,000 On Central Bank Buying: Bloomberg Chart Of The Day

Tyler Durden's picture

Submitted by GoldCore

Gold to Top $2,000 on Central Bank Buying: Chart of the Day

Gold is trading at USD 1,675.30, EUR 1,214.20, GBP 1,062.30, JPY 129,036.00, AUD 1,634.90 and CHF 1,503.70 per ounce.
Gold’s London AM fix this morning was USD 1,676.00, GBP 1,062.31 and EUR 1,214.31 per ounce.
Yesterday’s AM fix was USD 1,673.00, GBP 1,065.74 and EUR 1,218.05 per ounce.

Cross Currency Table

Gold is marginally higher in most currencies today and continues to consolidate at the upper end of the range between $1,600 and $1,700/oz. Physical demand for coins and bars remains very strong with GoldCore experiencing a notable increase in demand this week.

Gold in USD – 30 Day (Tick)

Gold is up nearly 3% on the week and looks set to post its biggest weekly gain in more than a month. Markets remain nervous about the risk of contagion ahead of a G20 meeting whose agenda will be dominated by the euro zone debt crisis and steps to tackle the contagion.

Gold should be supported by global inflation data this morning which remains stubbornly high particularly in emerging markets.

Inflation in China and India remains very high. In India, inflation exceeded 9% for the 10th month in a row and in China inflation is at 6.1% but the key food component of inflation rose 13.4% year-on-year in September.

European inflation accelerated the fastest in almost three years in September on soaring energy costs, complicating the European Central Bank’s task as it combats the region’s sovereign-debt crisis. The euro-area inflation rate jumped to 3 percent last month from 2.5 percent in August. Inflation in Germany also surprised to the upside this week.


The Bloomberg ‘Chart of the Day’ shows the proportion of gold in the international reserves of India, Russia, China and Mexico is significantly lower than the rates in the U.S., Germany and France, based on data compiled from the World Gold Council. The lower panel tracks central bank holdings in metric tons and the bullion price since March 2008.

Central banks last year were net gold purchasers for the first time in two decades.

“I certainly expect international central bank gold buying to continue, especially in emerging economies where foreign reserves are growing,” said Gavin Wendt, founder and senior analyst at Sydney-based Mine Life, which publishes reports on the metals industry. “It’s the safest option for them.”

Central banks, the biggest gold holders, have expanded reserves due to the international financial crisis. Central bank and government-institution buying totaled 192.3 metric tons in the first half of 2011, World Gold Council data show. Gold accounts for 75.4% of the U.S.’s reserves and 72.7% of Germany’s.

The ratio is just 1.6% for China and 8.2% for Russia, WGC data show.

“Governments in many places like Asia and South America are rapidly embracing gold as a security mechanism,” said Wendt, who expects gold at $2,500 in 2013. “The value of their U.S. dollar foreign reserves has drastically fallen over the past decade.” Thailand, Bolivia and Tajikistan raised reserves in August, according to the International Monetary Fund.

China's foreign exchange reserves, the world's largest stockpile, rose by $4.2 billion in the third quarter to $3.2 trillion, the People’s Bank of China said on Friday.

Central bank demand due to concerns about currency debasement and contagion remains a primary driver of gold’s bull market and means that the foundations of the bull market are very sound.

Central bank demand is strategic leading to gradual accumulation and it is long term meaning that official sector demand will provide support to prices for the foreseeable future.

Thus, continuous suggestions that gold is a bubble today and in recent years and of a gold bubble bursting and prices falling sharply as seen in 1980 is uninformed and misguided.

The world of 2011 is very different to that of 1980.

In 1980, the US was the world’s largest creditor nation. Today, it is the world’s largest debtor nation – the largest debtor nation the world has ever seen.

In 1980, China was a communist country whose citizens were banned from owning gold. Today, there are 1.3 billion Chinese people and a growing middle class who can buy gold.

The Chinese central bank did not have any currency reserves in 1980, today they have $3.2 trillion in foreign exchange reserves.

Similarly, India, China, Brazil and other emerging markets were debtor nations in 1980 today they are creditor nations with massive foreign exchange reserves denominated primarily in dollars.

In 1980, the much of the world was coming out of a period recession and stagflation. Today, we appear to be on the verge of a recession or Depression possibly involving stagflation again.

In 1980, there was no banking or sovereign debt crisis and no risk of global financial and economic contagion.

For breaking news and commentary on financial markets and gold please follow us on Twitter


(Bloomberg) -- Gold Traders Most Bullish Since July

(Bloomberg) -- Central Bank Buying Means Gold to Rally to $2,000: Chart of Day

(Reuters) -- Gold flat after Spain downgrade

(Yahoo Finance) -- Asian stocks retreat on Spain rating downgrade


(The Telegraph) -- Europe's grand plan risks slow death by a thousand cuts

(Beacon Equity Research) -- Dow Theory Letters Richard Russell: to Tell you the Truth, I’m Scared

(ZeroHedge) -- Foreigners Dump $74 Billion In Treasurys In 6 Consecutive Weeks: Biggest Sequential Outflow In History

(Resource Clips) -- Fort Knox or Fort Potemkin?

(BusinessInsider) -- Art Cashin Offers A Huge Lesson On Weimar Hyperinflation, And The Roots Of Today's Crisis

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HUGE_Gamma's picture

the Iranians are on the cutting edge of nuclear transmutation, the stability of the worlds monetary system is in danger if they start dumping gold coins and platinum bars on the comex and lme by the tons. the united states and israel must destroy those reactors before its too late. 

achmachat's picture

so I guess you're going to repeat this moronic nonsense on each thread about precious metals here?

HUGE_Gamma's picture

im setting the record straight about down arrows

kito's picture

That record belongs to robo...and you aint robo

Smiddywesson's picture

I'm not so sure Robo is Robo.  He knows too much to be anything other than a sock puppet used to rile us up.

Go Robo!

Pinto Currency's picture



Seems to me the real story is European, Middle Eastern and Asian retail physical metal buying driving gold higher. 

Central banks buying surely helps in the market while the pounding of gold and silver prices through the paper forward & futures market is causing real shortages of physical metal.

HoofHearted's picture

Yeah, nuclear Iran would surely make people much more confident about fiat, wouldn't it? Can you think beyond one issue? Or are you a typical American Idol watcher?

Jack Napier's picture

The concept is that precious metals can be made radioactive. It's not out of the quesion. A geiger counter would be prudent.

LongSoupLine's picture

With auto sales skyrocketing in the middle east, I propose we develop an enormous glass parking lot somewhere in their central region...say, ohhh somewhere around ancient Persia perhaps.  It's simply a logical business decision, nothing personal.

AndItsGone's picture

Don't you have a $0.37 check from David Axelrod's astroturfing company to cash?

Esso's picture

Soooooo, did you forget your [/sarc] tag, or are you just a retard?

JenkinsLane's picture

Gee, I wonder why you think that? I wouldn't know, I'm just a dummy.

caconhma's picture

Italians have Mafia.

Jews have Zionism.  Zionism is the Jewish Mafia. Their purpose is to destroy the USA, its economy, and its democratic institutions.

As for Israel, it is not any different from South Africa 20-30 years ago. Israel is a racist & militaristic state. Its future will not be any different than of the old racist South Africa.

As for America and its people, we do NOT need any WWIII. We do not need our people dying for Israel!


Abitdodgie's picture

Why not if they are stupid enough to go , let them

Jack Napier's picture

While they're at it, they ought to destroy your kitchen microwave and laptop.

Black Friday's picture

If they just dumped bars on the open market it would lower the value of their own product, a product that already cost way more in energy than could ever be recouped at even 10X the current market price, and a product that would most likely be highly radioactive.

LongSoupLine's picture

"He who has the gold..."


GeneMarchbanks's picture

Methinks China has at least double what they report.

BigJim's picture

Methinks you're probably onto something there.

Methinks the same goes for Saudi, Iran, Kuwait, etc, etc.

Smiddywesson's picture

I guess this is a good place to address this.  I used to think that all the world's central banks were in on this, slowly acquiring gold according to some agreed upon schedule to avoid running up the price on themselves.  I don't think that proved out. 

Obviously some countries are buying gold and not reporting their holdings, but I think others are coming late to the table and are just starting to realize that the Fed and the ECB are scheming to screw everyone.  Clearly Venezuela now gets it, and wants to take possession of their gold.  I think from here on out other nations are likely to ramp up their gold purchases to try to catch up and replace their foreign reserves with gold. 

We're coming into the home stretch where 75% of the US reserves are in gold and nations are dumping treasuries.  Any one of these factors, panicked buying by central banks without gold, the US and ECB reaching target 100% gold reserves, or worldwide dumping of treasuries, could bring about End Game where a new system is announced and the price of gold is intentionally ramped.  If anyone plans on doing any more stacking of physical, I would strongly recommend doing it this month.

Panic Panic Panic's picture

You've convinced me.  It's a BK triple stacker for lunch today!  To Hell with cholesterol!

LongSoupLine's picture

That's crazy talk...after all, Bernank said gold is not money.  Why would they waste their time on such a silly yellow element?

Long cotton and linen futures.

Long-John-Silver's picture

Gold is backed by nothing. That's what a young lady told me just a few days ago.

Smiddywesson's picture

Hee, hee, that statement will live forever as the stupidest financial comment ever made.

It's an immortal sybol of the mental control exerted over the last century

Thisson's picture

It's true! That's why everyone should get themselves into a rock solid currency like the ZIM:



terryfuckwit's picture

dead right you are.. but is there any chance of any event that would expose the lying bastards.. and thats all the lying bastards including the chinese to accurately account for their gold reserves... just a guessing game until it is needed for something...

moondog's picture

These countries need to keep their gold totals to themselves. Nobody wants to be the next Libya. I wonder how history would be different if Libya had nukes? 

Gringo Viejo's picture

Keen sense of the obvious.

BigJim's picture

...World Gold Council data show. Gold accounts for 75.4% of the U.S.’s reserves and 72.7% of Germany’s.

I wonder how much of Germany's gold is sitting in the FRBNY's vaults?

Good luck getting that back when the SHTF, guys.

Esso's picture

That's really good thinking on Germany's part.

I think I'll unload my vault and give my goods to my bankrupt neighbor for safekeeping. I'll be able to get it anytime I want because he's just across the street.

Smiddywesson's picture

...World Gold Council data show. Gold accounts for 75.4% of the U.S.’s reserves and 72.7% of Germany’s.

I wonder how much of Germany's gold is sitting in the FRBNY's vaults?

Good luck getting that back when the SHTF, guys.

Rubbish.  The Fed and the ECB are marching in lock step to pull this off.  They intend to stay on top of the world power structure and won't endanger that by fighting each other.

faustian bargain's picture

History is replete with examples of such allies becoming enemies.

broke433's picture

Gold may reach 2000 = 300 dollar gain.

Gold may fall to 1200 = 500 dollar loss.

baby_BLYTHE's picture

Well since everyone is so darn bearish on Gold, looks like its time to buy.

Johnny Lawrence's picture

Disagree.  Right before the recent big decline in gold, every brokerage firm under the sun increased their gold targets to ~$2k.


baby_BLYTHE's picture

Gold falling from the peak of 1900-1200 is that not a bubble? There is no way gold can be a bubble with all the money that has been printed worldwide, 0% interest rates, debt/gdp ratios 90%+, unfunded liabilities... I could go on.

Now everyone on ZH is lock step staying gold is a bubble?

I dearly miss the old ZH. The debates, discussions, in depth analysis many users presented, even the old trolls (Masterbates, Johnny Bravo, Harry Wanger) even Robo was better back in the day.

The changing of times :/

broke433's picture

Paulson sells gold = $500 gold

qussl3's picture

Paulson holds GLD.

If he liquidates there are big fish waiting to pick up blocks on the cheap just to redeem baskets.


achmachat's picture

ever thought about how unaffordable physical gold and silver would be if SLV and GLD didn't exist?

Smiddywesson's picture

Why guess, you're about to experience it yourself very soon.

faustian bargain's picture

...because buying less than an ounce is soo complicated.

BigJim's picture

$500 dollar gold = BigJim owning a lot more gold.

And yes, you can eat it. Over and over again.

I'd recommend giving it a wash in between, though.

apberusdisvet's picture

The WGC is a propaganda arm of the bullion banksters.  There is much anecdotal evidence that countries in the ME own far more gold than stated and the numbers for Russia and China are suspect.  The larger issue in the supposed holdings of the US and Germany.  It has oft been postulated that there are many "owners" of the same bars in the various vaults.

Smiddywesson's picture

The central bankers have had years to replace those bars.  They are clearly buying, and God and Ben only know how much.  They would be fools to not replace them when gold is so cheap.  You can bet the gold is there.  It may not have been before, but it's there now.

JonNadler's picture

you still can't eat gold even if it goes to 2000

Clint Liquor's picture

But fiat is always delicious and nutrious.

Chaffinch's picture

And it's high fibre, so very good for the bowels.

JustObserving's picture

All the gold mined in human history is about 5.3 billion ounces.  Some of it may be lost. A very fair optimistic estimate of all the value of gold in this world may be about $8 trillion.

Now compare that to US debt of $15 trillion and unfunded liabilities of $116 trillion (per and growing at $8.6 trillion a year.

Or compare that to the value of land in Beijing in January 2011:

"According to the China Economic Weekly magazine, property prices are currently so high that the total value of land in Beijing, estimated at 130 trillion Chinese yuan (US$19.74 trillion), surpassed the United States' gross domestic product of US$14.5 trillion for 2010."

Gold goes much higher than  $2000 - and sooner than most think.


Smiddywesson's picture

Gold goes much higher than  $2000 - and sooner than most think.

Yes, the change in prices has to be unanticipated and violent for TPTB (those that can ramp the price and stand to profit from it) to reap the most rewards.  This isn't the housing industry where price discovery happens over the course of months and months.  When gold pops, there will be no opportunity for the common man to jump aboard.

Chaffinch's picture

The Central Banks are in a giant poker game - some will be bluffing by exaggerating their holdings, but my bet would be that they are more likely to have some other gold they are keeping secret (maybe just by extending the delay factor for announcing their purchases).
I suppose we have to allow for the possibility that some of them might be telling the truth - but the only thing I am sure of is that they want it badly (confirmed by Ben feigning complete disinterest) and the price is going up, this year, next year, and the year afterwards.