Europe’s central banks halt gold sales

By Jack Farchy in Berlin Published: September 26 2010 22:08


Europe’s central banks have all but halted sales of their gold reserves, ending a run of large disposals each year for more than a decade.
The central banks of the eurozone plus Sweden and Switzerland are bound by the Central Bank Gold Agreement, which caps their collective sales.

In the CBGA’s year to September, which expired on Sunday, the signatories sold 6.2 tonnes, 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 tonnes in 2004-05.
The shift away from gold selling comes as European central banks reassess gold amid the financial crisis and Europe’s 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.

The lack of heavy selling is important for gold prices both because a significant source of supply has been withdrawn from the market, and because it has given psychological support to the gold price.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.

“Clearly now it’s a different world; the mentality is completely different,” said Jonathan Spall, director of precious metals sales at Barclays Capital.
European central banks are unlikely to sell much more gold in the new CBGA year, according to a survey by the Financial Times.

Greenspan’s Warning on Gold - “Fiat money has no place to go but gold,”

September 15, 2010Alan Greenspan spoke at the Council on Foreign Relations earlier today, and what was his advice? That central bankers should be doing what these columns, among others, have been rattling on about, namely that they should be paying attention to gold. “Fiat money has no place to go but gold,” the former Fed chairman said at the Council, according to economist David Malpass, who quotes Mr. Greenspan in one of Mr. Malpass’ emails on the political economy. Mr. Malpass writes that the former chairman of the Federal Reserve’s board of governors was responding to a question in respect of why gold was hitting new highs.

[Continued]
http://www.nysun.com/editorials/greenspans-warning-on-gold/87080/

AngloGold to Raise Capital - $1.37 billion to eliminate gold hedges

LONDON—AngloGold Ashanti Ltd., one of the world's largest producers of precious metals, plans to raise about $1.37 billion to get rid of forward gold sales contracts that are weighing on its earnings.
The Johannesburg-based miner is using the proceeds from an equity issue and a convertible-bond offering to eliminate gold hedges that locked the company into forward gold sales at an average price of less than $450 a troy ounce, compared with Tuesday's record high gold price of $1,274.80 a troy ounce.
"Removing the hedge book... [will] give us full exposure to the gold price, widening profit margins and improving cash flow," Chief Executive Mark Cutifani said.
AngloGold Ashanti, the world's No. 3 gold producer behind Barrick Gold Corp. and Newmont Mining Corp., is betting that gold prices will remain high in the future. London-based metals consultancy GFMS Ltd. forecast gold may rally close to $1,350 a troy ounce before year's end, supported by concerns about the pace and strength of the economic recovery....

http://online.wsj.com/article/SB10001424052748703743504575493550276702786.html?mod=googlenews_wsj

Gold price hits new record high

14 September 2010

The price of gold hit a record high on Tuesday, with analysts giving a number of reasons for its rise.

Both the price of the actual metal and the price for buying it at a future date rose more than 2% to $1,274.75 an ounce.
It was the biggest one-day gain for the commodity in four months.
One of the factors spurring investors is gold's traditional role as a so-called "safe-haven" investment at times of economic uncertainty.
On the physical market, demand for both bullion and jewellery has risen ahead of the seasonal Indian wedding period and the Hindu religious festivals that begin in September.
Another driver is more technical - gold is priced in dollars, and any fall in the dollar makes it cheaper to buyers using other currencies.
The dollar has fallen across a range of currencies, driven down by a range of factors.
Its most remarked upon slide has been against the Japanese yen. It is trading at a 15-year low against that currency.
The price of gold has risen 16% so far this year.
Analysts said there were no significant new reasons for this latest record.
"It's going up for all the same reasons. People are fearful still," ANZ head of sales, Peter Hillyard, told the Reuters news agency. "Little things come into the market, little factors that awaken people's interest in gold."
The World Gold Council's last report on the gold market predicted that continuing strong demand from jewellery buyers in the two fast-developing markets of India and China, would help keep the price high.

http://www.bbc.co.uk/news/business-11306751

IMF Sells 10 Tons Gold to Bangladesh; Sales to Central Banks Now 222 Tons

LINK

The International Monetary Fund, which set out a year ago to sell about 13 percent of its gold holdings, sold 10 metric tons to Bangladesh for $403 million.

The transaction brings total central bank purchases from the fund to 222 tons, according to fund data. India has bought 200 tons, Sri Lanka 10 tons and Mauritius 2 tons. A further 88.3 tons has been sold under the agency’s “on-market” sales program, it said in a statement yesterday।

Jim Sinclair - Strapping In For The Big Move

Now that expectations for Gold at very significant prices are being offered by various rational sources, there is one thing you can be sure of. That one thing is $1650.

I am getting many emails asking how it is possible for the gold price to reach $1650 by early January.

I suspect these are far out in time, out of the money call option buyers that have done exactly what I have warned against. That is the using of options with an investment outlook.

Options are speculations that you never hold past the half way to expiry point, but instead switch to further out months if you believe in what you are doing.

Those that pre-offer gold cannot trade it at $1650 in January because of the short time versus the big moves. They clearly have never experienced the gold run in late 1979 and early 1980.

I will stand with what I have said for nearly 10 years. Gold will trade at $1650 on or before January 14th, 2011. That never made me want to buy expensive in time call options.

It has given me the courage to invest in gold without margin both in shares and bullion.

There is no doubt in my mind that $1650 will occur in early 2011. I have told you that Martin Armstrong, a master timer, feels that gold will trade higher and face a reaction in middle to late June of 2011.

The gold banks are throwing blocks to the price as we approach $1262. This is a major waste of time and money as gold is going to and through that price. The only argument is whether gold will hit $1650 in January 2011 or $3000-$5000 in June 2011.

Do you have any idea how much money has been made by those that bought gold modestly and in cash only on every reaction and sold into the rhino horns? It sounded stupid when I suggested this tactic for the wannabe traders.

I ran 22,000 long gold contracts in the New York and London markets in 1978 to 1980. Back then that was a big number. Today if I have a conviction, I simply play with everything I have and screw credit. The only credit I would use as a pro trader is options.

Those of you who follow me closely know that I am NOT kidding. This is the time when PRICE and TIME meet each other.

This is the time now as it was in 1979 that I went throttle to floor.

This is the time now as it was in 1979 that I am committing 100% of all the cash I can accumulate to what I believe in.

This is the time when all I have planned for is falling into place for the final and enormous pay day. However, I will not and you should not violate discipline, as I have always tried to teach you.

Option are never held past 50% of time left when you purchased them.

If I am wrong about gold at $1650 on or before 14/01/11 it only means gold will trade much higher than $1650 five months later.

As far as being long and wrong, that is something I definitely am not.

Respectfully,
Jim