Got Gold? Central Banks Are Getting Large Quantities

With investing, if you are not early you are late – Hal, long time friend and colleague

Brazil’s Central Bank announced the purchase of over 17 tonnes of gold in October.  Here’s the commentary on this from UBS precious metals strategist Ed Tully:

There may be a flutter of excitement in the market today with news that Brazil’s official reserves of gold rose 17.2 tonnes in October, according to IMF statistics. This follows on from the 1.7 tonnes of buying in September and brings total Brazilian gold reserves to 52.52 tonnes. This is a chunky purchase by a central bank, and the gold market will likely sit up and pay attention to today’s news, not just because of its size but because this is a central bank that has not been active in the market for some time. Gold struggled in October, and without this official sector buying the move below $1700 would likely have been much more severe than the short lived dips transpired to be. Today’s news confirms much of the market chatter at the time that official sector buying was taking place and was one of the key factors that gave prices a reasonable floor last month.

In fact, several non-Fed/BOE Central Banks increased their gold holdings by over 40 tonnes in October.  We know that China, in addition to retaining 100% of the 25 tonnes per month it produces, has been importing bullion hand over fist.

Gold and silver have been unusually resilient in the face of one of the more overt attempts by the U.S. bullion banks to trigger a COT open interest liquidation sell-off.  For those of us who have been trading and researching the metals market for the past 11 years of the bull market, the attempted manipulation has never been more transparent, nor has the ability of the market to withstand this big bank flagrancy.

Here’s the Bloomberg report of the October Central Bank buying spree:  LINK  Without bloviating on the significance of this aggressive and rampant CB accumulation of bullion, please note that several countries besides Germany are now making noise about repatriating their gold being “safekept” by the Fed, BOE and Bank of France.  Switzerland has proposed legislation being introduced in order to force the issue, The Ecuadorian Government has called on its banks to repatriate 1/3 of their foreign-held gold and the Netherlands is starting to make noise about doing the same.

The name of the game is “accumulate physical – not paper (GLD, CEF, GTU, etc) and make sure you have trustworthy custodian.”  That would be either a private domestic depository or under lock and key in your own house, with Smith and Wesson are your guard dogs.