Central bank gold purchases to top 500 tons this year in a new record supporting prices
By: Peter Cooper
GoldSeek.com
Wednesday, 5 December 2012
Gold buying by the global central banks will hit a new high this year of more than 500 tons up from 465 tons in 2011, according to data compiled by the World Gold Council. Only yesterday the Bank of Korea announced that its gold reserves rose by 14 metric tons, a 20 per cent jump in total holdings to 84 tons.
Central bank gold buying has become a pillar of the gold market today. Only a few years ago the central banks were net sellers of gold under a long-standing inter-bank agreement. But lately they have been among the biggest buyers to protect against weaker currencies and the potential for faster inflation.
Gold standard
In truth this is a gradual return to a de facto gold standard with gold assuming a bigger and bigger role in the currency system again. That is after all the main function of the central banks, and to preserve the value of money in troubled markets they are turning back to gold.
It is more than a little ironic that the central banks themselves are arguably the biggest cause of this instability. If they were not printing money like a house on fire then the danger of devaluation and inflation would not be present.
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