Central Bank Gold Sales Continue to Suppress Price Surge
Source: Mineweb.com (5/2/07)
While central bank influence on the gold market has dissipated in the past five years, it is still the most significant impact to the supply side of the market as mining companies can't ramp up enough supply to change annual production figures in a meaningful way.
Case in point, central bank sales in the past 6 weeks. ECB sales were updated today and showed another 12.3 tonnes of gold sold into the market in the past week by ECB captive banks. Remember, this is only an update of ECB banks, not anyone outside of the 14 banks in that union. Adding that 12.3 tonnes to the past 6 weeks of sales and the gold market has absorbed nearly 89 tonnes in the last 7 weeks. For reference, in the previous six months, central banks had sold 112 tonnes of gold into the market. The fact is, these sales have put the market under tremendous pressure, but have not tanked prices as has been the case in the past. These increased sales levels are giving investors a great entry point because as last year showed, the sales will abate into the summer months.