Zerohedge: Central Banks Buy The Second Most Gold In 50 Years: A Look At Who’s Buying

There is no mention made in this article of the well-known information that the United States has stolen Ukraine’s gold. ~J

In 2014, the price of gold, expressed in US Dollars, went absolutely nowhere (even if its increase in RUB – not to mention many other rapidly devaluing currencies – was a stark surge of 83%). The reason: for the second year in a row, concentrated selling of “paper” gold which saw some 159 tonnes of outflows from gold-backed ETFs, primarily in the US. This however, is a substantial slowdown from the 880 tonnes of gold ETF outflows in 2013, selling which started in earnest when the price of gold peaked just shy of $2000 on September 6, 2011… the day the SNB instituted its now failed currency control attempt to set a 1.20 EURCHF floor.

Furthermore, ever since the SNB’s stunning defeat in the currency wars one months ago (as noted above, the price of gold peaked hours before the SNB instituted its now defunct EURCHF floor in September 2011, and the result was an epic selling of gold-backed ETFs), sentiment expressed via paper gold has turned “tentatively positive” in the words of the World Gold Council, and so far in 2015, ETFs have seen inflows of around 60 tonnes, the vast majority (over 90%) of which has been into US-based funds.

 ETF gold holdings_0

And while one can debate just what was the net demand/supply for various other sectors such as jewelry, technology, and physical (not paper) gold investment, one thing is clear: central banks went on a shopping spree. According to the latest World Gold Council data, in 2014 the world’s central banks went on a golden shopping binge to take advantage of the ongoing dumping in paper ETF gold, resulting in bank net purchases amounted to 477 tonnes over the past year, a 17% above 2013’s 409 tonnes. This was the second highest year of central bank net purchases for 50 years, coming second only to the 544 tonnes added to global gold reserves in 2012.

Who took the biggest advantage of the depressed gold price? One name sticks out: spot it on the chart below:

central banks gold 2014_0

From the WGC:

Russia had by far the greatest appetite amongst those who raised gold reserves. The country accumulated an additional 173t (36% of total central bank demand in 2014) over a turbulent 12 months. 2014 was bookended by tension and uncertainty for the country: geopolitical antagonism with the Ukraine, and the resulting international sanctions, at the beginning of the year was followed by severe economic distress towards the end.

Kazakhstan (48t), Iraq (48t) and Azerbaijan (10t) were also notable for the size of purchases made. Fortification and diversification of reserves, namely away from the US dollar, continues to be the driving force behind this activity.

Who sold? Why the latest foreign-policy debacle for the US state department, of course: Ukraine.

While purchases continue unabated, sales remained insignificant. Ukraine was the only central bank to significantly decrease gold reserves, falling 44% to 24 tonnes, as well-documented geopolitical struggles impacted economic performance. Further, sales under the Central Bank Gold Agreement (CBGA) were minimal: the final year of the third agreement only saw 6.8 tonnes, while the first year of the fourth agreement8 has seen less than half a tonne sold thus far.

If that was all there was, Russia could actually be thankful to Ukraine for essentially transferring over its gold from Kiev to Moscow. But there is much more here than meets the eye, and the biggest wildcard remains as usual China. Because after its gold-buying splurge, Russia currently has – according to official data – more gold, 1,208.2 tonnes in its, and certainly not the NY Fed’s vault – than China. The problem, is that China’s gold holdings were last updated officially in early 2009.


And as everyone following the physical gold space knows, there are really just two key, outstanding questions:

  1. What is the updated total inventory of Chinese gold holdings (estimated to be somewhere between 3,000 and 6,000 or more tonnes), and
  2. Just what is the PBOC waiting for and when will it reveal this number

With global geopolitical events moving ever faster, and with “developed world” central banks increasingly losing control almost on a daily basis, China may have to answer both questions relatively soon.

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4 Responses to Zerohedge: Central Banks Buy The Second Most Gold In 50 Years: A Look At Who’s Buying

  1. templelijah says:

    US gold reserves are not under federal government jurisdiction, meaning the private gold cartels are who actually control the gold. The gold the national governments think they hold is a small percentage of their debt magnitudes, less for their unfunded liabilities, and a speck in comparison to central bank derivatives exposure.

    Thus in theory the global gold will be transferred to the official main controlling system as the dollar is devalued in a systematic and controlled manner, in which process any actual wealth foundation of national sovereignty will also be “transferred”. The setup is already in place, it just has to be made official because loss of real wealth for nations, aided by massive debt and unfunded liabilities, will also be the loss of the sovereign reality of their nation-state systems of governance.

    Gold ownership will be the key to the next fictional currency that must emerge from these coming ashes of national sovereign autonomy, but of course at global scale but backed by the actual enforcement power to actually apply international law to these defaulting republics. Its an algorithm whose global-sovereignty will follow the real gold rulership upon which world government’s baseplate forms. The national debt magnitude and fictional nature of its creation by the central banking system suggests a global “loan mod” will be set-up in exchange for whole physical nations, their gold (which they do not hold anyways), and their sovereignty by that final “solution”.

    Its now just a matter of time and what will be the proper catalyzing accelerant of this final phase, and of course what the true purpose of the central banks derivatives exposure is still unknown as to its true objective in this process. Imo the enormity of the central banks derivative exposure will be the key to float this formula reliably with actually maximum control aided by the guiding computer networks actually centralizing now for this very purpose.

    Since all the gold reality is as digitally represented as is the fiat currency non-reality, as is the investment symbolization and “monetization”, it is subject to virtual reality for real, the numbers can be purposely altered as needed to guide the process over a number of years of this coming acceleration cycle. Its not “the end”, it is a final true global cycle.

    • Jean says:

      I think your facts here can be contested, but I do not have the ability to do this. . . There have been huge amounts of gold hidden and stolen . . . much more than the general public is aware of, and it is not virtual! . . . Hugs, ~Jean

  2. Ri-chard says:

    And did the US also steal Libya’s gold?

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