Tuesday, February 14, 2012

The Largest National Holders of Gold Have Retained Their Reserves, But Should They Sell?

Source: Commodity Online

"But we believe, even beyond the technicalities, selling gold reserves is not a “golden ticket”, as it would very much be a short-term fix and, perhaps more importantly, weaken balance sheets by switching out a hard asset," Barclays added.
For example, Italy does hold a substantial amount of gold, but even selling all of this would yield just over $130bn, which represents just 6% of Italy’s debt. Greece owns 111.6 tonnes, making up 83% of its reserves, but at a dollar value of $6bn it only represents 1% of total debt outstanding. 
Indeed, on the demand side, the latest IMF statistics reveal a continuation of central bank net buying, with net purchases of just under 40 tonnes in December alone; and including Turkey’s new policy of accepting gold in its reserve requirements from commercial banks increases net reported inflows to 387 tonnes for the year, Barclays concluded.   LINK...
The BULLISH trend in gold continues. Nothing has changed and we believe there will be NO significant drop in gold like what happened in 1980, because that would require raising interest rates, and the consequences of that would be devastating to the financial markets.  BK