09/29/10 Stockholm, Sweden – The year to September reporting is in for the European Central Bank Gold Agreement (CBGA), the group that controls the aggregate gold sales for the eurozone, Sweden, and Switzerland. The results are not that surprising — the group sold only a meager 6.2 tonnes. However, the precipitous drop in sales from the year prior period is staggering… the members’ gold sales are down 96 percent.
According to the Financial Times:
“The central banks of the eurozone plus Sweden and Switzerland are bound by the Central Bank Gold Agreement, which caps their collective sales. In the CBGA’s year to September, which expired on Sunday, the signatories sold 6.2 tonnes, down 96 per cent, according to provisional data.
“The sales are the lowest since the agreement was signed in 1999 and well below the peak of 497 tonnes in 2004-05. The shift away from gold selling comes as European central banks reassess gold amid the financial crisis and Europe’s sovereign debt crisis.
“In the 1990s and 2000s, central banks swapped their non-yielding bullion for sovereign debt, which gives a steady annual return. But now, central banks and investors are seeking the security of gold.”
The about face in European gold selling arrives in tandem with the much-discussed renewal in gold purchasing interest by central banks in Asia and other developing economies, including Russia. Yet, even with gold holding record price levels — in the vicinity of $1,300 an ounce — it appears the CBGA member states will still plan to sit tight and refrain from their typical sales numbers going forward, which the FT indicates have historically averaged about 388 tonnes per year. You can read more details in Financial Times coverage of how Europe’s central banks have halted gold sales.
Best,
Rocky Vega,
The Daily Reckoning
Rocky Vega
Rocky Vega is publisher of Agora Financial International, where he advances the growth of Agora Financial publishing enterprises outside of the US. Previously, he was publisher of The Daily Reckoning, and founding publisher of both UrbanTurf and RFID Update -- which he ran from Brazil, Chile, and Puerto Rico -- as well as associate publisher of FierceFinance. Rocky has an honors MS from the Stockholm School of Economics and an honors BA from Harvard University, where he served on the board of directors for Let’s Go Publications, Harvard Student Agencies, and The Harvard Advocate.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
Start your 100% FREE subscription to The Daily Reckoning today and you’ll get a free research report, “How to Survive the Fall of Social Security.” Simply enter your email address below to get your free report and join over 495,000 worldwide Daily Reckoning subscribers!
We Respect Your Privacy and We will
Never Share or Sell Your Email Address
This is a very informative post. I would like to know more on the halted gold stock by the Europe’s central Banks.
Central banks are interesting. On the one hand, they sold gold…for what ?….they paper they originally printed ? Why ? Couldn’t they just run the press a bit harder ?
Oh…yeah…..they sold it to make it seem like their paper is more valuable by holding down the price of gold in paper terms…kill that canary.
But any time they want their gold back, all they have to do is dip into their bottomless bucket of paper, and POOF…..the gold re-appears in their vaults.
Unless, of course, they screw up, and faith gets lost in the paper.
But there is always Plan B: Make the stuff illegal and/or tax it so high, the ordinary peons of the world have to use their paper script.
Yeah…..the Mafia ain’t got NOTHING on Central Banksters