Commodities | Jun 21 2006
By Greg Peel
US based trading guru Dennis Gartman reports World Gold Council figures suggest there has only been 291 tonnes of gold sold under the Central Bank Gold Agreement in the first nine months of this "year" of the agreement. 500 tonnes are allowed each year.
Gold bulls take heart from this information as it suggests a reluctance to sell, and thus upside. However, the World Gold Council is not so sure, suggesting maybe the other 209 tonnes available for sale in the next three months will hit in one big lump.
France, the Netherlands, and the European Central Bank have been the big sellers so far.
On the other side of the equation, the world has been expecting some serious gold buying coming from the likes of China and the Middle East as they seek to diversify away from US dollars in fear of growing global imbalance and the size of the US current account deficit. They have even indicated so themselves. However, the World Gold Council reports that gold reserves held by China, Taiwan, India, Lebanon, Saudi Arabia, Indonesia and Kuwait are unchanged. The reserves of Jordan and Morocco have actually fallen.
Gold has corrected an awfully long way. Are these countries waiting to buy still? Dennis Gartman is very bullish gold at present, but he’s also rather confused as to what the central banks are up to.