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Central Banks are still buying Gold

Look at the most recent findings from the World Gold Council we see that ETFs and India kept Gold demand higher in Q-3 of Y 2012.

In a detailed review of the report it shows that central banks continued to be buyers of Gold during the Quarter, with 97.6 tons of Gold purchased. This is close to the 100 tons average in 6 of the past 7 Quarters.

The year-to-date figure for central bank buying is up 9% so far for Y 2012.

As currencies weaken central banks are adding the precious Yellow metal as real assets in their national treasury’s.

The World Gold Council central bank buying data going back to 2002 was updated in November. Data from The Economist’s Intelligence Unit indicates the nations are expected to grow their Gold holdings in Y 2012 and Y 2013, it is clear that central bank Gold continue to grow.

Brazil added 1.7 tons of Gold to its holdings during September. Brazil stands at number 50 on the list of nations with some 35.3 tons of Gold. That is just 0.5% of its reserves. The Economist shows that Brazil’s GDP is expected to grow by 1.5% in Y 2012 and then by 4.2% in Y 2013.

Kazakhstan is reported to be a net buyer of Gold. It added 1.4 tons in July and again in August, with a 0.4-ton drop in September, the nation added some 2.4 tons of Gold during Q-3. Kazakhstan was ranked at 33 on the list of nations, with 104 tons coming in at 19.7% of its total reserves.

Ukraine bought up Gold in each month of Q-3, adding to the 4 past months of Gold gainers. After adding 4.9 ton so far in Y 2012, Ukraine added some 2.4 ton in Q-3. Ukraine came in at # 51 on the list of nations in total Gold holdings, with some 35.1 tons, or 6.9% of reserves. The Economist projects Ukraine’s GDP to grow by 0.8% in Y 2012 and by 2.2% in Y 2013.

Paraguay added 7.5 tons in July and implies that its central bank is adding hard assets to its treasury. This is a substantial gain for Paraguay as its ranking was shown to be at # 70 among nations. Its total was 8.2 tons, or 9.7% of its total reserves.

South Korea was a big buyer, with central bank purchases adding 16 tons of Gold in July. No additions or subtractions were seen in August and September, but that is a large enough purchase to stand out in Q-3 activity. Korea ranks as # 40 at 70.4 tons, 1.3% of its total reserves. The Economist sees South Korea’s GDP growing by 2.6% in Y 2012 and by 3.7% in Y 2013.

Russia was a big buyer in Q-3 with 18.7 tons purchased in July and August. Russia will keep buying Gold as long as the Ruble continues to become a trusted global currency. Russia sold 2.2 tons in September, focus will be on if the nation will continue to buy Gold. Russia’s Quarterly net purchases tally up to 16.5 tons. Russia is # 8 on the list of nations holding the most Gold. The Russian central bank is closing on the 1,000 tons mark as its holdings are listed as 934.5 tons of Gold, and that comes to 10.1% of its total reserves. The Economist is projecting Russia’s GDP to grow by 3.7% in Y 2012 and 3.7% in Y 2013.

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Turkey lead the central bank of Gold in Q-3. Turkey added Gold as a result of new policy accepting Gold in its reserve requirements from commercial banks. The gains were a huge 44.7 tons in July, 6.6 tons in August and 6.9 tons in September. Turkey was a large buyer of Gold earlier in Y 2012, with 4 of the 6 months as a net buyer coming in at 58.2 tons. Turkey ranks #18 on the list of nations, with its 302.4 tons at to 15.4% of its total reserves. The Economist projects GDP growth in Turkey of 3.2% in Y 2012 and 3.8% growth in Y 2013.

The WGC noted that changes of less than one ton are not included unless they form part of a longer-term program.

It also said that central banks differ in whether Gold out on swap is or is not included in reported reserves. Under the IMF Standard Data Dissemination Standards, such Gold is included in reserves, so swap activity does not result in any reported change. However, not all central banks adhere to this, and for others swap activity can result in a change in reported reserves.

It is interesting to note that small nations are also buying Gold, including, the Kyrgyz Republic added 0.1 ton in July and another 0.1 tons in August. Mongolia, added 0.1 tons in August, and it was listed as trading activity. The Philippines is said to buy locally produced Gold, which it may sell or retain in reserves, but it was also listed as a 0.1-ton gainer, with its purchases coming in August. Serbia added 0.1 ton in July and again in August, for a total of 0.2 ton in Q-3.

Taiwan purchased 0.9 ton in August more than 0.3 ton added in 1-H of Y 2012. The Economist data projects 1.3% GDP growth in Y 2012 and 2.7% in Y 2013.
Gold ETF buyers and Indian consumers are keeping Gold demand up, but the central banks that are adding hard assets to keep their currencies and economies safe against future problems. Stay tuned…