Copyright (c) 2012 Rod Hoss
With most countries around the world regularly buying gold for the last five years, the world has seen around 142 percent upsurge in the price of gold since 2008. Experts believe that the current scenario is just perfect for gold trading. According to projection by the World Gold Council, the total purchase of gold by central banks may reach 500 tons by the end of 2012. Interestingly, central banks have already purchased 254.2 tons of gold in the first half of 2012. Here's a look at some interesting facts revealed by the International Monetary Fund (IMF).
In July, 2012, South Korea and Russia purchased consecutively around 16 tons and 18.6 metric tons of gold.
The Kyrgyz Republic, Turkey, Ukraine, and several other countries have spent more money for buying gold in 2012.
For the 12 consecutive months, Kazakhstan increased their bullion reserves
In an interview with MarketWatch, Justin Harper, a market strategist at IG Markets said, "Gold prices continue to be underpinned by growing demand from central banks...we believe this trend is likely to ramp up once liquidity increases in global markets,"
According to a report by Don Miller, published in Money Morning on October3, 2012, "the cheap money policies by many of these same central banks, such as the Federal Reserve's recently announced QE3 program, will also help fuel the rise in gold prices." In the report, Miller projected that gold prices may rise up to $2,500 by 2013. Now let's take a close look at some major reasons why majority of central banks are currently investing in gold.
Why Most Central Banks are Currently Buying Gold
According to the report by Don Miller, central banks had a major shift in policy regarding buying and selling gold after they signed the Washington Agreement on Gold in 1999. Prior to signing this agreement, central banks had only been into selling of gold. But this, according to Miller, was destabilizing the gold market to large extent. The second version of the Washington Agreement on Gold includes some reasons why the agreement was signed. Let's take a look.
"The agreement came in response to concerns in the gold market after the United Kingdom treasury announced that it was proposing to sell 58% of UK gold reserves through Bank of England auctions, coupled with the prospect of significant sales by the Swiss National Bank and the possibility of on-going sales by Austria and the Netherlands, plus proposals of sales by the IMF."
The article by Miller also revealed that the agreement helped to restrict sales of gold to 400 tons per year for the next five years. Here's a look at some important things to know about this agreement.
The agreement was signed by the European Central Bank and the central banks of many countries, such as Austria, France, Belgium, Ireland, Finland, Germany, the Netherlands, Italy, Switzerland, Luxembourg, Portugal, Spain, Sweden, and the United Kingdom
After 1999, the agreement was renewed twice - once in 2004 and once in 2009
As a result of the agreement, all signatories, as well as several other countries throughout the world, reduced selling of gold
In 2009, all central banks stopped selling gold. Instead, they started buying gold.
According to experts, this trend of buying gold will continue in the coming years. With more and more countries likely to increase buying gold, experts believe that the price of gold is expected to reach unprecedented height in recent years. Some experts also believe that the current scenario seems just perfect for those who want to invest in gold.
With most countries around the world regularly buying gold for the last five years, the world has seen around 142 percent upsurge in the price of gold since 2008. Experts believe that the current scenario is just perfect for gold trading. According to projection by the World Gold Council, the total purchase of gold by central banks may reach 500 tons by the end of 2012. Interestingly, central banks have already purchased 254.2 tons of gold in the first half of 2012. Here's a look at some interesting facts revealed by the International Monetary Fund (IMF).
In July, 2012, South Korea and Russia purchased consecutively around 16 tons and 18.6 metric tons of gold.
The Kyrgyz Republic, Turkey, Ukraine, and several other countries have spent more money for buying gold in 2012.
For the 12 consecutive months, Kazakhstan increased their bullion reserves
In an interview with MarketWatch, Justin Harper, a market strategist at IG Markets said, "Gold prices continue to be underpinned by growing demand from central banks...we believe this trend is likely to ramp up once liquidity increases in global markets,"
According to a report by Don Miller, published in Money Morning on October3, 2012, "the cheap money policies by many of these same central banks, such as the Federal Reserve's recently announced QE3 program, will also help fuel the rise in gold prices." In the report, Miller projected that gold prices may rise up to $2,500 by 2013. Now let's take a close look at some major reasons why majority of central banks are currently investing in gold.
Why Most Central Banks are Currently Buying Gold
According to the report by Don Miller, central banks had a major shift in policy regarding buying and selling gold after they signed the Washington Agreement on Gold in 1999. Prior to signing this agreement, central banks had only been into selling of gold. But this, according to Miller, was destabilizing the gold market to large extent. The second version of the Washington Agreement on Gold includes some reasons why the agreement was signed. Let's take a look.
"The agreement came in response to concerns in the gold market after the United Kingdom treasury announced that it was proposing to sell 58% of UK gold reserves through Bank of England auctions, coupled with the prospect of significant sales by the Swiss National Bank and the possibility of on-going sales by Austria and the Netherlands, plus proposals of sales by the IMF."
The article by Miller also revealed that the agreement helped to restrict sales of gold to 400 tons per year for the next five years. Here's a look at some important things to know about this agreement.
The agreement was signed by the European Central Bank and the central banks of many countries, such as Austria, France, Belgium, Ireland, Finland, Germany, the Netherlands, Italy, Switzerland, Luxembourg, Portugal, Spain, Sweden, and the United Kingdom
After 1999, the agreement was renewed twice - once in 2004 and once in 2009
As a result of the agreement, all signatories, as well as several other countries throughout the world, reduced selling of gold
In 2009, all central banks stopped selling gold. Instead, they started buying gold.
According to experts, this trend of buying gold will continue in the coming years. With more and more countries likely to increase buying gold, experts believe that the price of gold is expected to reach unprecedented height in recent years. Some experts also believe that the current scenario seems just perfect for those who want to invest in gold.