Central banks now net buyers of gold
Thursday 17 February 2011 - by Andrew Hickley
A structural shift in policy saw central banks becoming net buyers of gold rather than net sellers for the first time in 21 years in 2010.
Noting that Russia has announced plans to purchase at least 100 tonnes of gold per year to replenish country reserves and that European central banks are facing intense examinations of their finances, managing director of government affairs at the WGC George Milling-Stanley says that this trend is likely to continue.
"If conditions in Europe do settle down, it is possible that European central banks may again consider gold sales programmes; however at this time, it would seem too early for any European nation to take such action in the face of heightened scrutiny.
"Any gold sales from advanced economies are unlikely to be significant as the official sector remains highly risk-averse. Collectively, the official sector is still a significant holder of gold. Central banks remain committed to its importance and relevance in maintaining stability and confidence as they have been for hundreds of years."
Overall gold demand in 2010 reached a 10-year high of 3812 tonnes, in spite of its average price rising by around 40 per cent between 2008 and 2010.
In value terms, annual gold demand surged by 38 per cent to a record of $150bn (€110.5bn).
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