The world’s major central banks are expected to reduce sales and lending of their gold bullion reserves this year, MarketWatch reports.
Because central banks hold a significant portion of above-ground gold in the world – over 15% of it, the article reports – reduced selling by the banks could weigh on gold supplies.
If you are a true contrarian, and a gold bull, this report may be somewhat alarming, as central bank buying and selling is often a classic contrarian indicator of the gold market. The Bank of England famously sold a signifcant amount of gold in 1999, essentially calling the exact bottom for gold prices.
With central banks respectively printing money at an alarming rate, however, I expect gold prices will be fairly well supported once this new fiat currency makes its way into circulation – though a short term downward correction in gold and silver still cannot be ruled out.
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