South Africa: Big Gold Sell-Off in Next Three Months

Items in the news
Posts: 473
Joined: Sat Feb 04, 2006 2:44 pm
Location: Longwood, FL, USA

South Africa: Big Gold Sell-Off in Next Three Months

Postby onepence » Thu Jun 22, 2006 1:11 am

South Africa: Big Gold Sell-Off in Next Three Months
Business Day (Johannesburg)

June 19, 2006
Posted to the web June 19, 2006

Charlotte Mathews

SIGNATORIES to the second Central Bank Gold Agreement could sell 209 tons of gold in the next three months, compared with 291 tons sold in the first nine months of this year, according to the latest World Gold Council data.

Total end-user demand for gold in the first quarter was 835,7 tons, of which 534,8 was from the jewellery industry, 104,8 from industrial and dental users, and 196,1 from investors.

The second Central Bank Gold Agreement, covering the five years to September 2009, provides for its 10 signatories altogether to sell a maximum of 500 tons of gold a year.

The first agreement, covering the five years to September 2004, provided for 2000 tons to be sold in that period. The agreements were intended to remove the destabilising effect on the gold market of uncertainty about central banks' selling plans.

A council spokesman said on Thursday that the council expected sales in the current year of the agreement to be at or close to the 500-ton annual limit. It was not yet certain whether sales in the later years would reach the limit.

The statistics show the biggest sellers of gold among the signatories this year to be France, the Netherlands and the European Central Bank. Although central banks' policy decisions to sell down gold reserves were a major factor depressing the gold price in the past 20 years, gold bulls suggest the policies could change.

It was speculated that even if European and north American central banks continued to sell, the Middle and Far East could build up gold reserves as a defence against a weakening dollar.

But the council's latest quarterly report on world official gold holdings shows tonnages held by China, Taiwan, India, Lebanon, Saudi Arabia, Indonesia and Kuwait remain unchanged. Mor-occo and Jordan reduced theirs.

Return to “News”