Central Bank Gold Purchases Now Control 10% Of The Total Market

Central Banks have become big players in the gold market and now control 10% of the total market demand.  Now, this wasn’t always the case.  Just ten years ago, the Central Banks were main suppliers via their policy of dumping gold into the market.  However, the Central Bank strategy to sell gold into the market to depress the price, had quite the opposite effect.

For example, Central Banks dumped over 2,600 metric tons of gold into the market between 2003 and 2007, according to data from the World Gold Council.  So, what kind of impact on price did the sale of 84 million oz of Central Bank gold have on the market during that period?  The price of gold nearly doubled from $363 in 2003 to $695 in 2007.

The last year Central Banks sold gold into the market was in 2009.  However, it was only 34 metric tons.  Since 2010, Central Banks have been net purchases of gold.  Between 2010 and 2017, Central Banks purchased nearly 3,700 metric tons (mt) or a stunning 119 million oz of gold.

And Central Bank gold purchases don’t seem to be slowing.  The World Gold Council (WGC) just released yesterday in their Market Update: Central bank buying activity, that official gold purchases are now 10% of the total market.

Using data from the WGC Demand Trends, Central Banks purchased 193 mt of gold in the first half of 2018, representing 10% of the total global demand:

The majority of the official gold purchases during the 1H of 2018 came from Russia, Turkey, and Kazakhstan.  Now, what a difference than just a little more than a decade ago when Central Banks were selling rather than buying gold.

In the first half of 2007, official gold sales equaled 217 mt and represented 14% of the total market:

Now, with the recent turmoil in Turkey impacting its Lira, some are concerned that if the country decides to start selling its gold to stabilize its currency, then that could be negative on the gold price.  Well, I highly doubt it.  If the dumping of 2,600 mt of gold into the market between 2003 and 2007 didn’t impact the gold price negatively (actually it nearly doubled), then why would it do so today?

If Central Banks are smart, they will hold onto their gold reserves as they will need it during the coming financial meltdown.  We must remember, DEBTS like U.S. Treasuries, aren’t really ASSETS.

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43 Comments on "Central Bank Gold Purchases Now Control 10% Of The Total Market"

  1. Looks like sure sign of what everybody knows but no one in any government is talking about publicly. A crash is coming, we know it and they know it but they don’t want the sheeple to know it until it is too late.

    So many preps and so little time left.

  2. Ripple 50% in one day

    • From nothing to nothing. Bits & bytes. Who bites? Whales and nerds are waiting.

      • It paid for one of my houses…I hardly call that nothing.

        • Yeah, all of us can do this. Watch your screen and buy several houses.

        • DisappearingCulture | September 22, 2018 at 3:00 pm |

          Hey Paul,

          Put a lot of money into your choice of cryptocurrencies NOW and let me know how it did for you in about a year. You were smart or lucky enough to ride the initial waive; I’d bet Bitcoin with NEVER reach it’s previous high.

          • I’ll take that bet. Bitcoin, Ethereum, Litecoin, and a couple others are safe bets, maybe not a year, but absolutely within five years will make you a much better return than the fake markets that most people deal with these days…don’t say I didn’t warn you.

          • Paul,

            I gather you don’t realize that the recent reversal in the cryptos was just another trading cycle in an ongoing popping of a highly speculative bubble.

            For example, there is no coincidence that Ehereum bounced right off the $176 level on the Long-Term chart. If you look at this chart, $176 was a major resistance level: https://bitinfocharts.com/comparison/ethereum-price.html

            Do not believe this is a reversal of much higher prices. This is just a typical correction higher before Ethereum heads back down below $50.

            steve

        • DisappearingCulture | September 23, 2018 at 10:43 am |

          ‘Bitcoin, Ethereum, Litecoin, and a couple others are safe bets, maybe not a year, but absolutely within five years….’

          Safe bets? That would be funny if it wasn’t so sad that someone actually believes this. Few things are more speculative than cryptos [Tesla comes to mind lol]. Other than the utility of using a crypto as a currency [which very few have any interest in], what do you own with a cryptocurrency? You own the hope lots of others will rush in to make the price go up like the mania seen in 2017.

          If/when the equities markets decline precipitously, some will rush in, pushing up the prices to some degree. But you still don’t own anything of substance. With an overpriced stock like Amazon at least you own something…a portion of a company. It may drop in market cap but you own something.
          I’ve read lots of stories of people [mostly under middle age] getting into cryptos in late 2017 & 2018. who have lost their savings, home, etc. That can happen in stocks & real estate [getting in at the top of the bubble], but you own something other than “a digital illusion of wealth” to use a quote.
          Play with cryptos; don’t stake your financial future on them. Don’t say I didn’t warn you

          • Time will tell…that goes for you too Steve. 10 years you have been waiting for your day in the sun, and yes, I do think it’s coming soon, but for the last few years I’ve been investing in what the current trend is. Cryptos as a currency is NOT the issue. What is the current trend is…

          • Paul Anders,

            You say, “10 years you have been waiting for your day in the sun.” That’s interesting. The average silver price in 2011 was $35 and $30 in 2012. That’s only 6-7 years in my book.

            Now, I know not to trust your math… LOL.

            steve

          • No Steve, i haven’t been waiting for 10 years. And I’d hardly call a 6-7 year investment that has gone down about 60% a good investment. Keep waving those pom poms though, I do believe we’re no more than 2-3 years away from the metal payday.

  3. Michael Kohlhaas | September 21, 2018 at 9:05 am |

    The CB idiots should by their own COMEX futures. Frigging asswipes!

  4. “Central Bank Gold Purchases Now Control 10% Of The Total Market”

    In my mind, this is the equivalent of a publicly traded company’s CEO buying his own stock. Very positive sign. Some people trade based on that metric alone

  5. One last try. This is the first article that appears to address the issue of how much gold do the Central Banks control? Furthermore, how much gold do the primary dealers or the “consortium” of world banks or accomplices like COMEX, London Bullion Exchange, Shanghai Gold Exchange which are indirectly tied to central banks have?
    My understanding is that the preponderance of gold is held in private hands, fragmented into small amounts in the form of jewelry, etc., mostly in Asia, but this cannot be mustered into use as a currency, even though it is true money. The result is to allow the central banks to effectively corner the gold market to prevent gold from ever emerging as currency, thus locking in a digital, crypto, or fiat system of currency which can be CONTROLLED, and gold will be the privileged currency of only governments, elites, and central banks. The masses will be locked out of using gold as currency- at least “legally.”

    This then begs the question: Everyone is looking at gold. But is there enough silver to re-emerge as a currency, even if fractional backing?

    This is why I am puzzled as to why we can not get a good handle on the amount of physical silver held by various institutions. Does JPM have 800,000,000 ounces? Is this enough to serve as a domestic currency whereby JPM would effectively usurp the US Treasury’s Constitutional role of the issuer of “coinage” by virtue of its reservoir and emerge mega-wealthy as the value of silver rockets higher?

    What form of silver does JPM have? Are they slowly acquiring small denominations to fly under the radar as opposed to 100 Kg bars? Small denominations could be melted down to hide the purchase of small denominations. How could the rather anemic number of 1 oz coins sales account for such a massive stash? Maybe if other large bars were being purchased concurrently and smaller coins slowly over time.

    People like Louis Camaarrasano have dismissed me for bringing up such a hypothetical assumption when the fact is we don’t know how much silver JPM has- or how much gold is in Ft Knox. It is all guesswork, but still, I think we need to at least run the available data through and be aware of the possibilities, no matter how crazy they appear at this time…..like negative interest rates were a few years ago?

    This might appear crazy, I know, but these days, nothing, I mean nothing, surprises me. If someone can come up with reasonable numbers and dismiss this “theory” then fine. I would be happy to wipe it off my list.

    People like Jim Sinclair have made “calculations” on what the value of gold would have to be to back all the fiat- $50,000 an ounce- I am not sure at what fractional amount? Maybe he has the right idea, but the wrong metal.

    Has anyone made similar calculations for silver? Or can such calculations ever be made because unlike gold, a large part of silver’s existence is transitory as it is used for industrial purposes?
    Camarrasano argued that it would be ridiculous for JPM to amass puny 1 oz coins when it can make billions trading paper. Maybe. But if silver is used as backing for a new currency, then JPM doesn’t have to “sell” those coins like grains of rice. It can just sit on its stash like Scrooge McDuck and do absolutely nothing.

    • DisappearingCulture | September 21, 2018 at 2:29 pm |

      “…Is this enough to serve as a domestic currency whereby JPM would effectively usurp the US Treasury’s Constitutional role of the issuer of “coinage” by virtue of its reservoir and emerge mega-wealthy as the value of silver rockets higher?…”
      This has already been done without metal by the FED, e.g. Federal Reserve notes. Look at the currency in your possession. By the U.S. Constitution that is illegal.

    • Thanks Hubbs, to me, a very good comment. Especially this:

      “My understanding is that the preponderance of gold is held in private hands, fragmented into small amounts in the form of jewelry, etc., mostly in Asia, but this cannot be mustered into use as a currency, even though it is true money. The result is to allow the central banks to effectively corner the gold market to prevent gold from ever emerging as currency, thus locking in a digital, crypto, or fiat system of currency which can be CONTROLLED, and gold will be the privileged currency of only governments, elites, and central banks. The masses will be locked out of using gold as currency- at least “legally.”

      In my opinion, forget about all those theories and focus on the demise of fiat currencies. They’re already dead, but most people don’t know it. When critical mass becomes reality, the value of things will become more clear. As soon as the Fogs of Fiat dissapears we will be able to see who swims naked.

      Use phyz as a insurance policy, generational wealth, savings. Just a little bit, lets say 3% of your income per month. Doesn’t hurt most of us, i hope 😀

      Forget about f*ckers like JP or central banks. Keep it small, low profile.

      • Look at how many countries, in only the last couple years, that those citizens who acquired Gold and silver have already benefited in at least preserving their wealth. Many world currencies have fallen heavily already including India, Russia, Brazil, Malaysia, Argentina, Turkey, etc. Not a small amount of population and you hear of another badly falling currency nearly every week.

    • coppy of a comment from some guy on youtube, warning not many may like it!

      More clueless nonsense. First of all when you sell short it does not mean you are selling something you do not own. If I own shares in a company and think prices will fall I can go short with put options and if I am right and price falls I can sell my shares at the original contract price to the other person on the other side of the trade for the higher price, (remember prices fell since the contract) . This is called putting an assets like shares to the other party. Most of the time the parties settle for the cash difference just as in the Comex. Now if I was the one owning the shares and lost I would have 3 businesses days to deliver the shares to to my broker so the trade can be settled. This is also how the Comex works as I can short the metals and either have them delivered to the Comex vault in “good delivery bars” or produce then by settlement date. Now since most trades in futures are hedges and settled in cash if triggered it becomes very expensive for active traders to keep moving metals in and out of vaults so they either keep then in a Comex vault for extended length of time or if so required produce them.. Failure to deliver results in fines, penalties and revocation of trading privileges. Now if I go short I theoretically have unlimited exposure but in the real works of trading this is not the case. If for example I go short and the trade starts to go against me. If a put options I can simply close the trade and take my loss which is the cost of the puts. If a futures trade, (which by the way both futures and options are traded as they are different) I can buy my contract to stop losses.

      Now silver did not topple Bear Stearns as they were once my clearing firm. They had large funds that had invested heavily i9ng mortgage backed securities known as the MERS loans, (mortgage electronic registration system) which recorded the transfer of securities as they changed hands instead of paying the local recording fees and doc stamps. When the bank brought in the law firms and robo signers are started to illegally foreclose on millions these loan Bear saw their net worth collapse. They sued but their punishment by treasury was to be denied a bailout as others were. This is also what happened it Legman. The reason for the foreclosures was that up to 10 insurance policies were place on each note by entities who had no relationship to the original lender and borrower. so they foreclosed to receive their payouts. Who underwrote the policies? AIG which then needed t taxpayer bailout! Actually Bears profits and losses in silver were extremely small and no had bearing on their balance sheet. Go look it up as it is all public knowledge.
      Now the JP Morgan nonsense. Even when their commodity trading desks was at its prime this still accounted for a very small fraction of their bottom line. If they were really in trouble with silver they simply would have bought and closed out the contracts. Their positions were pale in size to other commodities they were trading and again look it up in the quarterly filings as it is all there in black and white. Now when treasury intentionally killed Bear they forced Morgan to take over the silver positions which consisted of both longs and shorts. Now if you think that treasury would allow Morgan’s balance sheet to be negatively impacted by the governments action I have a bridge I’d like to sell. Total bullshit promoted by those who sell metals to consumers.
      Now most people do not realize that Morgan sold its physical commodity trading desk in 2014 to Mercury for $3.5 billion. Today they are a fraction of the size they were once was as they got out lile many banks after the commodity bear market started in 2011 and we are still there hence metals keep going down and will continue. They are basically a broker today that bring together large buyers and sellers a collect a transaction fee or trading fee hence the reason of no losses. They rarely buy physical commodities of anything today. If you look at again their quarterly filings they state how much and it around 144, millions ounces as custodians of one of the Comex vaults. This is traders metals and not the banks. Iy constantly moves in and out of these various Comex vaults. Their clients for physical sales are miners, wholesalers, large retail chains, industry, etc and about anybody who buys or sells on a large scale. What you read about the bank is total bullshit by clueless people. One is Ted Butler who was claiming Morgan was buying silver eagles from the mint and then melting them down to bars. Folks this is bullshit. Why would a bank pay over $2 spot, pay transport cost and then pay to have then melted down and transported to a vault? They wouldn’t and didn’t. They have direct access to bars. Folks you see have absurd this is and you are being played. His latest is Morgan has over 800 million ounces. Really TED? There is no official bank filing to bank, SEC and CFTC that they have any silver. Folks people just make this bullshit up and I can;t believe how many buy into it. Butler was also the on who around 2011 was telling all that metals are going to continue to the moon. Many who fell for the scam lost their entire retirement and to say they are angry is an understatement. This is the real damage these people inflict with their bullshit, lies, unrealistic price forecasts and of course fear porn! Beware they are all at it again!

  6. Price Manipulation?

    Someone or entity, dumped $1 billion of notional gold contracts onto the market this morning, in the space of one minute! Of course the market reaction was to drive down the spot price of gold.
    The proof of manipulation is incontrovertible. Those who disagree have no grounds to stand on, except that of denigration by way of calling them “conspiracy theorists”. As if by use of this phrase, wholly explains their case sans any proof whatsoever!
    Steve, I think your use of the WGC statistics and reports, leaves something to be desired. This organisation over the years enjoys a very close relationship with the mainstream gold cartel. The WGC depends on them (LBMA, COMEX, etc.) for their financial survival.
    It must be remembered that in November 2004 the World Gold Council sponsored the formation of the GLD exchange traded fund. It is in the WGC interest to keep the amount of central bank gold bullion purchases stilted, which the central banks agree with in the name of opacity.
    The CB’s realize if the true amount of bullion purchases was known, the price would skyrocket before they have had their fill! The true amount is much higher.

    • I wonder if they have to dump $1 billion notational to move the market enable buying physical at a lower price?

      I seem to recall that a few years back, moving the market to allow that, needed probably just 1% of that amount. Coupled with that I have heard that buying 1kg of physical gold is not a problem but buying a 1000kg is not easy to get hold off unless of course you are a CB.

      Not sure why anyone would want that old Barbarous Relic /sarc 😉

  7. Also remember, unlike gold, silver is bulky and can really only be used for small purchases, which for governments, may be the ideal. It allows the masses to buy their bread, eggs, and milk, but it is difficult to deliver a flatbed truck of silver to buy a house. This forces people to stick with silver for daily expenses, but rely on a silver backing of fiat. The amount of silver required to do this would be so bulky it would have to be stored in banks or other “official” repositories. You just can’t sneak a large amount of silver to pay for a large purchase, even if you have your own truck.
    Remember in 1964 when silver coins were last minted. People hoarded those coins, despite LBJ’s threats. The problem is, there was still a Basel gold standard. Don’t know how that would impact silver’s perceived value now, given that people have an alternative: gold or BTC.
    My “theory” or “conspiracy theory” is that people would hoard silver again this time around if such a new silver backed currency emerged to replace the FRN. The price of industrial metal would go up too, but silver substitutes, slowing economy, and greater efficiencies of use, eg., PV Panels might take the edge off.

    Either way, if there is ever a reset, I suspect there will be a trial of some fiat like replacement like the SDR (Special Drawing Rights) backed “Amero”, which will fail, possibly another trial of a different currency will then be tried which will also fail. Reluctantly people will have to go back to some form of backing. No gold available, silver is recognized, but since it is too bulky, it has to be stored in big banks and its use to back fiat is forced upon us by default. Small amounts of physical may be allowed at first, but I would suspect in such a scenario people would accept their fate and use only fiat/plastic/digital etc.and try to hoard the rest. Eventually silver backed fiat would fail like we expect gold to do eventually, but the banks would have had a second joy ride by then.

    • Hubbs, you try to look through the Fogs of Fiat. That doesn’t work. Fiat currencies are approaching their Wile e Coyote moment, and when the drop reaches momentum nothing will save fiat currencies. So you need something to get to the other side. Sometimes a rope is enough. And enough is enough.

      Agree fully though with your comment, except that the new world will be different in such way that it will tear up your belives the hard way. Adapt or die. I was there. Currently preparing my mindset is more important than my silver stack, which i have too.

      Small however. I could walk miles with it. Diversify, i could put all my gold under my tongue, but that would cause problems at the customs.

      My two cents. Forget about gold and silver. Stack some and get on with your life. Paper gold and silver is a scam, just like pensions and currencies. In degrowth it all just dies, first slowly, then suddenly. You won’t get rich after the collapse of this bitch.

      • H & H,

        In attempting to look thru the “Fog of Fiat Collapse”, I have gain some understanding and insight from two guys that write on the organic prepper site, https://www.theorganicprepper.com/category/preppers/selco/ and https://www.theorganicprepper.com/category/preppers/jose-from-venezuela/. Their views and descriptions of the war in the Balkans and the demise of Venezuela were very interesting and enlightening.

        Its clear that you can’t eat PMs and that food, ammo and meds are of far greater value during the collapse or pending of the war but they (PMs) come into their own when systems settle down and some semblance of normalcy returns. The lesson is that your preps need to be much more than stacks of PMs but they will be the foundation of your future wealth.

        There will probably be a panoply of new fiats, SDR’s or some such and then attempts at fractionally backed fiats to replace the totally unbacked set of todays world currencies and they are all doomed to failure. If it is a world wide liquidity crises that gets us first, then all “On Time” delivery systems will crash and a great many will starve, followed by civil unrest, marshal law, failing medical care, failing government, failing utilities, and rampant disease.

        Buy for cash and stash, AFTER you have covered your food, water, shelter, guns, ammo, comms and meds. Face it, you have to survive for your gold and silver to be of any beneficial value.

        • Fully agree SteveW.

          Oh, wait, wait, do not forget to prep your mindset. Maybe that is the most important prep.

  8. In my mind I keep hearing “The greatest wealth transfer in the history of civilization”
    Question is from whom to whom is the wealth being transferred?
    The Bank of international settlements, settles contracts in gold.
    How did the Chinese renminbi wind up in the SDR basket of currency?
    How did Members of the chinese government hold seats at the IMF?
    Who are the members of Shanghai Cooperation Organization and why are they demanding more influence in the IMF?
    Wait my head hurts let’s all sing “Everything is awesome” you know from the lego movie ready “Everything is awesome, everything is cool when your part of a team
    Everything is awesome, when you’re living in a dream”
    You can hear it in your head.
    There isn’t that better?

    • From the average Joe to the Elite. Picture this. You are currently buying a house. You’ve made a down payment and make monthly payments. When you can no longer make the payments because you lost your job or inflation has become so great you have to choose between food or shelter, you will pick food. The bank repossesses your house. After things settle down, you will again buy a house and start over, thus forfeiting all the previous equity to the bank…owned by the Elite.

  9. I find it interesting that Turkey recently redeemed their gold about 220 Metric tons and sold it to pay off their bond debt but did not seem to help their situation and they continue to flounder. Venezuela also brought back their gold reserve I believe about 195 metric tons. They sold it and apparently did not help their disastrous economic system. Any thoughts?

    • DisappearingCulture | September 23, 2018 at 10:15 am |

      “Venezuela also brought back their gold reserve I believe about 195 metric tons. They sold it and apparently did not help their disastrous economic system. Any thoughts?”
      Perhaps they had too much debt to pay off with the sale of their tangible assets?

    • Venezuelan insiders arranged for “sale” of gold, by which they recieved a commission, err, kickback?

      Of course they knew it would do no good.

  10. Gold is about to break a triangle which looks like a 123. If gold closes below $1200 on Monday it will break the triangle and following the 123 formulae could fall to $1020. If it does close on Monday I will be short again for another big move down.

  11. My immediate question about this issue is: how much of the gold held by various institutions is real, physical gold and how much of it is rehypothecated, paper gold that doesn’t really exist except in the minds of those involved. Without third party, truly subjective audits of the various holders of said gold, I am doubtful much of what we are lead to believe exists truly exists. The banking and financial institutions involved–to say little about governments–have long and sordid histories of manipulation, fraud, and corruption and I have little doubt their nefarious activities and behaviour infiltrate the precious metals ‘market’.

  12. Always people say that there would not be enough silver (or gold) to be used as money or that it’s too heavy for high value purchases.
    That’s nonsense if there is a reset.
    If silver were to be used as money to purchase items of the daily life, its value will then be governed by demand and may well skyrocket, leading then to the use of smaller coins like 1/10 oz instead of 1 oz

  13. Jaime Schwartz | September 25, 2018 at 10:25 am |

    Thanks, Steve. Great Article. I know you are a real journalist because you don’t block or censor my comments, which appear below your hard-work.

    I’ve tried to comment on a similar website to yours (Hint W.S.) but my comments always get blocked and never appear.

    Based on your intelligent analysis, strong insight, excellent research, which I mostly agree with & corroborate myself — you are the real deal. Plus the fact that you do not censor.

    Buy up them Gold Eagles folks! Don’t let anyone scare you away!

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