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Gold - Central Banks Are Major Players in Price Resurgence

What’s significant about gold's resurgence is that it’s not only smaller investors and larger funds buying gold - central bank purchases have been quietly and consistently on the rise. My attention was drawn to a report published by the Official Monetary and Financial Institutions Forum (OMFIM), which concluded that “gold is re-assuming a more central monetary role as a favoured investment for central banks as a result of low and negative interest rates, increased perception of country risk, and enhanced geopolitical uncertainty.” Essentially the same motivating fsctors that are driving mums-and-dads to gold. This positive sentiment is also reflected in the World Gold Council’s latest Gold Demand Trends report, which showed that central banks added 566 tonnes of gold (US$21 billion worth) during 2015 – the sixth consecutive year of net purchases. During Q1 2016, central banks bought 109 tonnes of gold and the WGC expects total net purchases for 2016 to range between 400 - 600 tonnes. As a result I believe gold could trade as high as $1,400 this year and $1,500 during 2016.

Gavin Wendt
Founding Director

Gavin has been a senior resources analyst following the mining and energy sectors for the past 25 years, working with Intersuisse and Fat Prophets. He is also the Executive Director, Mining & Metals with Independent Investment Research (IIR).

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