Gold demand is stronger than ever with the latest report on gold ETF holdings. When an investor buys exposure into a gold ET, there has to be a corresponding purchase of gold for the fund. Investors bought a total of 469 tonnes of gold during he first quarter over three times the high of 145 tonnes in the third quarter of last year. Total gold bullion ETF's are now 1658 tonnes with the GLD SPDR Gold Trust representing 1,105 tonnes. This ETF is now the sixth largest holder of gold in the world.
The ETF market has truly changed the demand for gold. With ETF's being such a large gold holder, we have the potential for even greater volatility in gold prices. Gold volatility is down from the highs last year, but gold ETF buyers will have different behavior from central banks that focused on being buy and hold investors for monetary reserves.
Clearly, China wants to be a larger gold holder. It has now become the fifth largest holder at 1,054 tonnes. There is plan albeit small to diversify their reserves. However, we are seeing the IMF actually try to monetize more of their gold holdings in order to increase credit availability. Th IMF is planning to sell up to 12.9 million ounces. Interesting story on the politics of gold sales in the WSJ, "The IMF's Gold Gambit". We can see the quality of timing of gold sales by some central banks is mixed. G0rdon Brown sold 400 tonnes or 60% of UK gold reserves at near the bottom in 1999-2002. I guess they wish they had that gold back now that they are in a crisis.
Clearly, China wants to be a larger gold holder. It has now become the fifth largest holder at 1,054 tonnes. There is plan albeit small to diversify their reserves. However, we are seeing the IMF actually try to monetize more of their gold holdings in order to increase credit availability. Th IMF is planning to sell up to 12.9 million ounces. Interesting story on the politics of gold sales in the WSJ, "The IMF's Gold Gambit". We can see the quality of timing of gold sales by some central banks is mixed. G0rdon Brown sold 400 tonnes or 60% of UK gold reserves at near the bottom in 1999-2002. I guess they wish they had that gold back now that they are in a crisis.
Nevertheless, with all of this buying how come gold has not reached new highs above $1,000. who are the sellers? Gold is only slightly higher today than form the first of the year. It is almost unchanged form the beginning of 2008. Our trend indicators show a mixed to slightly down direction. The high for gold was actually in mid-March 2008 and another spike in February, but these were temporary moves. I would like to know who are the sellers with all of this retail gain.
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