Sharp Increase in Central Bank Gold Reserves – South Korea Up 17-Fold & Thailand 15.5% in 2 Months

 

Gold is higher in all currencies today except for the Swiss franc and is trading at USD 1,629.20 , EUR 1,147.30 , GBP 1,000.20 and CHF 1,270.10 per ounce. Gold’s London AM fix was USD 1624.00, EUR 1145.28, GBP 997.30 (10:41 GMT).

Gold reached new record nominal highs in euros and Canadian dollars yesterday at EUR 1,149.60/oz and CAD 1,566.48/oz yesterday and remains close to these record highs today, and close to record highs in most fiat currencies.


Cross Currency Rates

European indices are lower after Asian indices fell (Nikkei -1.2%, Sensex -1.1%, Shanghai -0.72%, Hang Seng -1.07, STI -1.25% and the South Korea’s Kospi was the worst performer falling 2.35%).

The Italian MIB is down another 0.9% and jitters abound about Italian banks and banking sector.


Gold in Euros – 30-Day (Tick)

Spanish and particularly Italian bonds are under pressure today with the Spanish 10-year rising to 6.37% and the Italian 10-year rising to 6.21%. Spain and Italy’s debt markets are beginning to look like Portugal and Ireland’s prior to their bond yields surged to over 10%.


Gold in GBP– 30-Day (Tick)

Further confirmation in the continuing stealth accumulation of bullion by central banks came overnight with confirmation that South Korea’s central bank bought 25 tonnes of gold  over the past two months. The gold is worth $1.24 billion and resulted in a 17-fold increase in their gold reserves.

Thailand’s gold reserves rose by 15.5% in the two months and rose to about 4.07 million ounces in June, from about 3.523 million ounces in May, according to figures on the Bank of Thailand’s website accessed by Bloomberg this morning.

South Korea is the world’s seventh-biggest foreign-exchange reserve holder and 64% of its reserves are in U.S. dollars. The bank said that it also holds euros and other assets and the move was about achieving diversification.

The BOK’s reserves, stored in London in the vaults of the Bank of England, increased 25 tonnes to 39.4 tonnes (from 14.4 tonnes) but remain meager when compared to the size of their foreign exchange reserves.

BOK’s gold holdings, at today’s market prices, account for 0.7% of its reserves, up from 0.2% prior to the purchase.

The BOK reserves were at a record high of $311.03 billion at the end of July which puts this $1.25 billion gold purchase in perspective.

Their gold reserves and those of other Asian central banks, particularly the People’s Bank of China, remain meager when compared to those of western central banks and the U.S. 

Earlier this year, Thailand, whose gold holdings account for only 2.9 percent of reserves, bought 9.3 tonnes of gold. Russia purchased 41.8 tonnes and Mexico bought 99.2 tonnes.

China is the world’s sixth largest gold holder and the biggest among Asian banks with 1,054.1 tonnes, equivalent to just 1.6% of their massive currency reserves.

According to the World Gold Council, governments hold an average of 10 per cent of foreign exchange reserves in gold. Larger economies such as the US, France and Germany hold more than 50 per cent.

"As a real safe asset, gold helps us to cope effectively with changes in international financial market," said Jaehyun Joo of the Bank of Korea.

"We expect that gold would serve as a safety net for official foreign reserve and enhance the stability of the Bank Of Korea’s foreign reserve management," Mr Joo added.

Mr Joo’s comments reflect the mindset of people and central bankers in Asia who realize gold’s store of value importance and are increasingly concerned about the euro, the dollar and the global financial and monetary system.

The “Asian put” continues to place a very stable floor under the gold market and means that gold is not seeing any meaningful correction.

This is likely to continue for the foreseeable future and means that investors would be advised to allocate to gold sooner rather than later as a meaningful price correction is unlikely.

Some weakness in gold may be seen if we experience another bout of misplaced ‘market euphoria’ and risk appetite once the debt deal is fully completed. However, this will likely be more short term weakness as the medium and long term fundamentals remain sound.

Smart money and official demand for gold remains robust as a very fragile global economic recovery, stubbornly high inflation in many countries and sovereign debt and contagion risks lead to diversification into gold.

For the latest news, commentary, infographics and videos on gold and financial markets follow us on Twitter.

NEWS

Reuters
Gold nears record after US debt deal, Korean purchase

The Financial Times
South Korea lifts gold reserves 17-fold

Bloomberg
Gold May Advance to Near Record as Slower Factory Growth Increases Demand

Reuters
Gold edges up after South Korea buy

The Wall Street Journal
Korean Central Bank Moves Into Gold

BBC
S Korea buys gold as safe haven, first time since ’98

Bloomberg
Gold Coins Sell Out in Lisbon as Biggest Bet Sees 22% Gain

COMMENTARY

Zero Hedge
The Imminent $2.5 Trillion Debt Ceiling Hike Will Unleash A Gold Price Surge To $1,950 And Higher

King World News
‘By every metric’ gold is cheap, Rickards tells King World News

GoldSeek
Ron Paul: When a Cut is Not a Cut

MoneyWeek
It doesn’t matter who is in charge – buy gold

Mark OByrne

Also on news-goldcore-com

Videos

Episode 5 of The M3 Report with Steve St Angelo

What we can Learn from the International Gold Market

Jim Rogers Interview 2022

Blog posts

Ross Geller inspires Bank of England policy

This morning the UK pound slumped as one of the world’s oldest central banks pressed hard on the panic button. The Bank of England was seen to be shouting ‘Pivot! Pivot! Pivaat!’ as they announced they would temporarily suspend their programme to sell gilts and will instead buy long-dated bonds.  In a statement, the bank […]

READ MORE

Episode 5 of The M3 Report with Steve St Angelo

Is the energy crisis something that can be resolved? Was it always inevitable? Will renewable energy make it all OK? Are Western financial policies to blame? All this and more in today’s The M3 Report! If you’re not already subscribed to GoldCoreTV then click here right now to make sure you’re all set to watch the fifth […]

READ MORE

Brace Yourself for the Impact

Fed’s message this week – higher rates, lower economic growth, higher unemployment. The Fed hiked interest rates by 75 basis points for the third straight meeting and the statement said that the committee anticipates further increases. The Summary of Economic Projections (SEP) showed that the median projection is for a further 1.25% increase by yearend. […]

READ MORE

Featured

Rick Rule- Should You Invest In Gold 2022

READ MORE

Jim Rogers- The Worst Bear Market is Coming

READ MORE
Newsletter
Category
Archives
Popular

No posts available

Videos

Episode 5 of The M3 Report with Steve St Angelo

What we can Learn from the International Gold Market

Jim Rogers Interview 2022

Blog posts

Ross Geller inspires Bank of England policy

This morning the UK pound slumped as one of the world’s oldest central banks pressed hard on the panic button. The Bank of England was seen to be shouting ‘Pivot! Pivot! Pivaat!’ as they announced they would temporarily suspend their programme to sell gilts and will instead buy long-dated bonds.  In a statement, the bank […]

READ MORE

Episode 5 of The M3 Report with Steve St Angelo

Is the energy crisis something that can be resolved? Was it always inevitable? Will renewable energy make it all OK? Are Western financial policies to blame? All this and more in today’s The M3 Report! If you’re not already subscribed to GoldCoreTV then click here right now to make sure you’re all set to watch the fifth […]

READ MORE

Brace Yourself for the Impact

Fed’s message this week – higher rates, lower economic growth, higher unemployment. The Fed hiked interest rates by 75 basis points for the third straight meeting and the statement said that the committee anticipates further increases. The Summary of Economic Projections (SEP) showed that the median projection is for a further 1.25% increase by yearend. […]

READ MORE

Featured

Rick Rule- Should You Invest In Gold 2022

READ MORE

Jim Rogers- The Worst Bear Market is Coming

READ MORE