Central bank gold purchases soar

Section:

By Rhiannon Hoyle
The Wall Street Journal
Thursday, November 17, 2011

http://online.wsj.com/article/SB1000142405297020361140457704365239638348...

LONDON -- Total central-bank gold purchases in the third quarter more than doubled from the second quarter and were almost seven times higher than a year earlier as countries continued to diversify reserves, according to a World Gold Council report.

At 148.4 metric tons, gold buying among central banks was at the highest since the sector became a net buyer of the precious metal in the second quarter of 2009, according to the quarterly report.

Central banks and other official institutions, by comparison, had bought 66.5 tons of gold in the second quarter and 22.6 tons in the third quarter of 2010.

... Dispatch continues below ...



ADVERTISEMENT

Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit,
Extending the Mineralization of the Southwest Vein on the Property

Company Press Release, October 27, 2010

VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:

-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.

-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.

-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.

Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.

"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."

For the company's full press release, please visit:

http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf



"Central-bank buying was a highlight of the quarter. Statistics this year have been remarkable," Marcus Grubb, managing director of investment at the gold council, said in an interview.

The report included a significant number of purchases that hadn't been reported publicly and whose buyers couldn't be identified due to confidentiality restrictions, the council said.

"This large number is a surprise," said UBS analyst Edel Tully, who said her own tally of net purchases reported through the World Gold Council and International Monetary Fund totaled just 20.2 tons for the quarter. "This information is very bullish. And no doubt the market will be busy speculating on the identity of such buyers."

The World Gold Council, an industry association representing 22 gold miners, attributed the acceleration in central-bank demand to concerns over the credit-worthiness of Western governments, as sovereign-debt troubles remained in the spotlight.

"While one can account for some of the purchases—from Thailand, Bolivia, Russia, etc. -- there is an unaccounted amount out there. A clue probably lies in the fact that a lot of buying has been from central banks that have been in surplus, [in regions] like Asia, Central Asian, and Latin America," said Mr. Grubb, who expects the unknown buyers likely will be made public in coming months.

Central-bank purchases by developing countries have been increasing in recent years as those nations diversify holdings, partly because of rising foreign-exchange reserves through export-led growth but also, more recently, as a reaction to the sovereign-debt crises affecting traditional reserve currencies like the U.S. dollar. Before 2009, however, central banks had been net sellers of gold bullion for about two decades.

The central bank of Russia, a regular buyer from its domestic market, continued its long-term program of gold accumulation during the three-month period. Its third-quarter gold purchases amounted to 15 tons, taking its total holdings to about 852 tons, the council said.

Still, the association said while a number of countries continued to buy gold, "a slew of new entrants emerged wishing to bolster their gold holdings in order to diversify their reserves."

In Bolivia, gold reserves rose by 14 tons, while Thailand also stepped up its buying, adding 25 tons to its holdings.

Last month, metals consultancy GFMS forecast central banks could buy nearly 500 tons of gold this year. According to the World Gold Council's figures, the sector purchased 348.7 tons of the metal in the first three quarters of the year.

"This is an incredible number when you compare to last year. If buying continues at this pace, I wouldn't rule out 400 to 500 tons [of gold being purchased by central banks] this year," Mr. Grubb said.

The WGC said it expects growth in central-bank gold demand to continue into 2012.

Front-month gold for November delivery fell $54, or 3%, to $1,719.80 a troy ounce, on the Comex division of the New York Mercantile Exchange on Thursday.

* * *

Join GATA here:

Vancouver Resource Investment Conference
Sunday-Monday, January 22-23, 2012
Vancouver Convention Centre West
Vancouver, British Columbia, Canada

http://cambridgehouse.com/conference-details/vancouver-resource-investme...

California Investment Conference
Saturday-Sunday, February 11-12, 2012
Hyatt Grand Champions Resort
Indian Wells, California, USA

http://cambridgehouse.com/conference-details/california-investment-confe...

Support GATA by purchasing gold and silver commemorative coins:

https://www.amsterdamgold.eu/gata/index.asp?BiD=12

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon:

http://www.goldrush21.com/

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16



ADVERTISEMENT

Prophecy Platinum Drills 120.9 Meters
Grading 1.26 g/t PGM+Au at Yukon Wellgreen Project

Company Press Release
Monday, September 26, 2011

VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) has announced the drill results received from its 2011 drilling Wellgreen platinum group elements, nickel, and copper project in the Yukon Territory.

Borehole WS11-188 encountered 457 meters of mineralization grading 0.47% nickel equivalent (including 0.72 grams per ton platinum, paladium, and gold) from surface to the footwall contact. Within this larger swath of mineralization, the hole encountered a high-grade section of 17.8 meters of 3.14 grams per ton platinum, palladium, and gold, 1.03% nickel, and 0.74% copper (1.77% nickel equivalent).

The hole was drilled completely outside of current resource boundaries, between the East Zone resource and the West Zone resource that was reported in the company's press release no July 14, 2011.

The high-grade intercept located between the two resources not only demonstrates that the East and West Zone resource form a single, geologically contiguous body but also indicates that the higher-grade material in the East Zone continues to the west and at depth at Wellgreen.

For drill result tables and maps, please see the company's full press release here:

http://www.prophecyplat.com/news_2011_sep26_prophecy_platinum_wellgreen_...