buying and selling gold

With financial turmoil escalating to improbable levels in the Eurozone, it seems that it’s not only investors who jittery about the turn of events. According to a recent report published by the World Gold Council, the world’s central banks have made their largest gold purchase in decades, amounting to some 148.4 tons on a net basis, during the last quarter, a sure sign that they are also getting increasingly nervous. While the Council declined to specify which banks were behind the gold purchases, they did mention that quite a few new entrants participated in the buying spree. Central banks are typically a major driver of the gold market, but few reveal details or specifics on their purchases or bullion reserves.

Gold prices have been propelled up to $1,920 an ounce, a 600% increase in only 10 years time, and central banks, now net buyers, have helped to push it there. Bullion analysts expect that central banks from emerging markets are likely to push gold prices higher still, to levels not seen in nearly four decades. By one recent upwardly revised estimate, central banks could purchase more than 400 tons of gold this year, perhaps even as much as 500 tons, meaning that this quarter could seen gold purchases of an additional 90 tons or more.

The majority of the gold purchase occurred after the sharp decline in September, when prices fell to a low of $1,534 from their record high $1,900. That period in time coincided with the ongoing Eurozone crisis and the debacle in the U.S. over the debt ceiling. While the central banks are believed to be buying in according with their longer-term targets, there are few who believe that the increase in gold purchases isn’t also a factor of the increasing turbulence in the Eurozone.