Thursday, April 14, 2011

Central Bank Reserve Managers Expect More Gold Buying This Year

As reported at BullionVault, a survey of 39 central bank reserve managers revealed that gold is generally considered a safe investment.
"Traditionally, government bonds have been termed 'risk-free' assets but the Eurozone situation has made some of us change our understanding of that," said one of the 39 reserve managers who responded....

The survey found that central banks became net buyers of gold bullion in 2010. This marked the end of a 20 year trend of net selling of gold by central banks.

Over 70% of reserve managers surveyed said they expect central banks to remain net buyers of gold, given sovereign debt uncertainties.

In other words, gold is successfully competing with sovereign debts for space in central-bank reserves. Should this trend continue, gold should keep going up. Granted that central bank reserve managers aren't the best investors there are, but they have to pay attention to relative fundamentals.

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