Mostly: Classical

[amarksp]

Central Bank Gold Sales
I remain sceptical as well on that Barclay's report..
http://www.miningmx.com/gold_silver/273020.htm

Banks not selling more gold: GFMS
Allan Seccombe
Posted: Wed, 11 Oct 2006
[miningmx.com] -- THE gold price will find a floor at $540 in the short term but will move up to $700 in the next six months, but it could fall to as low as $400 within six years, Philip Klapwijk, chairman of GFMS said on Wednesday.


GFMS is also sceptical about speculation swirling around the gold market that the signatories to the central bank gold agreement had sold their full quota of 500 tonnes for the year to September 26, despite figures showing sales of 393 tonnes, he said.

...
Dehedging will continue to provide support, but it will not match the estimated 378 tonnes for 2006 – a 341% increase on the previous year. Central bank gold sales are seen moderating and scrap will be less of an issue than it was in the first half of 2006.

If prices are sustained at these levels and mining companies can find new sources of production, gold output will ramp up as other assets start to look attractive against an extremely high gold price, with a weak dollar offering value and stocks will look cheap next to bullion.

“Gold will suffer quite significant falls somewhere down the track… It’s quite possible in five or six years time, assuming we are not in a 19-year bull market, we see gold prices down at $400 an ounce,” he said.

Gold production is not seen picking up in a big way over the next two to three years because of a decade of underinvestment in exploration and development, he said.

The European Central Bank released gold sales figures for the last week in September, from which many parties drew conclusions about what the signatories to the Central Bank Gold Agreement had sold for the year. Their annual quota up to 2009 is 500 tonnes.

GFMS estimated the central banks sold 393 tonnes, but Barclays reckons forward sales were not reflected in the data and the full 500 tonne quota might have been met.

Klapwijk said GFMS did not think the quota has been filled.

“The evidence held up for that has largely been market participants pointing to a lot of volume going through the market lately. There is no supporting evidence from a pick up in leasing rates, which you would expect to see if a transaction that size had gone through the market,” he said.

“It is also not in keeping with past behaviour by central banks over the first five-year agreement and the first year of this agreement. Some forward sales are not impossible, but I’m a believer that it’s unlikely that you’ve had a 100 tonnes or more sold in a very short period,” he said.

“We have taken the view that there might be some forward sales, I’m sceptical there were sufficient forward sales to take us to 500 tonnes.”