Everyone keeps buying record amounts and the price keeps going down. Something is afoot !
South Korea joined Russia and Kazakhstan in boosting gold holdings, even as the metal had its worst start to a year since 1991 and billionaire investor George Soros cut his stake in the biggest bullion exchange-traded fund.
The Bank of Korea added 20 metric tons in February, raising its gold reserves by 24 percent to 104.4 tons, it said in a statement today. Holdings rose about $1.03 billion by value to $4.79 billion at the end of last month, equivalent to 1.5 percent of total foreign exchange holdings, according to the statement. Prices advanced.
Central banks increased gold buying 17 percent to 534.6 tons last year, according to London-based World Gold Council. Photographer: SeongJoon Cho/Bloomberg
The Bank of Korea headquarters, center, stands in Seoul. “The Bank of Korea’s gold buying is part of the long-term diversification of currencies and assets in foreign-exchange reserves,” it said in the statement. “It is of no great importance to try to gauge if it’s profitable or not based on short-term price swings.” Photographer: SeongJoon Cho/Bloomberg
Russia and Kazakhstan expanded bullion reserves for a fourth straight month in January and the World Gold Council expects central banks to remain strong buyers this year after increasing purchases in 2012 by the most in almost five decades. Banks from Goldman Sachs Group Inc. to Credit Suisse Group AG predict the metal’s 12-year bull market may be unwinding after five straight monthly losses.
“They are buying gold for a long-term commodity that they can put into their portfolios,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “The timing of their entry into the market can sometimes be quite contrary to what’s happening price-wise.”
Gold for immediate delivery has fallen 5.9 percent this year, making it the worst-performing precious metal. It touched $1,555.55 on Feb. 21, lowest level since July, and traded 0.1 percent higher at $1,577.32 at 4:55 p.m. in Seoul.