Central Banks vs Gold

The central banks, knowing of it or not, were submerged in another protracted battle in the war against gold, only that this time through leasing along with selling programs in the nineteen nineties. Over the past ten years, the central banks placed almost seven thousand tons of gold on the market. According to the statistics of the GFMS, this involved roughly two thousand three hundred tons in the form of leasing and four thousand six hundred-fifty tons in the form of sales. Through the nineteen nineties, the net effect has been to maintain the price of gold under four hundred dollars per ounce and for part of the ten years under three hundred dollars per ounce. With the advent of the Central Bank Gold Agreement in nineteen ninety-nine, this most recent intervention has been regulated and contravened.

Gold in nineteen ninety-nine, reacted instantly to the agreement by spiking higher. Previous to the agreement, gold was trading at two hundred-sixty dollars per ounce; after September nineteen ninety-nine, it broke through three hundred dollars and topped out at three hundred thirty-nine dollars. After the consolidation lapse and a return to the previous two hundred sixty dollar level, gold began a steady climb that stalled at the four hundred dollar level, where it trades as this is written. With the supply of gold being throttled, if another spike will develop in the first ten years of the twenty-first century or not depends on developments on the other side of the fundamentals’ ledger: the demand for gold.