Not surprisingly, governments are horrible traders -- trust us, it's not just our government that's inept when it comes to the market, it's all of them -- and so we shouldn't be particularly surprised that the rash of central bank gold buying all around the world occured in the last couple months, and now two years ago.
Bloomberg: The banks will buy 13.8 million ounces (429 metric tons) this year, worth $15.5 billion, for the first net expansion in reserves since 1988, New York-based researcher CPM Group estimates. Gold fell 15 percent that year and took another 15 years to trade again at the same price as central banks from Switzerland to the U.K. cut their holdings.
...
“This is late in the game to be buying gold,” said Peter Morici, a professor of business at the University of Maryland in College Park and former economic adviser to the U.S. government. “Central banks are not known for their investment acumen. What it reflects is a lack of confidence in the U.S. economy and the long-term durability of the dollar as a store of value.”
Countries were also increasing their holdings in 1980 when gold peaked at $850 an ounce, data compiled by the London-based World Gold Council show. The record was exceeded 28 years later.
Also, it's not just that central banks kbuy at the top. As a recent Goldman research report argued, countries like India also have a knack for selling before big rallies.
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See Also:
- Goldman: India Has Been A Horrible Gold Trader
- India Has Set The New Gold Floor
- Is The Norwegian Krone The New Gold?
Full story at http://feedproxy.google.com/~r/businessinsider/~3/uoU5gGaOq0o/central-bank-gold-buyers-top-ticked-the-market-2009-12
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