I’ve often mentioned that the only paper I’ll bother buying or reading is the FT Weekend.
Reading this weekend piece I came across a small comment in the Commodities column of the Markets & Investing Section:
“As a group, central banks are set to buy almost 500 tonnes of gold this year, the most in more than four decades.”
Some of you will know that very often Central Banks buying and selling decisions can be enormously useful contrarian indicators.
The best known example of that here in the UK was when the self-proclaimed ‘fiscally prudent ‘ Gordon Brown as Chancellor of the Exchequer ordered the Bank of England to sell 400 tonnes of the UK’s gold reserves for approx $290 an ounce at, what turned out to be, the very bottom of the gold market. The selling decision by the BoE signalled the very bottom of the gold market. An enormous bull market occurred for the next 10-12 years. It now trades at $1690 and has been as high as $1920 an ounce.
Now admittedly we are in different post financial crisis world were QE led initiatives have led to huge sums of money being injected into the system. However when reading a comment like the one above it does make me think – is the gold party over?
Just a thought – any opinions welcomed.