Europe's Central Banks Halt Gold Sales

The Financial Times put out an article on September 26th discussing how the European Central Banks have reduced the sale of their gold supply by 96% this year.  Only 6.2 tonnes were sold vs a high of 497 tonnes in prior years and an average of 388 tonnes per year.  European Central banks are pulling back on gold sales due to the global financial crisis and the European Sovereign Debt Crisis.  This impacts gold price as a significant source of gold has now been withdrawn from the market, which will help hold recent rises in gold up (always a pullback in any run up though).

Why do I highlight this event in gold?  Well I find it significant to the current financial/economic situation we are in.  A while back there was an agreement called the Central Bank Gold Agreement which restricted the amount of gold a central bank could sell, because Central Bankers were selling so much gold that it depressed prices.  The CBGA put a cap on how much gold a central bank could sell in a given timeframe.  This agreement expired on Sunday.  Normally, this would have opened the floodgates to sell more and depress the prices further.  Even if it didn't expire, you can see by the reduction in sales that central banks have changed their thinking and have started to hold gold instead of sell it for fiat currencies (a big sing of our times).

Courtesy of Financial Times

It also attests to recent changes in foreign countries where gold is now being used as an alternate currency to fiat currencies and increasing rhetoric on backing fiat currencies with gold.  The currency war and gold continues.  [ Original source ... ]