Dow Jones is reporting that the Bank of Korea has announced that it has increased the amount of gold in its reserves for the second time this year.
The report states that they purchased 15 tons in several batches last month. The last purchase was back in June for a total of 25 tons.
It now has 54.4 tons in reserve. Even with the purchases this year, it still has only 1% of its total foreign exchange reserves in gold. The former amount was a mere 0.7%.
We do not know the actual price at which these purchases were made but there is no doubt in my mind that they occured on forays down into the zone near the $1600 level. This level has seen strong buying by assorted Central Banks for some time now and I see nothing that would cause this to change anytime soon.
The fact is that many of the banks that have been accumulating gold are doing so to both diversify their reserves and to provide confidence to investors world wide .
As traders/investors this is valuable information for us as it points to very strong downside support in gold with sizeable accumulation occuring among a group of market participants who are not buying the metal only to try to flip it for some sort of short term gain. They are buying because they see value in the metal at these prices.
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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