Reports coming out of the IMF indicate that Brazil has DOUBLED its holdings of gold since the end of August of this year. It is now officially holding 2.18 million ounces compared to 1.08 million ounces at the end of August. IMF data reveals that Brazil purchased 472,000 ounces in November.
Also, the World Gold Council is reporting that it expects official sector gold demand (Central Banks) to reach 500 tons this year, eclipsing last year's reported 457 tons of the metal.
It is evident that these up and coming economic powerhouses such as Brazil are moving to begin diversifying their burgeoning reserves.
This is the reason why the physical gold market will continue to provide a strong floor of support beneath gold on price setbacks of the nature that we are currently undergoing.
Setbacks like this merely move the gold from weak hands to strong hands. Hedge funds are NOT STRONG HANDS - they are momentum chasers only, either up or down. Strong hands such as Central Banks are generally not prone to selling gold even on rallies in price as their movement to acquire the metal is part of a long term strategy that is not going to be dispensed with based on short term fluctuations in the price of the metal.
Keep in mind that very few people make money trading gold by buying it high and trying to sell it even higher. You have to be faster than the algorithms to consistently pull that off. Be smart and use weakness to acquire the physical metal if you are a long term oriented investor or for that matter, a trader watching for support levels to emerge and be confirmed. Do not chase gold higher. Let the nitwits who run the hedge funds do that for you and use their buying to sell into.
"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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