Gold News: Does Central Bank Buying Affect Its Price? [Details]

gold money, gold bars
Written by Mike Hammer

We can start this week off with a bang. It’s no secret that central banks bought a lot of gold over the past year, we’ve talked about it many times (here’s one example, and another). This morning, Ronan Manly published a detailed article on central banks’ recent spate of gold buying.

The question: Does central bank buying have any impact on the open market price of gold? Now that’s something we probably should understand, right? The general assumption is that more central bank buying means more demand on the open market — but is it true?

It’s like the book Freakonomics, which looks more deeply at a single question to see if the common wisdom has any “wise” in it at all. We won’t give it all away, but you should understand that Manly doesn’t mention the LBMA‘s coming increase in reporting and transparency, slated to begin on Nov 20.  That doesn’t take away from most of the article.

But, it does modify the impact of a few paragraphs. You should definitely read this one all the way through.  (Note: The Gold Enthusiast is not affiliated with BullionStar, but we are fans of some of their authors, such as Ronan.)

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About the author

Mike Hammer

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated with a business degree, then worked with Macy's. After Macy's he spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined a well-known financial planning firm as a financial advisor, helping regular people understand their finances and meet their life goals.

Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where he worked first for a small manufacturing consulting company, then a major university. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach.

Since then, Mike has trained over 200 individuals, spoken at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"

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