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Gold price - GLD vs. Central Banks

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March 19, 2013 – Comments (0) | RELATED TICKERS: GLD

Trying to figure what influences the price of the precious yellow metal is a really fun parlor game. I have often stated it is merely an emotional thermometer for certain classes of investors. However, stories of central banks hoarding the Precious and that GLD has dramatically increased the demand, got me thinking if one factor might overwhelm the other.

Central Bank buying in 2012

     493 tons

GLD total held

     about 1300 tons

Well, I am not sure this proves anything.

When GLD reserves were ramping up when the ETF was first introduced, it certainly must have put pressure on the price. Yes, its reserves overwhelm banks purchasing, but now that the fund is mature, the only thing that matters are yearly inflows or outflows, which surely must be less than bank buying. In 2012, GLD inflows I calculate at around 100 tons

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