We must be cautious here, still, because We don’t know how much was bought or why it was bought, so we cannot say for certain that there has been a major policy shift by one of the signatories.  However, so as not to minimize this event, it definitely shows that at least one of the signatories has approved and acted on an approval to purchase gold.   Consequently there does appear to have been  by one of the signatories of the Central Bank Gold Agreement, a major change of policy on gold in their reserves.

q       Could this be a signatory that has not sold previously and now wants to buy?   If so how much more will it buy?

q       Is this a signatory that has reversed its policy on selling and now wants to buy in the future?  

q       Perhaps this was a "housekeeping" purchase [but cannot see why it could be?] to tidy up the books, but this just doesn’t make sense.

q       This is an event that has not happened for almost three decades.  

q       It is deeply significant that a European Central Bank [not just one of the Arab or Asian banks] should actually buy.  

Maybe this is a ‘feeler’ purchase to see just how the market will react once they realize what has happened.   So far it appears that we are the frst to highlight this event.  Once it becomes generally known perhaps it will affect the gold price?

If it is a change of policy of just one European Central Bank, we believe it will affect the thinking of other global Central Bankers and cause them to re-visit the place of gold in the monetary system.  

If this is correct then the gold market could move firmly into center stage in 2007.   With so little gold around, the race to acquire it by Investors across the spectrum could be fast and furious taking the gold price to new heights.  

We will be developing these points in later issues of the Gold Forecaster.    

Slovenia’s joining the C.B.G.A.

We did not dwell on the standard statement issued when a new Central Bank joins the C.B.G.A. agreement, which reflects the initial position of all signatories to the agreement and that is,

“Banka Slovenije has agreed not to expand its gold leasing and its use of gold futures and options over the period of the agreement”   

So as to absorb the full impact of this statement, we have to see that it strictly limits the activity of member Central Banks activity in the futures and options markets.   However, it does not prevent them from both selling and buying gold.   The agreement is only a limitation on the amounts to be sold and a restraint on future activity in the futures and options markets.

To read this week’s entire issue, please visit

                        www.goldforecaster.com            www.silverforecaster.com

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-- Posted Friday, 29 December 2006 | Digg This Article