Following up on our note yesterday, the ECB has released new gold sales figures for the past week. Roughly 12 tonnes (385,000 ounces) were sold by two Euro system banks into the market. This follows 16 tonnes (515,000 ounces) of sales the previous week. The market hasn't seen sales at these magnitudes for consecutive weeks for some time. The key point to focus in on is that in the past under sales of this size in consecutive weeks in the market, prices have dropped considerably.
ECB system gold sales have been averaging 2-3 tonnes a week so far this year. In just two weeks, the market has absorbed 28 tonnes of gold sales while prices have continued to climb! This is a very bullish signal currently of physical demand strength in the marketplace. France is more than likely the big seller still out on the market, but the French are beginning to run out of gold they're willing to part with, having sold off nearly 5 million ounces over the past few years. With only one bank continuously selling into the market, the ECB sales should revert back to the 2-3 tonnes a week in sales moving forward and still be significantly short on the year for the 500 tonne sales quota.
The gold market is poised for $15-25 up days in the weeks ahead as the physical sales dry up and geopolitical and dollar worries set the tone for the market.
Blanchard and Company, Inc. is the largest and most respected retailer of American rare coins and precious metals in the United States, serving more than 450,000 people with expert consultation and assistance in the acquisition of American numismatic rarities and gold, silver and platinum bullion. The Blanchard Economic Research Unit is a key source of precious metals market analysis and continues to be an important resource for financial and consumer media throughout the United States. Blanchard and its predecessor companies have called the New Orleans area home for more than 30 years. For more information about the company, visit BlanchardGold.com or call the company toll free at 1-800-880-4653.
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