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Blanchard Economic Research Note

-- Posted Tuesday, 8 May 2007 | Digg This ArticleDigg It!

On the ECB gold reserves front, two ECB captive banks sold over 11.5 tonnes of gold this past week into the market, making this the 8th straight week of significantly increased sales compared to the past 6 months of the Central Bank Gold Agreement financial calendar.  In two months, ECB banks have sold over 100 tonnes of gold into the market.  By comparison, the ECB banks sold 112 tonnes in the six previous months.  While we continue to believe that these elevated sales levels have been the reason behind the gold market's inability to eclipse the $700 level, we also believe that the sales should begin to taper off and still fall substantially short of the 500 tonne quota level for the ECB calendar year (Sept. '06 - Sept. '07). 

As we pointed out last week, during this period of elevated sales into the market of late, the day's market bottom has been made 84% of the time during the London open with an average price recovery of nearly $5 per ounce into the NY close.  Seeing gold sitting just below resistance today should make the post-London close today in front of the Fed meeting tomorrow particularly interesting for some price action.

Piggybacking on the ECB sales update is news out of South Africa that the Reserve bank there has increased their gold reserves in the past month by $73 million (3-4 tonnes).  While by no means a market mover on its own, we have seen over the past year continued small additions by 2nd and 3rd tier central banks to their gold reserves.  Two tonnes here and three tonnes there will eventually aggregate to be quite significant over time in a market environment where the slight changes to supply and demand are pushing around prices considerably.

Keep an eye on the market 15-30 minutes after the London close for some potential bumps in price upwards, but the real action in the market for the week is set to take place post-Fed decision; set to be released Wednesday at 1 pm EST.


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 or call the company toll free at 1-800-880-4653.

-- Posted Tuesday, 8 May 2007 | Digg This Article


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