Central banks` behaviour on #gold changed dramatically after the 2009 global financial crisis. Since 2010, they are net buyers – between 2010 and 2018, they average 485t per year. Surprisingly, during the CBGA era, Western central banks did not accumulate gold as quickly as their Southeast Asian counterparts. Countries such as Russia, China and Turkey have bought gold and transferred their reserves to historic levels. With the expiration of the CBGA, some of them are expected to get their hands dirty in the gold markets. In total, at the end of 2018, central banks held about 33,200 tonnes of gold, or about one-fifth of the gold ever mined. In addition, these stocks are highly concentrated in the advanced economies of Western Europe and North America, a legacy of the days of the gold standard. This means that central banks have enormous price power in gold markets. In a major development, European central banks have decided not to renew a 20-year contract to coordinate gold sales.
The Central Bank Gold Agreement (CBGA) dates back to 1999. The agreement was aimed exclusively at limiting gold sales and stabilizing the European precious metals market. Fiat`s periods of monetary instability are obviously excellent for gold prices. About two years after the Great Financial Crisis (GFC) of 2008/2009, gold prices increased in 2011 to $2,000. During this period, the behaviour of central banks has changed. Central banks are now net customers. The Bundesbank itself does not sell more small quantities of gold to the Ministry of Finance each year. The ministry uses precious metal to mark commemorative coins.
The signatories confirm that gold remains an important component of the world`s foreign exchange reserves, as it continues to offer advantages for asset diversification and none of them currently plans to sell large quantities of gold. But the gold market has changed dramatically over the past two decades. The sources of demand are more diversified than in 1999 and prices are significantly higher. At that time, central banks were net (uncoordinated) sellers, which led to the CBGA. t.co/Jp7ym8ndMs The first CBGA was signed in 1999 to coordinate gold sales planned by the various central banks. During its implementation, the agreement contributed to balanced conditions in the gold market, ensuring transparency of the signatories` intentions. In 2004, 2009 and 2014, it was renewed three times and gradually moved to less stringent conditions. “The independence of central banks is enshrined in law in many countries, and central bankers tend to be independent thinkers. It is worth asking why such a large group of them decided to cancel this very unusual agreement… At the same time, the Council is aware, through our close contacts with central banks, that some of the largest owners have been concerned for some time about the impact of unfounded rumours on the price of gold – and therefore on the value of their gold reserves – and on the use of official gold for speculative purposes.
In 2019, the undersigned banks agreed not to renew the contract because they had not sold large volumes of gold for some time.  Their sales had gone from the near limit agreed in 2007 to almost zero in 2012, before remaining very low thereafter.  FRANKFURT/LONDON, July 26 (Reuters) – European central banks have overturned a 20-year agreement to coordinate their gold sales and said they have no intention of selling large quantities of metal, the European Central Bank (ECB) said on Friday. At Novem Gold, we eliminate the inconveniences of physical gold selling, uncertainty of personal storage and verification problems when buying at the same time. It represents the best of technology and know-how that fundamentally disrupts an industry.