Gold Mining Today

Gold Mining Today

Gold Mining Today

Gold bullion production is a very good indicator of the strength of the gold bull market, however, it isn't the full story. To continue, we must examine who exactly is buying the yellow metal and why.

The largest buyers and sellers of gold bullion over the last 40 years are the world's central banks. While central banks are really a whole other topic in their own, the most important point is that central banks keep reserves in the various world currencies such as US dollars, Japanese Yen, the Euro and, most importantly, gold.

The following pie charts compare the top ten largest holders of gold bullion in the world in 2000 and then in 2010. Notice the difference in the list of countries, as one country in particular has emerged as a world gold power. During the last 10 years, this country has tripled its gold holdings!

This country is China. China, in 2000, was ranked fifteenth in world gold holdings and, in the 10 years since, has vaulted to sixth, having almost tripled its gold reserves. It isn't only China that's making headlines, however, as India's central bank purchased approximately 200 tonnes of gold bullion in November of 2009, from the International Monetary Fund (IMF) for 6.7 billion US dollars. Over the last decade, this purchase arguably displays the most bullish nature of gold's valuation, as India's average purchase price was approximately $1045 US dollars a troy ounce.

Before India's purchase, China was thought to be the front runner in the bid for the IMF's approximately 400 tonnes of gold bullion. With nearly 200 tonnes remaining, I would speculate that China again must be considered the most likely buyer, as their 2 trillion US dollar holdings are devaluing daily. I believe this speculation is supported by the numerous other resource and commodity-type purchases that the government-run investment banks have made with oil, copper, aluminium, etc.

If you believe in market timing, getting in before the remaining 200 tonnes is purchased could make you some easy money. After India's purchase in November 2009, for example, the spot price sky rocketed from $1050 to a top in the beginning of December 2009 of $1210; that's a 15% valuation in one month!!! Get the latest and greatest stock tips from Casey Research and you will be set for the next big valuation. http://www.whatisgold.net

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