Issue link: http://resourceworld.uberflip.com/i/99312
agreement made several important points relating to gold, the most important being a statement that, "...gold would remain an important element of global monetary reserves..." Historians can easily note that, with the acceptance of this arrangement, gold's momentum began to change and by 2001, the present bull market in gold began. Within the limits of such agreements, central bankers remained limited net sellers of gold until a dramatic transformation began to take place. Thanks to the flood of worldwide government debt, deficits and fiat money creation which have taken place in response to the Great Recession of 2008-09, central bankers began to become seriously concerned about the future of fiat currencies and, most importantly, became net buyers of gold for the first time in decades. This transformation began in 2010 and accelerated through 2011 and into 2012. According to the World Gold Council (WGC), for the past two years, central banks have been net buyers of gold at DECEMBER 2012/JANUARY 2013 a rate of about 100 tonnes per month (approx. 3.2 million ounces) and the total accumulation of gold in central bank treasuries or held by international financial bodies such as the IMF or the European Central Bank (ECB) now total more than one billion ounces. According to the WGC, in November 2012, the top 10 central bank or financial body holders of gold were the US, Germany, IMF, Italy, France, China, Switzerland, Russia, Japan and the Netherlands – closely followed by India, ECB and relative newcomers such as Brazil, Venezuela and Thailand. Yet another important factor was added to the mix by America's Federal Reserve Bank which has now instructed private member banks to value their gold holdings at 100% of quoted value when it comes to meeting reserve requirements. Formerly, that figure was a 50% valuation. My speculation lies at the heart of the gold argument. If this trend toward growing central bank holdings is an indication that gold is going to re-enter the world's monetary system and such financial indicators as money supplies; accumulated private and national debts; future governmental obligations and literally trillions of dollars resting in various asset accounts are to be re-valued in terms of currency units per ounce of gold, then there appears to be little question that the price per ounce of gold could rise significantly – and I do mean significantly. The year 2013 could prove to be of enormous importance to the future price of the yellow metal. n This material is taken from sources believed to be reliable and is provided for information only. Any investment decision should be made only after prior consultation with investment professionals. Leonard Melman is a financial and political writer who focuses on issues relating to the resource sector. Mr. Melman lives in Nanoose Bay, British Columbia, Canada and can be reached at lmelman@ shaw.ca www.resourceworld.com 33