What Will Drive The Gold Price In The Days Ahead?

By Julian D. W. Phillips, GoldSeek

Gold is higher than ever before and is still climbing.   Many investors are waiting for a fall in the gold price, because they are looking at the past market shape, that has not factored in the major sea-change in the shape of demand.   Even many institutional analysts have not realized just what has happened to the market and turn only to their charts to decipher the next moves.    You our subscribers, we hope, have realized from our writing and forecasts that a great deal more is still to come in this gold market in the years to come.

The impact of I.M.F. Sales of Gold on the gold price

Essentially there has been a leap in the evolution of the gold market, due to the I.M.F. sales of gold.   For a couple of years the pending sale of 403.3 tonnes was seen as an overhang on the market and one that pointed to the days when gold’s price would peak.   But the reverse has occurred once the first portion of the 403.3 tonnes sale was announced.   We are waiting for further announcements on the third tranche of 201.3 tonnes.   Please note that India indicated it would be an ongoing buyer of gold from the I.M.F.  Mauritius is happy with its 2 tonnes.

However, if this is another central bank and not Russia or Chinathe market will again be surprised and take the gold price even higher.   China will have the same impact, with all eyes on the quantity it buys.   This is because of the tide of central bank’s changing attitude to gold expressed in the action of buying gold, has not yet been fully accepted by the market place and monetary analysts.   To do so would also herald as well as define dropping confidence in the U.S. $ and other paper currencies.   Monetary authorities will fight this all the way, even in the face of gold buying by central banks.

A look back in history to the time when the I.M.F. first sold gold shows us that their motive was to support the S.D.R., but this failed.   This time their motive is entirely different.   They simply want to sell gold for as much as they can.   But not small amounts of gold, as this is the first time since the U.S. and the I.M.F. sold gold in large amounts [500 tonnes at a time - at auction] last century that the market has been able to buy gold in large tonnages.   It may well be the last time too!

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