“Do Western Central Banks Have Any Gold...

“Do Western Central Banks Have Any Gold Left???”
http://sprottasset.com/markets-at-a-glance/do-western-central-banks-have-any-gold-left/

Worth reading in full, but some quotes below.

“Over the past several years, we’ve collected data on physical demand for gold as it has developed over time. The consistent annual growth in demand for physical gold bullion has increasingly puzzled us with regard to supply. Global annual gold mine supply ex Russia and China (who do not export domestic production) is actually lower than it was in year 2000, and ever since the IMF announced the completion of its sale of 403 tonnes of gold in December 2010, there hasn’t been any large, publicly-disclosed seller of physical gold in the market for almost two years.4 Given the significant increase in physical demand that we’ve seen over the past decade, particularly from buyers in Asia, it suffices to say that we cannot identify where all the gold is coming from to supply it… but it has to be coming from somewhere.”

“It would not lend much credence to central bank credibility if they admitted they were leasing their gold reserves to ‘bullion bank’ intermediaries who were then turning around and selling their gold to China, for example. But the numbers strongly suggest that that is exactly what has happened. The central banks’ gold is likely gone, and the bullion banks that sold it have no realistic chance of getting it back.”

“Frank Veneroso’s conclusions were even close to accurate back in 1998 (and we believe they were), when coupled with the 2,300 tonne net change in annual demand we can easily identify above, it can only lead to the conclusion that a large portion of the Western central banks’ stated 23,000 tonnes of gold reserves are merely a paper entry on their balance sheets”

This part is pretty obvious;
“We might also suggest that if a proper audit of Western central bank gold reserves was ever launched, as per Ron Paul’s recent proposal to audit the US Federal Reserve, the proverbial cat would be let out of the bag – with explosive implications for the gold price.”

Alf Fields $4,500 gold target would probably get blown out of the water.

However I don’t believe you need the audits. All you need is the market to believe it is so and the price should continue to trend strongly higher as more become aware.

Back in Feb 2012 I found this chart (see below).
I find it difficult to believe that after that rapid decline in gold holdings over a 20 year period and with the GFC coupled with what Sprott discusses above, that US gold holdings suddenly flat lined and stayed constant till now.
Their gold holdings were always volatile, either rising rapidly from 1900 to 1950 or falling rapidly thereafter.
The flat line seems much more likely a lack of disclosure of changes than an actual lack of change.
A lack of disclosure of changes almost certainly implies a decrease in holdings.

Whether western central govts have been selling to suppress the gold price (the Libor scandal proves they are capable and willing to manipulate) or whether they have been selling out of necessity doesn’t really matter. When they stop selling or slow right down, what will the price do?
The price is likely to move much higher to its intrinsic value.
This is when gold companies will outperform the gold price because the POG will rise much faster than costs reversing the pattern we have seen over the last 5 years where costs rose faster than the POG.

That is when the market will see the value in large lower grade deposits such as Buccaneer. That is where I see much of our leverage to a much higher sp.
I think we are at the start of the next major move in the POG and the very significant buying of gold stocks over the last 1-2 months suggests the market is already positioning for it.

The easy part of the investment choice is that we still trade at a discount to the scoping study projected net cashflow based on the jorc resource only and only down to 100ms and at a gold price of $1600. No East vein or GH in the scoping study.