WGC Report: Central banks bought most gold last year since 1964

The World Gold Council (WGC) issued a quarterly report Thursday that noted central banks around the world bought the most gold last year since 1964. This comes as gold continues to maintain global high demand and nears record value levels.

Last year, gold purchases made by central banks increased 17 percent, compared to the year prior. Meanwhile, fourth-quarter acquisitions of 145 tons of gold rose 29 percent from the same time in 2011. International investments in Exchange-Traded Funds (ETFs) was up 51 percent in 2012 versus the year prior, but it was down 16 percent in the final quarter of the year.

The average price of gold throughout 2012 was $1,669 per ounce, up six percent from $1,571.50 per ounce in 2011. In value terms, WGC noted that total gold demand was $236.4 billion in 2012, an all-time high.

Demand in China was relatively flat as jewellery demand was up one percent and investment demand was up two percent.

“China and India remain the world’s gold power houses, and by some distance, despite challenging domestic economic conditions. In India, consumer sentiment towards gold remained strong despite measures aimed at curbing demand, reaffirming gold’s role in Indian society. In an underdeveloped financial system in India, gold has an important role to play,” said Marcus Grubb, Managing Director of Investment at the WGC in the report. “Notwithstanding the predicted economic slowdown in China, investment demand was up 24% in Q4 on the previous quarter and jewellery consumption held steady at 137.0t.”

Grubb added that central banks have transitioned from net sellers to net buyers. He explained that even with the unstable macroeconomic environment, China and India, the two largest gold markets, had an annual demand 30 percent higher than the average for the past half century.

At the end of the trading session Friday, gold ended at a six-month low following a brief dip below $1,600. It ended the week at $1,607.90.

Jim Rogers, finance guru and Chairman of Rogers Holdings, said in an interview this month that investors should not sell their gold or silver. He did say, however, that he isn’t buying at the present time unless it falls dramatically.

Silver also fell below the $30 mark Friday.