Russian Central Bank Selling Gold

[Ardent Listener]

Russian Central Bank Selling Catalyst for Gold's Stagnation: Gartman
13 April 2012, 11:30 a.m.
By Daniela Cambone
Of Kitco News
http://www.kitco.com/

Editor's note: Catch the Latest Happenings with Kitco Video News!

(Kitco News) - Gold’s decade-long bull run is retracting and Russia central Bank selling may have to do with it, according to newsletter writer Dennis Gartman.

The editor of the Gartman Letter came under attack by gold bugs earlier this week for his statement that gold has been in bear territory since the summer of 2011 when it peaked above $1,900.

“I guess in retrospect it does appear that it was the Russians who were selling about a month and a half ago,” said Gartman about the catalyst for his realization. “Having been great buyers of gold for two and half years now, the Russian central bank has turned into a seller. That may well be the seminal or the tectonic plate shifting circumstance. One of the great buyers is no longer a buyer,” he told Kitco News in a phone interview.

In February, Russian central bank reduced gold holdings by 3.8 tons worth about $200m as per data released by the International Monetary Fund. This was the country's first gold sale in five years. Russia holds the world's fourth-largest gold and foreign-exchange reserves, after China, Japan and Saudi Arabia.

“First of all the final arbiter of any discussion is price itself. [Gold] is $250 an ounce lower than where it was back then [2011] it had just barely got up to over $1900 an ounce in dollar terms, it is now trading as we speak at $1660 an ounce in dollar terms, that’s clearly no longer a bullish move, “he said.

Gartman said good bull markets are defined by a very simple notion where each new high is higher and each new low is higher. “From 2006 to 2011 that was absolutely the truth, each interim high was higher and each interim low was higher it was a well defined bull market. Since the late summer you can no longer say that.”

He added, “I think it’s very hard to deny the facts, the facts are the facts; numbers are numbers. For anybody who is demonstrably bullish about gold and wants to be that way they have a very strong argument that is made against them.”  

Gartman explained that if gold goes below the $1520-$1550 level even the most ardent gold bull bugs will have to admit there is a problem.

In terms of forecasting where the price of gold is headed, Gartman said making predictions can make one look “foolish”. However, he said that if the gold breaks $1550, it could go some good distance down.

“Fundamentally one wants to be bullish of the market because of the amount of monetary stimulus that has been thrown at the global capital markets by the ECB, by the bank of Japan and obviously by the Fed, and that should sponsor stronger gold prices but it’s not going up. So the proper place to be I think is not bullish nor bearish but hard upon the sidelines,” he said.

As to whether the appearance of a QE3 post U.S. election could help gold prices, Gartman said he thinks it’s possible, but highly unlikely. 

“Unless and if Obama were to win a demonstrative election and the House were to swing to the Democrats and the Senate were to remain Democratic that would be mortifyingly bullish to the gold bull market but I have my doubts as to whether that can in fact happen,” he said.

Click To Watch the Full Interview with Dennis Gartman

By Daniela Cambone of Kitco News dcambone@kitco.com

Cecilia Tulikowski-Denison contributed to this interview.

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[beauanderos]

Anyone who wants to sell me their gold or silver after reading claptrap like this is welcome to PM me. Gartman is one who will miss the forest for the trees. On any given day, rationale can be offered to to "explain" price movements, and their GUESS will either be right or wrong. These guys are WRITERS and they get paid to produce spiel. No one who has really studied the markets (Andy Hoffman) gives them any credibility.

And, while I'm at it... I hate Jon Nadler. I stay away from Kitco just because his scent stinks up the place so bad with his incessant precious metals bashing (bought and paid for?). I see his articles are invading our sacred castle here as well. That's sad. Look at the number of people reading his posts... then look at the number of responses. The lack of interest should tell you something.

[Ardent Listener]

I'm sorry you have taken my posts like that Beauanderos. This particular article was not written by Jon Nadler. I believe it is important to get as many views, including those that may not be popular with some, in order for each of us to draw their own conclusions. Those who do not agree may want to just not click on posts that start with 'in the lead' as they are reports made by Jon Nadler. Others may want information such as posted in the OP, especially when making buying or selling decisions.

[68Camaro]

The general topic is a repeat. If you search the web you'll find the same panicked statements in prior years, when the Russian Central Bank did some minor re-balancing move and reporters misunderstood, and the headlines read "RUSSIA SELLS GOLD". They are not net sellers of gold - they continue to buy gold, on the main - around 10-15 tonnes per months, of which 3-4 tonnes is a blip. The cause of the blip, dunno. Perhaps taking adavantage of some favorable terms, or even an internal sale to their mint for coinage.

[Ardent Listener]

The general topic is a repeat. If you search the web you'll find the same panicked statements in prior years, when the Russian Central Bank did some minor re-balancing move and reporters misunderstood, and the headlines read "RUSSIA SELLS GOLD". They are not net sellers of gold - they continue to buy gold, on the main - around 10-15 tonnes per months, of which 3-4 tonnes is a blip. The cause of the blip, dunno. Perhaps taking adavantage of some favorable terms, or even an internal sale to their mint for coinage.

That may be a logical explanation that is not common knowledge. In the 80s the central bank of Britian sold about half of their gold which drove the price down for years. I'm not suggesting this is the case with Russia. I rather doubt it since as a gold producer higher gold prices benefit them. Still, headlines like that can tend to at least drive the price down temporarily. Those who are bullish on gold may want to consider that possibility in any short term buying plans they are considering. You know, buy low sell high.... and all of that.

[68Camaro]

Understand. And appreciate the free exchange of ideas!

The relatively small amount of UK sale of gold per se wasn't what depressed the price in the time you refer - the Brits didn't have enough to do that on their own - that drop was caused by the wholesale organized sale of central bank gold the world over, purposed to depress the price of gold in an age when the USD dominated and was denominated in petrodollars, and the rest of the world had to move in lockstep. It was magnified by the run-up that gold had had prior to that time, when (in current dollars) it hit more than $2500/oz.

Now? The emperor has no clothes, and the world knows it.

[Ardent Listener]

Understand. And appreciate the free exchange of ideas!

The relatively small amount of UK sale of gold per se wasn't what depressed the price in the time you refer - the Brits didn't have enough to do that on their own - that drop was caused by the wholesale organized sale of central bank gold the world over, purposed to depress the price of gold in an age when the USD dominated and was denominated in petrodollars, and the rest of the world had to move in lockstep. It was magnified by the run-up that gold had had prior to that time, when (in current dollars) it hit more than $2500/oz.

Now? The emperor has no clothes, and the world knows it.

I was not aware that other central banks were involved based on an article I read some time back on 24HourGold. But it makes sense. Yes, free exchange of ideas or information is what realcent is all about.

[theo]

I'm sorry you have taken my posts like that Beauanderos. This particular article was not written by Jon Nadler. I believe it is important to get as many views, including those that may not be popular with some, in order for each of us to draw their own conclusions. Those who do not agree may want to just not click on posts that start with 'in the lead' as they are reports made by Jon Nadler. Others may want information such as posted in the OP, especially when making buying or selling decisions.

I have no problem with you posting these articles as I agree that all views should be considered. However, I'd venture to guess that the reason your Nadler posts recieve scant attention is that Nadler himself has very little to offer. He continues to view PMs as mere commodities driven primarily by industrial demand, while virtually ignoring the fiscal and monetary pressures on the dollar not to mention the spector of manipulation. But instead of addressing these issues he merely repeats his old arguments.

[Ardent Listener]

I'm sorry you have taken my posts like that Beauanderos. This particular article was not written by Jon Nadler. I believe it is important to get as many views, including those that may not be popular with some, in order for each of us to draw their own conclusions. Those who do not agree may want to just not click on posts that start with 'in the lead' as they are reports made by Jon Nadler. Others may want information such as posted in the OP, especially when making buying or selling decisions.

I have no problem with you posting these articles as I agree that all views should be considered. However, I'd venture to guess that the reason your Nadler posts recieve scant attention is that Nadler himself has very little to offer. He continues to view PMs as mere commodities driven primarily by industrial demand, while virtually ignoring the fiscal and monetary pressures on the dollar not to mention the spector of manipulation. But instead of addressing these issues he merely repeats his old arguments.

I subscribe to many of Nadler's views when they pertain to platinum and palladium. I have both bought and sold both of those metals based in large part on his reports and have done rather well in doing so. As for gold and silver his track record is not so great o say the least. But there are those who wished they considered his gold and silver reports just prior o the 08 crash.

[beauanderos]

On that point I have to agree. There had to be plenty of his readership who slapped their foreheads in dismay while moaning "he knew all along that this was coming, but I didn't listen to him." If one continuously predicts a given market will drop, at times they will be proven correct. What I abhor about him is his constant negativity regarding gold and silver. Since I don't read his biased disinformation (I don't hang around with angry people, either) I can't answer the question I am about to pose. Did he ever advise investors to climb back aboard the train after the 2008 derailment?