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Metals Focus: In Addition To Venezuela, Central Banks Are Still Net Buyers Of Gold
Nov 06, 2017

Metals Focus: in addition to Venezuela, central banks are still net buyers of gold

Metals Focus reported on Wednesday (November 1st) that although there were reports of Venezuela's $1 billion 700 million gold swap in October with Deutsche Bank (Deutsche Bank). The number of official net purchases is expected to decline by 5% this year to 370 tons this year, the lowest level in seven years, 646 tons in 2013.

According to the International Monetary Fund, is Venezuela, the country's official holdings of 361 tons by the end of 2014 fell to 188 tons at the end of August. Metals Focus said "it is worth noting, and is important in recent years, the substantial decline reflects a series of exchanges between Venezuela and the West Bank, the central bank has obtained the cash flow, in exchange for gold as collateral." But the latest news shows, the country allows for gold swaps and Deutsche Bank, and opposition lawmakers said Venezuela provide us $1 billion 700 million in gold guarantee, $1 billion 200 million of cash from Deutsche bank. Metals Focus calculates that equivalent to about 43 tons of gold swap swaps.

Metals Focus said, "looking to the future, as the economy is still struggling, Venezuela may refuse to pay cash (agreed by the exchange agreement)", which may lead to more official reserve sell-off. Even so, this does not represent reserve managers' changes in the mood for gold. After all, keeping away from most dollar denominated reserves and diversification will continue to make gold attractive; geopolitical risk is also a problem. Therefore, the official sector is expected to remain the net buyer of gold in the short to medium term, but the pace of procurement may slow down in the next few years."

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