LBMA - Speech by Ashish Bhatia on Central Bank Demand for Gold

7/30/2019 LBMA - Speech by Ashish Bhatia on Central Bank Demand for Gold

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BMA/LPPM Precious Metals Conference 2012 13 November 2012

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Central Banks: The outlook for demandPresented by Ashish BhatiaGovernment Affairs | 13 November 2012

Central banks: The outlook for demand

2World Gold Council | Central banks: The outlook for demand | 13 November 2012

Key insights1. Central banks have become net buyersagain

2. Foreign reserve growth has been staggering, yet gold has kept pace

3. Why the renewed interest in gold?

Liquiditygold is one the most liquid global assets

Diversification a crucial role for central banks

Foundational asset the war chest argument for gold re -emerges


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Central banks have become buyersagain



Central banks own 1/5th

of all the gold in the world

1 Based on end-2011 volume and 2011 average gold price.2 Includes other fabrication (12.1%) and unaccounted for (2.1%)

Source: Thomson Reuters GFMS, US Geological Survey, World Gold Council

Total above ground stocks= 171,300 tonnes (US$8.7 trillion) 1

68ft

68ft


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Clear divide between advanced and emergingeconomies


Emerging markets FX reserves have grown at astaggering pace



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Gold reserves keep pace with growing FX reserves


12%

12%

EM central banks rebalance reserve portfolios



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1. Liquidity


US$240 billion of gold is traded on the London OTCmarket



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2. Diversification


Gold provides ultimate diversification



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Gold is negatively correlated to the US dollar


3. Foundational asset



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The war chest argument gold is seen as theultimate asset to hold in an emergency and in thepast has often appreciated in value in times offinancial instability or uncertainty

John Nuge,

Centre for Central Banking Studies, Bank of England


Rising EM countries are top holders of FX reserves


Emerging markets (ex Japan)


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yet the largest economies rely on gold, not fiatcurrencies


G20 EM countries had modest holdings of gold in 07



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by 2012, they are rapidly increasing gold holdings



The Executive Program inGold Reserves Management

April 29 May 1, 2013


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LBMA - Speech by Ashish Bhatia on Central Bank Demand for Gold

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