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Increase In Eurozone Gold Reserves Not From New Purchases – Macquarie

By Neils Christensen of Kitco News
Thursday February 26, 2015 12:05 PM

(Kitco News) - The mystery behind the boost in gold reserves in the eurozone has been solved, according to research from Macquarie.

Unfortunately, according to the Australian-based investment bank – in a note published Wednesday - the rise in gold was not because of a major new purchase.

Tuesday, the International Monetary Fund (IMF) reported that gold reserves in the eurozone rose by 7.437 tonnes to 10,791.885 in January. However, analysts were left wondering which central bank actually bought the gold as the data groups together all the central bank gold reserves in the eurozone, including the European Central Bank (ECB).

The increase came as a result of Lithuania joining the eurozone and its central banks gold holdings of 5.8 tonnes are now included in the IMF’s calculations.

Macquarie also noted that Lithuania, as a member of the ECB, bought 1.6 tonnes of gold and deposited it with the central bank instead of just transferring from its holdings to meet its membership obligations. Lithuania has been a member of the European Union since May 2004 and officially became the 19th member of the eurozone and adopted the euro as its currency on Jan. 1.

In total Macquarie said that central bank buying narrowly eclipsed selling in the first month of the year. In total, net central bank purchase amounted to about 3 tonnes of gold. Along with Lithuania’s ECB purchase, Kazakhstan bought about 1.7 tonnes and Mauritius bought 1 tonne.

Russia sold 0.5 tonnes of gold in January and the only other seller Macquarie noted was Belarus, at just under 1 tonne. The IMF data released Tuesday showed that Turkey was a major gold seller as its central bank’s reserves fell by 14 tonnes; however, most analysts dismiss Turkey’s volatile holding because the central bank incorporates commercial holdings withing its reserves.

The fact that the increased reserves were not the result of new buying is not expected to have a major impact on the market. Wednesday, in interviews with Kitco News, several analysts dismissed the increase as insignificant, especially compared to the more than €1 trillion expanded quantitative easing program the ECB announced at its January monetary policy meeting.

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By Neils Christensen of Kitco News; nchristensen@kitco.com



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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