Profit Confidential Reacts to China’s Central Bank Purchasing 24% of the World’s Total 2015 Output

Profit Confidential comments on why China’s central bank snapped up 24% of the world’s total 2015 gold output.

New York, NY, United States – December 11, 2015 /MarketersMedia/ —

Profit Confidential (www.ProfitConfidential.com), an e-letter of Lombardi Publishing Corporation, a 29-year-old consumer publisher that has served over one million customers in 141 countries, weighs in on why the People’s Bank of China (China’s central bank) added 654 tonnes of gold bullion to its reserves between June and September.

While gold prices have fallen to a six-year low, central banks around the world have been actively buying the precious metal. Between June and September of this year, the People’s Bank of China added 654 tonnes of gold bullion to its reserves. (Source: Ananthalakshmi, A., “China boosts gold reserves by nearly 14 tonnes in October,” Reuters, November 30, 2015; http://www.reuters.com/article/china-gold-reserves-idUSL3N13P1XQ20151130#THoGP9OMWgkXGiY2.97.)

“To put that into perspective, the annual global gold mine production is around 2,800 tonnes. So, in the past five months alone, China’s central bank has purchased 24% of the entire world mine production for 2015,” says economist and lead contributor Michael Lombardi. “I expect China to continue to add more gold to its reserves as the Chinese yuan will soon be granted reserve currency status by the International Monetary Fund. Following this status change, the smart move would be for China to back its yuan with a solid asset, and that asset is gold.”

Lombardi explains that several other central banks are shoring up their gold reserves. Between March and September, Russia’s central bank purchased more than 144 tonnes of gold. (Source: “Recent reported changes in central bank reserve holdings,” World Gold Council data set, last accessed December 7, 2015; http://www.gold.org/download/file/3735/Changes_latest_as_at_November2015_IFS.xlsx.)

On the consumer side, demand for gold also remains strong. Having accounted for approximately 45% of total demand, China and India continue to be the dominant figures in the global gold market. While demand for gold also increased across Europe, the most dramatic growth came from the United States, with U.S. Mint Eagle sales reaching their highest levels since the second quarter of 2010. In the third quarter of 2015, U.S. investment demand (bar and coin purchases) increased by 27% and global demand for jewelry increased six percent year over year. (Source: “Gold demand climbed in Q3 2015 as consumers across the globe capitalised on buying opportunity,” PR Newswire, November 12, 2015; http://www.prnewswire.com/news-releases/gold-demand-climbed-in-q3-2015-as-consumers-across-the-globe-capitalised-on-buying-opportunity-300177352.html.)

“Gold prices are making new lows despite extreme buying. For contrarian investors, this is a great opportunity. Whenever the supply/demand equation of a commodity tightens but the market moves prices lower, investors get the best returns over the long term,” Lombardi states. “Now is the time to watch gold mining stocks. The shares of depressed quality senior gold mining companies are setting themselves up for huge upside when gold prices turn. As a result, 2016 is shaping up to be a great year for gold and an even better one for gold miners.”

Founded in 1986, Lombardi Publishing Corporation, which has served over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more information on Lombardi Publishing Corporation, visit www.LombardiPublishing.com.

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