About 10%-12% of the gold produced every year goes directly into industry, that is nothing to shake a stick at.



It's a common known fact that central banks all over the world, since 2002, have been selling huge quantities of gold. If not for this, the demand would have exceeded the supply and we would have seen a huge inflation in the price of gold. But this action cannot be sustained forever, and central banks cannot pay more for gold than what they sold it for, to replenish their stocks. Think of their gold supply as a buffer, similar like oil reserves, this is why they are often called "gold reserves". They are reserved, and when needed by industry sold, and when possible replenished.

If gold were to double in price for example, or quadruple, imagine how much a cell phone would sell for, or a flat screen TV, or a computer. This would seriously discourage people from purchasing these products, which would cause the economy, that is dependent on continual excessive spending, to collapse. Not to mention the number of jobs that would be lost in the retail industry, and the backlash later on the manufacturing industry. It would cause a chain reaction that would end up being a runaway event. The price of gold is manipulated specifically for these reasons, as well as profit taking by those entities and people who have control over enough gold to manipulate the prices effectively.

Many of the worlds central banks do not disclose how much gold they sell, or when they do. But here is an example of a few that have, you can see my meaning.



Germany - sold 12 tonnes of gold in 2001, as commemorative gold coins. [Source - World Gold Council]

Holland declared a policy of selling 300 tonnes over 5 years from 1999. The Dutch do not advertise their sales in the market as they happen. They have sold 100 tonnes in year 1. 27 tonnes in year 2. 9 tonnes in year 3, and 33 tonnes in year 4 (so far). [Source - World Gold Council]

Portugal sold 15 tonnes in December 2002 and 30 tonnes in February 2003, apparently as a result of options taken out in 1997/8. [Source - World Gold Council]

Switzerland plans to sell 1300 tonnes. They have sold annual amounts of 120, 220 and 283 tonnes, project a further 283 tonnes in 2003 and will cease selling after 2004. [Source - World Gold Council]

The UK has sold 395 tonnes in a public auction programme which finished in March 2002.[Source - World Gold Council]

On average, from 1997 to 2002 industry worldwide used about 397 tonnes of gold, per year. You could say that if these central banks did not sell the quantity of gold they did to meet the worldwide demand, it would certainly have hurt industry.

Also keep in mind, gold traded on the international market falls under the same banking rules that loaning money does. For example, banks only have to keep 10% of the total funds they loan on deposit. Same goes for gold, they "loan" the gold out and only have to retain 10% of deposit. That means for every one ton of gold that is kept on deposit there is another 9 tonnes of gold that is invented, that doesn't really exist, that is loaned, and the sold on the market as investment.

Scott