Russia has overtaken China to become the world’s fifth largest official sector holder of gold as Western sanctions drove buying by its central bank to record highs in 2018, its data showed on Friday.

“The amount of capital being put into new gold mines is a most nonexistent,” Zell said. “All of the money is being used to buy up rivals.”

We still consider Shanghai Gold Exchange (SGE) gold withdrawal data the best comparable measure of the nation’s gold demand year on year and for 2018 the annual total was a little higher than in 2017 or 2016, but still well short of the record figure reported in 2015.

Flows for the week & year

As a very well informed article in Revue Banque explains, Banque de France’s gold reserves will be “mobilized” in order to guarantee gold/currencies swaps and gold leasing. As of now, only other central banks will be able to use those financial products with the Banque de France, but since it has taken on JP Morgan as a partner (why not a French bank?), this opens up the possibility that, in the future, other international commercial banks may have access to them.

In their latest gold-price forecast report, the US investment banking giant Goldman Sachs made upward revisions to their 12-month price outlook.

Key Highlights:
3 months at 1,325 / oz (prior forecast was 1250)
6 months at 1,375 (1300)
12 months forecast to 1,425 (1350)

Gold to derive support from:
Defensive positioning (investors with a fear of a recession).
Central banks to buy.

Goldman Sachs issues an overweight recommendation for gold and commodities.

Paradigm Capital says royalty companies are the “best bet” in metals and mining.

In short, the world is a different place now than it was prior to the 2008 financial crisis in terms of gold production. Should physical demand soar once again as did in the 2009-2013 period, we could get the same price response we did then. Even as it is, substantially less metal is reaching the marketplace at a time when central banks have become net buyers of the metal and investor demand, though presently in a lull, is generally on the rise.

The trends now favor "strong-handed" long-term gold investors holding for asset preservation purposes and capable of weathering the market's ups and downs. As for the official sector, the trend toward building gold reserves is likely to continue. More and more emerging countries are likely to see diversification as in their best interest while established states are likely to hold close the gold reserves they already own.

US Mint sales for December & the year