TheLonger Term Implications of Basel III (January 2013) - Gold's Triumphant Return?

I recall an episode of the old Barney Miller TV show where they captured a criminal who said he was from the future and Sgt. Harris found out that zinc was the most valuable element on Earth in the future. So he called his broker and bought 2 tons at $40 per ton, just in case...

It seemed as relevant as some of the old statistics, so I thought I would share this insight.

 

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Bank of Korea boosts Au reserves 24% in 1 month (well, they didn't have much before: ranked #36)
http://www.bloomberg.com/news/2013-03-05/bank-of-korea-boosts-gold-reserves-as-central-banks-buy.html

I think it's interesting that a major CB added significantly (20 metric tonnes) when Gold was under $1650. To my thinking, this represents a kind of floor of institutional demand: POG 1550-1700 and CBs add ~20%.

For retail Au holders decisively looking for signals to add to their stash, this suggests disciplined BUYING at the towards Low-End breakpoints, dollar-cost averaging such dips:

POG under 1600, cautiously incremental (1-2% portfolio assets > Au bullion)
POG under 1500, moderately shifting (3-4% portfolio assets > Au bullion)
POG under 1400, assertively reallocating (4-6% portfolio assets > Au bullion)

These future price-targets may not be met and Au hasn't been at/below 1400 since Late February 2011, two years ago.

I don't presume to know what overall PM allocation suits anyone's risk-tolerance but following the CBs gold-hoarding cannot be called 'wild &reckless.' It's a conservative, value-buying discipline and methodical focus.

Bear in mind, the overall %age of PMs in a CBs "portfolio" may be very small... but they can always print money & we cannot. Bullion is the hedge against depreciating (more & more) Paper, a prudent alternative and diversification in times like these.

As unallocated Gold becomes more costly, the 'balance sheet Gold' will start disappearing? Hmmmm...
http://www.thenational.ae/thenation...conomics/rising-demand-for-dubais-gold-vaults

 

I just bought about 1500 dollars worth, so I'm betting that we have hit a point and it will start to go up again. I may have jumped the gun, but it's done now and I hope it does. Whenever I buy the price generally goes down, so don't follow me. We'll see...