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Friday, 7th August 2009 (3200 views)

The renewal of the Central Bank Gold Agreement (CBGA) shows the continued importance of the precious metal as an investment, according to the chief executive of the World Gold Council (WGC).

Aram Shishmanian commented that the announcement is a "clear endorsement" of the role gold plays in the current financial and economic markets and is "a reflection of the success of the previous Central Bank Gold Agreements".

Under the new agreement, the sale of gold over the five-year period will be limited to 2,000 tonnes, which Mr Shishmanian said demonstrates the "necessary hedge and protection that central banks are seeking".

According to the WGC, central banks' demand for sales has been reduced - and is reflected in a reduction in the annual cap on sales of 500 tonnes per year to 400 tonnes.

Room has been created under the agreed cap to incorporate the International Monetary Fund's (IMF's) proposed sale of 403t of its gold reserves, which the WGC said demonstrates a willingness to assist the IMF in compliance with the Crockett Report.

 

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