I received a very complimentary e-mail from a friend who said that she enjoys this blog and finds my arguments well stated. I appreciate that, but think the time has come for me to throw a little cold water on the proceedings by introducing the guys on the other side — the Central Banks.

That Central Banks hate gold can hardly be disputed. While they are spewing out their staggering piles of so-called money, gold just sits there, as it always has, immortal, immutable and, like the Central Banks’ opinion of gold, unprintable. While the quantity of their unbacked fiat paper crap (my words, not theirs) grows and grows, the amount of gold on this little blue planet stays pretty much the same.

The problem for gold bugs like me, however, is that whatever the Central Banks may think of gold, they own a lot of it. I mean a LOT of it. The six Central Banks with the largest holdings own over 20,000 metric tons of gold. Let’s say that a bit differently. They own over twenty million kilos of gold. Let’s do that one more time. They own over twelve billion ounces of gold (give or take).

That certainly gives one pause. One of the things they could do with it is sell it and that wouldn’t exactly drive the gold price up, to put it mildly. That “overhang,” as it is generally known, of Central Bank gold is scary for any gold bull. And it should be.

The topic of Central Bank gold sales has an interesting history some of which I will deal with in later posts. But for now, before anyone becomes too enthusiastic, be afraid. Be very afraid. The guys on the other side have plenty of ammunition.

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