Now you have some fundamental intelligence (see below) pertaining to the timing for gold’s launch back into a fully recognized bull phase at which time it will challenge $419.70 and $430.30 on its way to and above $480.
Assuming this major Swiss bank is correct, that date is likely between May 8th and May12th which in effect will be the last train out of the station. That time period is when the new Bank of Japan reserve statement comes out.
According to this news sent to the bank's super rich private clients, it will be known that the Bank of Japan has been a significant buyer of gold. This bank would not print and distribute a comment like this over their European private wire systems unless they believed deeply in the veracity of their information. Now you know why COT is trying so hard for a grandstand play to reverse their short positions. Are you falling for it? Your advisors certainly are. Then the fat lady has sung.
Major Intel for the Community from the private wire system of a Major Swiss Bank
12:17 GMT. (global56) Analysis Alert (global36)
Bank of Japan bought Gold in April. Policy contacts tell us that the BOJ is starting to diversify away from US dollars and bought gold and euros in April. A warning delivered to us by other policy contacts as early as February.
We believe BOJ purchases of gold will appear in April BOJ reserves. Figures due to be released in the May 6-12th window.
Currently the BOJ holds 24.6 million ounces of gold and last increased its gold holding by 50,000 ounces in May 2001.
Typically huge purchases of dollars over the past two years means that as a % of total reserves Asian central bank holdings of gold are dramatically lower than those of central bank counterparts in the rest of the world. For example, Japan's gold holding is just 1.3% of total reserves versus 45% to 55% seen among the likes of Germany, France, Italy and the US.
We calculate if Asian banks were to shift to a 5% weighting it would be worth about USD$55 billions. Sources tell us that the there has been buying of euros, as part of the diversification process.
When we visited one of the European Central Banks the trading desk let it be known that the BOJ knows how to buy euros. It would seem to us that the BOJ is willing to sell dollars during the current bid environment.
What is important is the actual size of these transactions, which no doubt will be significant. More important than even that is the fact that the world's largest reserve manager is risking a process of diversification away from the US dollar.
News of the Bank of Japan gold purchases should add to the view that Asian nations are now more tolerant of their currency strength versus the US dollar. Moreover, it will raise a question about the level of US government bond yields and if the Bank of Japan can be counted on for any more significant dollar support.
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