Supply from newly mined gold production has increased over 10 years by 35.3% from 1,733 tons to 2,346 tons and last year, while demand for gold for jewelry has moved more than 110% from 1,334 tons to 2,807 tons last year. That seems simple enough, Supply 2,346 tons, Demand 2,807 tons. I went to public school and I can still figure out the 461 ton difference. But consider I said demand for gold for jewelry. When you throw in demand from other sources the gap grows to 944 tons short! Itmakes that British sale of 125 tons seem like a drop in the proverbial bucket. Central bank sales make sense if you consider the motive. Keep gold prices down. In fact gold from official sales has contributed an average of 213 tons a year over the past 10 years. Recently however Central banks are pulling out the stops. In 1996 they sold 239 tons, or 21% of the shortfall between demand and production. You see its really quite simple, as long as the annual demand for gold exceeds the production level, the price must rise or be offset by existing supplies. For the past eight years this gap has been filled by central bank sales. Compare the total 2,100 tons over the past 10 years, to the 6,900 tons that have been bought by Asian countries in the same period. Isn’t it curious that the media rarely focus on the official sector buying of Gold Fields Mineral Services of South Africa reported a total of 19 central bank buyers to 16 sellers and of the 16 official sellers only five actually sold more than 10% of their holdings. Outside of the gold reserves of the US, the European Union and Switzerland, only nine banks in the world hold in excess of 155 tons of gold. China and Russia, among the nine, were both net buyers of gold last year. Russia has specifically indicated an intention to increase gold holdings. Venezuela is prohibited by law from selling its gold. The profile of those with 150 tons and more simply does not look like a that of massive sellers. European gold reserves are likely to remain in central bank hands at least for the foreseeable period. The issue of central bank sales is yet another of the many issues which have inhabited the Gold is on sale. better buy now!