The decline in the price of gold from the peak levels in August 2011 of the $1,900 range to the current $1,200s has had a huge impact on the balance sheets of central banks. They are big holders (and some have been big buyers over the last decade - India and China in particular) of gold. The Federal Reserve is the largest holder of gold and has seen the value of its gold holdings decline by well over a hundred billion dollars (assuming it still holds all 8,134 tonnes of its gold).

Central Banks and governments around the world may be getting tempted to sell their hoards and get some cash for the gold. They all must be aware of the stigma that Gordon Brown and the British establishment faced when it sold its 400 tonnes of gold reserves between a price of $256 and $296 an ounce during the 1999 - 2002 period. This ended up being the bottom in the price of gold, which then went up for the following decade.

Is there another sucker waiting to dump their gold? Or maybe it's not a sucker, but an astute central banker. Time will tell.

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