Source: Financial Times                             Date: 21 September, 2011

For the first time in nearly a quarter of a century, European central banks have become net buyers of gold. Current economic perils have revolutionized the bullion market, said the source. Gold is a chief export in Mongolia and the widespread interest in gold has effected firms such as Ivanhoe Mines to put more emphasis on gold production.Although purchases are small relative to the global gold market, they are huge compared to a history of heavy selling by European central banks. Their role in the market will be a prominent topic for debate at the annual London Bullion Market Association conference, the gold industry's largest conference. European central banks have added more than 25,000 ounces to their reserves, reported the International Monetary Fund (IMF).
“We're going back to a time when gold is seen very much as money,” said Jonathan Spall, director of precious metals sales at Barclays Capital. “It has been a complete reversal of the attitudes we saw during the 1990s.”The switch from buying to selling by nations such as Switzerland has driven gold prices more than 25 percent higher thus far. Spot gold hit a record of USD 1,920 per ounce this month. Central banks around the world are ready to buy more gold this year than ever since the collapse of the Breton Woods system when the U.S. dollars followed the price of gold 40 years ago.The shift from U.S. dollar reserves to gold comes as some politicians in Europe call for debt-ridden members of the European Union such as Portugal, Spain, or Italy to be forced to sell their gold reserves to reduce debt. However, despite record highs, gold prices would make only a marginal effect on debt, while possibly exacerbating investor concerns about the EU.