They're not that great at EURCHF either

It doesn’t seem to have hit the web yet - aside from this Dow Jones reprint on Morningstar’s website - but a survey of central bank reserve managers has found that the world’s central banks turned net buyers of gold in 2010, after twenty solid years of being net sellers of the barbarous relic. Quoth:

Sovereign fears have also increased the attractiveness of gold as a reserve asset. Gold’s quality as a store of value and fears over reserve currencies are the main reasons that central banks turned net buyers of gold in 2010 for the first time in 20 years, accounting for 74% of reserve managers’ responses.

[…] “Concerns over sovereign risk, rebalancing of portfolios and inflation fears mean that central banks will continue to be net purchasers of gold,” the RBS-sponsored report said. “This was the view of more than 70% of respondents, responsible for just under $1 trillion in reserves.”

So they were sellers at $300 an ounce, but now they’re buying it a thousand dollars higher. The obvious question, then: are central banks the worst gold traders in the world?

(They can’t be much worse than AngloGold, though. Anglo sold millions of ounces for hedging at an average rate below $450, then bought it all back late last year at around the $1300 mark.)

**Update: **here’s a very relevant working paper from the IMF: _Procyclicality in Central Bank Reserve Management: Evidence from the Crisis. _From the summary:

A decade-long diversification of official reserves into riskier investments came to an abrupt end at the beginning of the global financial crisis, when many central bank reserve managers started to withdraw their deposits from the banking sector in an apparent flight to quality and safety. We estimate that reserve managers pulled around US$500 billion of deposits and other investments from the banking sector.

And history repeats.