(from Canaccord letter)

 Gold demand from western investors and store-of-wealth buyers may have fallen in recent months; however, central bank demand continues to be very robust and this is providing strong support to gold price above the $1,600/oz level. IMF data released this week shows that Mexico added 16.8 metric tonnes of gold valued at about $906.4 million to its reserves in March. While, Russia continued to diversify its foreign exchange reserves and increased its gold reserves by about 16.5 tonnes. Other creditor nations, with large foreign exchange reserves and exposure to the dollar and the  euro, including Turkey and Kazakhstan, also increased their holdings of gold according to the IMF data. Reuters highlighted that central banks are expanding reserves due to concerns about the dollar, euro, sterling and all fiat currencies. Furthermore, there is an increasing realisation amongst central bankers that gold is a less risky alternative to most paper currencies and a recent survey showed that that majority of central bank reserves managers were favourable towards gold. As for the 800-pound gorilla in the room, the IMF data shows the People's Bank of China's (PBoC) gold reserves remained unchanged at 33.88 million ounces. However, Reuters stated that this seems hard to believe and it remains likely that China is again quietly accumulating gold reserves and the PBOC will announce a material increase in their reserves when they are ready to do so.