"Why do we have gold?" he asked, before citing economic security, the capacity to deal with unexpected events, adding confidence to paper currencies, and risk diversification. Pretty much the same advantages were named by a French central bank at the start of this decade...and France then went on to sell Gold from its vaults, cutting its holdings by one-sixth to 2,500 tonnes. But Hervé Hannoun spoke after gold had been falling for almost two decades. Whereas Paul Mercier spoke this week after 10 years of gold beating everything else – a period, as he noted, which also saw "the largest-ever reduction in official holdings, a reduction of 3,700 tonnes."

Take it as the ultimate contrarian "sell" if you wish. But given what everyone I spoke to thinks is the fate of the Dollar (let alone Sterling...or Euros), M.Mercier's carefully-phrased forecast looks a safe bet.

And as for Asia's growing private demand...

BullionVault has noted before that China's Household Demand for Gold has doubled as a percentage of its ever-growing annual savings over the last 10 years. In full-year 2008, basis World Bank estimates and GFMS data, gold swelled to equal 1.8% of saved household incomes.

But looking at Phillip Klapwijk's chart above, as John Reade suggested in his summing up, there's plenty of scope for further growth yet. China's gold demand has lagged behind the platinum-group metals – which are more in line with its share of global demand for base metals and concrete.

So China's private market is hardly deluged with gold at this stage. And that's with or without the People's Bank nabbing part II of those IMF sales.

Courtesy: www.bullionvault.com

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