The switch from central bank gold sales to purchases had a big impact on the gold market. Precious metals investors fail to realize that central banks sold a staggering amount of gold into the market up until 2009. It's also quite interesting that central banks became net purchasers after the 2008 market meltdown.

There's been a lot of speculation as to why the central banks decided to liquidate a portion of their gold holdings, but what we do know is that the amount equaled less than half of the United States supposed gold reserves were sold into the market from 2002-2009Furthermore, Official Gold sales took place right at the very same time the Gold ETF market took off. From 2002 to 2009, nearly 1,800 metric tons (mt) of gold went into Gold ETFs, which accounted for 52% of central bank gold sales during that period.

According to the data from the World Gold Council, in just eight years, central banks sold 3,425 mt of gold, or a massive 110 million oz (Moz) of gold into the market.To get an idea just how much gold this was, from 2002-2008 (the majority of sales), central Banks supplied roughly 20% of global mine supply. That is a heck of a lot of gold.

To put it another way, 110 Moz is more than the total current 93 Moz of global, transparent gold holdings, including depositories, mutual funds, and ETFs. Moreover, central banks sold nearly four times the gold that is “supposedly” in the SPDR's GLD ETF (28 Moz). So, it seems that a lot of the public's gold went into private hands.

Regardless, the chart below shows the central bank net gold purchases from 2002 to 2017:

As we can see, central bank sales of 110 Moz (2002-2009) switched to purchases of 118 Moz (2010-2017). Thus, the net change on the gold market over this 16-year period was a stunning 228 Moz. We must remember, the market enjoyed an extra supply of 110 Moz from 2002 to 2009, but this became the demand of 118 Moz during the next 8-year period.