What It Means When Central Banks Buy Gold

South Korea's central bank, the Bank of Korea, bought 25 tonnes of gold at a value of $1.24 billion during the last two months. This is one of many examples of how central banks these days a lot more often buys gold rather than selling it in the past. In hindsight it would have of course have been a lot smarter to buy in the past and sell now rather than the other way around (Gordon Brown's infamous gold sale when gold was at $250 per ounce won't exactly go down in history as a wise move), but that doesn't necessarily mean that it is wrong to buy now.