Official buying under the metal gives the miners their leverage

Central banks have become steady buyers of gold, adding to reserves in a way that does not chase prices or sell into weakness. A buyer like that changes the floor under the metal, and the miners get the benefit with leverage.

A buyer with a different motive

Most gold demand is price-sensitive: jewellery buyers pull back when it is expensive, investors sell when momentum fades. Official buyers are diversifying reserves over years, and they tend to buy dips rather than sell them. That dampens the downside.

For miners, a firmer floor under the metal means more stable margins, and stable margins are what let the operational leverage work in their favour.

What I'm watching

• Official sector purchases reported through the year
• The gold price against real yields, the traditional driver
• Miner cost discipline, which decides how much of the price reaches shareholders

Where I stand

Long, on a floor supported by buyers who are not trading the price. The miners are the geared way to hold that view.

What would change my mind

Official buying slowing sharply. The floor rests on that demand, and without it gold goes back to trading on real yields alone.