Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Gold Seeker Weekly Wrap-Up: Gold and Silver Close with Modest Losses but Miners Gain on the Week
By: Chris Mullen, Gold Seeker Report

Ira Epstein's Metals Video 11 24 2017
By: Ira Epstein

Life Under Manipulation
By: Theodore Butler

Legendary investor names his top junior resource stock picks right now
By: Peter Spina, President, CEO of GoldSeek.com & SilverSeek.com

Silver Miners’ Q3’17 Fundamentals
By: Adam Hamilton, CPA

Deflation must be embraced
By: Alasdair Macleod

Gold’s 47-Year Bull Market
By: Steven Saville

Taxes, Macro Signals, Seasonality, US Stocks and Gold Miners
By: Gary Tanashian

The Key to Profitably Ending Precious Metals Price Suppression And Other Markets Manipulation!
By: Deepcaster

The Precious Metals Bears' Fear of Fridays
By: Dimitri Speck

 
Search

GoldSeek Web

 
Renewed use of gold swaps by BIS indicates strain on price suppression

By: Robert Lambourne

 -- Published: Sunday, 28 August 2016 | Print  | Disqus 

Recent disclosures in the monthly statement of accounts published by the Bank for International Settlements indicate the bank's renewed use of a substantial quantity of gold swaps.

The annual report of the BIS for its financial year ended March 31, 2010, disclosed that 346 tonnes of gold were acquired through gold swaps from commercial bullion banks. A review of the previous use of gold derivatives by the BIS reveled that the transactions in 2009-10 were far more substantial than anything done in the bank's recent history.

Yet in an article published in the Financial Times on July 29, 2010, BIS General Manager Jaime Caruana said the gold swaps were "regular commercial activities" for the bank. Here is a link to the FT article, which requires a subscription to access:

http://www.ft.com/cms/s/0/3e659ed0-9b39-11df-baaf-00144feab49a.html

Here are excerpts from the article:

"Some analysts speculated that the swap deals were a surreptitious bailout of the European banking system ahead of last week's publication of stress tests. But bankers and officials have described the transactions as 'mutually beneficial.' ...

"'The client approached us with the idea of buying some gold with the option to sell it back,' said one European banker, referring to the BIS.

"Another banker said: 'From time to time central banks or the BIS want to optimize the return on their currency holdings.'"

It is notable that none of these comments in the FT article focused on the gold market itself but implicitly accepted that gold was being used as collateral to support dollar loans to commercial banks.

An alternative explanation -- that the swap transactions were initiated by the BIS to place more unallocated gold into the hands of certain central banks -- seemed plausible, since the gold market was tight at the time.

The use of gold swaps by the BIS increased in the financial year ended March 31, 2011, with 409 tonnes of gold swaps reported by the bank. This was the peak amount reported by the bank:

2011: 409 tonnes.
2012: 355 tonnes.
2013: 404 tonnes.
2014: 236 tonnes.
2015: 47 tonnes.
2016: 0 tonnes.

As the table makes clear, the use of gold swaps by the BIS had reduced considerably leading to March 2016, when use of gold swaps stopped.

It is an interesting coincidence that the BIS has renewed its use of gold swaps just when gold market conditions again are considered tight, as they were in 2010 and 2011.

This link accesses the July 2016 statement of account by the BIS:

https://www.bis.org/banking/balsheet/statofacc160731.pdf

From the published information it is not possible to calculate an exact amount of gold swapped, in part because the BIS has probably continued its recent policy of selling a few tonnes of its own gold each year. The bank's gold holdings have fallen from 120 tonnes in 2010 to 104 tonnes in 2016.

But it appears that the swapped by the BIS is in the range of 225 to 230 tonnes as of the end of July.

No doubt the BIS will comment at some point on its renewed use of gold swaps. But to those who consider the suppression of gold prices by central banks to be obvious, this is another sign that strain on the suppression scheme is growing.

-----

Robert Lambourne is a business executive in the United Kingdom and a consultant to GATA.

* * *

Join GATA here:

New Orleans Investment Conference
Wednesday-Saturday, October 26-29, 2016
Hilton New Orleans Riverside
New Orleans, Louisiana
http://neworleansconference.com/wp-content/uploads/2016/08/2016_Powell.h...

Help GATA by purchasing DVDs of GATA's London conference in August 2011 or GATA's Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://tinyurl.com/zr4tjuc

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16


| Digg This Article
 -- Published: Sunday, 28 August 2016 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2017



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.