122 Tonnes of Gold Secretly Repatriated to Netherlands
The
Dutch central bank said Friday it is repatriating some of its gold
reserves from the U.S., making it the latest central bank in Europe to
address public concerns about the safety of its gold in the wake of the
eurozone debt crisis.
As
the debate regarding whether or not Switzerland should keep the bulk of
its gold reserves at home on Swiss soil reaches it's climax - the
referendum takes place on Sunday - it is telling that the Dutch
announced on Friday that they have just secretly repatriated 122 tonnes
of their sovereign gold reserves from New York back to Amsterdam.
The
gold, worth $5 billion at today's prices, represents 20% of the
Netherlands total reserves. It now keeps 31% of its reserves in
Amsterdam. Another 31% is believed to be in New York, with the remainder
spread between Ottawa and London - the same locations where the bulk of
Swiss gold is purported to be stored.
The
trend towards gold repatriation began with Hugo Chavez bringing
Venezuelan gold back to Caracas in 2011. It has been followed by
similar moves by other large gold owning nations and central banks,
most notably, Germany.
The
repatriation movement has been driven by suspicion that the Federal
Reserve and other central banks may have leased or sold gold it was
holding on behalf of other countries to bullion banks and that this gold
may have been used in order to suppress the price of gold in recent
years.
Bizarrely, the Federal Reserve’s gold holdings have not been audited in over 50 years.
The
last audit, and the last public visit, was in 1953, just after U.S.
President Dwight Eisenhower took office. No outside experts were allowed
during that audit, and the audit team tested only about 5% of gold
there. So, there hasn’t been a comprehensive audit of Fort Knox in over
60 years.
Demands
for gold repatriation also accelerated after the Lehman collapse and
during the global financial crisis due to concerns that if the U.S. and
world suffered a systemic collapse or a dollar crisis , nations may find
it hard to secure their gold reserves.
The
concern was that a desperate Fed could nationalise international gold
reserves in order to prevent a dollar collapse or to rebuild confidence
in the dollar after a currency crisis.
It
is interesting to note that while some western economists, such as Paul
Krugman, continue to denigrate gold, western central banks, do not
appear to view gold as a "barbarous relic." Nor do their eastern
counterparts and their Chinese counterparts many of whom have been
quietly reducing their dollar, euro and pound foreign exchange reserves
and adding to their gold reserves in recent years.
The
Dutch Central Bank went so far as to state that the action was designed
to install public confidence in the ability of the central bank to
manage crises. The prospect of further shipments from the U.S. remains
open as they are keeping the logistical details secret.
Questions
are already being asked about how the Dutch were able to repatriate
such a sizeable volume of gold when Germany's request was brushed aside.
It may be that by taking a discreet approach the Dutch allowed the
Federal Reserve room to manoeuvre - allowing them to harvest the metal
from the open market. Skeptical analysts have suggested that the fall in
the ETF gold holdings may have come in handy for the New York Federal
Reserve.
Questions
are also being asked about the faith of the Ukrainian gold reserves
after the gold disappeared from the Ukraine’s central bank soon after
the U.S. sponsored coup brought the new government to power.
The
Dutch clearly view gold favourably as an important monetary asset and
they also have demonstrated their belief that owning gold in a secure
manner is of utmost importance.
Although
the German Central Bank has stated that it trusts the Americans as
custodians of it's gold reserves - despite being denied access to vaults
in New York to view their own gold - the campaign for repatriation of
Germany’s gold remains strong.
Whether
the Swiss gold initiative passes or fails this weekend it is still
worth noting that a very large minority of Swiss are very conscious of
the role that gold plays particularly in times of crisis.
During
the reformation in Europe it was in these three countries - Germany,
Switzerland and the Netherlands - that independent thought flourished.
Populations globally have been “dumbed down” in recent years but these
nations still have a high level of public discourse and debate and the
importance of prudence, saving, thrift and gold remains understood by
many.
We
believe that other central banks may have already quietly sought or
indeed will seek repatriation of their gold from New York, Ottawa and
London. This has the potential to create a short squeeze as central
banks may be forced to enter the market to acquire the physical bullion
that they thought they already owned.
If
these custodians are not in possession of the gold they claim to hold
they, too, will be forced to buy gold on the open market where supply is
now extremely tight as seen in gold remaining in backwardation.
We believe, like the Dutch, that only gold bullion in your possession or allocated gold stored in secure locations such as Singapore, Hong Kong and Zurich can be viewed as a safe-haven asset.
MARKET UPDATE
Today’s AM fix was USD 1,196.00, EUR 964.67 and GBP 764.51 per ounce.
Friday’s AM fix was USD 1,193.25, EUR 958.59 and GBP 761.54 per ounce.
Friday’s AM fix was USD 1,193.25, EUR 958.59 and GBP 761.54 per ounce.
Gold prices were
1% higher last week. Gold and silver rose to three week highs Friday
after China cut benchmark interest rates to support economic growth,
leading to demand for precious metals as a store of value.
Gold in USD - 5 Days (Thomson Reuters)
China's
rate cut on Friday aligns them with the European Central Bank and Bank
of Japan in deploying fresh stimulus and QE as ultra loose monetary
policies continue globally.
Russia added to gold reserves in October, bringing holdings to the highest in at least two decades, IMF data showed last week and as announced by the Russian central bank governor (see here).
Russia added to gold reserves in October, bringing holdings to the highest in at least two decades, IMF data showed last week and as announced by the Russian central bank governor (see here).
Gold
has climbed 6% after touching a four-year low on November 7 amid
increased demand for coins and jewelry, combined with signs that nations
are boosting reserves. Central banks may raise purchases by as much as
22 percent in 2014, the World Gold Council estimates.
Gold in USD - 2 Years (Thomson Reuters)
The
net-long position in gold rose by 21,634 contracts to 60,307 futures
and options in the week ended November 18, according to U.S. Commodity
Futures Trading Commission (CFTC) data published three days later. Short
wagers fell to 65,405 contracts, the least since September 9.
Gold
rose 70% from December 2008 to June 2011 as central banks increased
quantitative easing on a massive scale and currencies internationally
were debased. The precious metal fell 28% in 2013, the most in three
decades, after sharp and severe selling in the futures market, often
during less liquid markets overnight in Asia, led to price falls.
Switzerland
holds its referendum on the Swiss Gold Initiative this Sunday (Nov.
30). If passed it would to require the Swiss National Bank to hold at
least 20% of its assets in gold, up from about 8%.
Opinion
polls suggest the no side will win but many opinion polls have been
badly wrong in recent years. Voter discontent with the political
establishment is likely to make the referendum tighter than is expected.
A yes vote would surprise the market and lead to fireworks in the gold
market Sunday night, Monday and next week.
********
Courtesy of http://www.goldcore.com/
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