- Gold holdings at Bank of England called into question!
by Alasdair Macleod, via http://www.resourceinvestor.com/
Last week I wrote about the mess the Bundesbank has found itself in over its gold bullion. But they are not alone: The Dutch, Austrian, Mexican and now even the Swedish central banks are also coming under public pressure to explain themselves and to repatriate their gold.
The question that is central to the blind trust placed by central banks in the Bank of England and the Federal Reserve Board is whether or not this trust has been abused. There appear to be no audits; lessees have sold unrecorded gold into the markets; and there is evidence of outright sales using gold swaps and sight accounts (a sight account does not require physical gold to back it). With this in mind, we can make a stab at quantifying the deception (if it exists), starting with the table below (see top of post).
The table assumes that China, Russia and the other Asian states within their sphere of influence hold no gold in London or New York, because their actions are diametrically opposed to attempts to keep a lid on the price. Furthermore, they have very different geopolitical priorities, ruling out any trust-based monetary relationships with the West. Venezuela took her gold back last year. Otherwise it is assumed all central banks operate within the normal central banking framework.
Our objective is to establish whether the 5,738 tonnes of gold held by the Bank of England is reasonable. The figures in the table include the gold custody figures reported by the Bank of England in its last Annual Report, IMF-reported holdings of individual countries and the Federal Reserve Board’s International Summary Statistics (Page 3 for earmarked gold). The unknowns are broadly three: