Central Banks Operating in Stealth at the Heart of the London Gold Market
- Central Banks Operating in Stealth at the Heart of the London Gold Market
by Ronan Manly, https://www.bullionstar.com/
While many people will be familiar with the term ‘London Gold Market’, most will have little knowledge about its inner workings, especially when it comes to how, and to what extent, the world’s central banks trade and lend gold in London through the Bank of England and the LBMA bullion banks.
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And that’s the way they like to keep it. Never in the history of financial markets has there been a trading venue that has been more opaque, more secretive, and more impenetrable than the London Gold Market. Especially when it comes to central bank gold operations.
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That the London Gold Market (meaning the wholesale market) is controlled by a cabal of LBMA bullion banks is widely known, but what’s not so well understood is that within the core of this haze sits the Bank of England, overseeing, coordinating and facilitating the central banks of the world to conduct their gold transactions, including the ultra-secretive gold lending and gold swap transactions. It was for this reason that the famous ‘Another’ said that:
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“If you are searching for facts you will find them, but the items you find will not be true! Did you think that the high-powered world of the LBMA would operate in a fishbowl for all to see?
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We cannot take what is on the outside as evidence for what is on the inside. To find the answer work with inside assumptions and extrapolate them to the outside!”
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In this quote, ‘Another’ was specifically talking about central banks, for he continued:
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“Think now:
Would the world’s central banks really have kept gold this long if they only valued it at it’s ongoing commodity price?”
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The Bank of England, The BIS, and The LBMA
Why I highlight this here is that last week an unusual and surprising article was published by Bloomberg titled “Bank of England gold commands high premium, signals Central Bank buying”.
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The article, quoting anonymous ‘bullion traders’, claimed that gold bars stored in the Bank of England’s gold vaults in London had, during May, been selling ‘for unusually high premiums’ of between 30 – 40 US cents per troy ounce, and as high as 50 US cents, when usually these premiums would, according to Bloomberg, be between 0 – 20 US cents. The premiums on the BoE gold, said Bloomberg sources, had also diverged on the upside compared to premiums on similar gold bars held in commercial vaults in London, such as the JP Morgan vault in the City of London (which is under Carmelite St / John Carpenter St near Inner Temple).
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read more.
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