Four key observations from the Deutsche Bank report on the Swiss Gold Initiative

Section:

7p ET Sunday, November 16, 2014

Dear Friend of GATA and Gold:

A full copy of last week's Deutsche Bank report on the Swiss Gold Initiative, provided by GATA consultant R.M., conveys these four major points:

1) Any gold purchases made by the Swiss National Bank pursuant to approval of the initiative in the referendum on November 30 are unlikely to have much impact on the gold market because the purchases would be small and made over time and because they likely would be accomplished outside the gold market and through central banks, which are always trading gold among themselves. (Secretly, of course, to facilitate their market interventions.)

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2) The Swiss National Bank could evade the intent of the initiative by moving its reserves into a sovereign wealth fund, thereby diminishing the need for purchasing gold; by the bank's obtaining only gold derivatives rather than gold itself; or, more likely, by "window dressing," by the bank's obtaining gold only overnight at monthly reporting periods, using "gold swaps," which could be quickly reversed until the next reporting period.

(In an interview published today, the chairman of the Swiss National Bank said its creation of a sovereign wealth fund was "unthinkable" and that "the SNB cannot simply use some tricks to circumvent the will of the people. I rule that out categorically." See: http://www.gata.org/node/14733.)

3) "It is unknown," the Deutsche Bank report says, "to what extent the major central banks engage in gold swap and repo transactions, since official statistics no longer disaggregate these."

That is, the actual location and disposition of government gold reserves are secrets far more sensitive than the location and disposition of nuclear weapons, since, as was confirmed in the secret March 1999 report of the staff of the International Monetary Fund to the IMF's Board of Directors, gold reserves are frequently used by central banks for all sorts of market rigging --

http://www.gata.org/node/12016

-- while nuclear weapons are extremely unlikely ever to be used.

4) The delay in the German Bundesbank's repatriation of its gold reserves from the United States likely has been caused not by any logistical problem but rather by "diplomatic difficulties."

The Deutsche Bank report is posted at GATA's Internet site here:

http://www.gata.org/files/DeutscheBankSwissGoldReferendum-11-14-2014.pdf

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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