Robert Lambourne: BIS gold swaps and derivatives at highest point since February

Section:

By Robert Lambourne
Tuesday, December 17, 2019

In the past two months the Bank for International Settlements, which represents most central banks in the world, has nearly doubled its gold swaps and derivatives position, the bank's October and November statements of account show:

https://www.bis.org/banking/balsheet/statofacc191031.pdf

https://www.bis.org/banking/balsheet/statofacc191130.pdf

The BIS uses gold swaps and other gold derivatives to gain access to gold held by commercial banks. As of November 30 the bank's swaps and derivatives, estimated at 250 tonnes, were at their highest level since February. But the recent levels are still much reduced compared compared to those of the second half of 2018.


ADVERTISEMENT

Buy metals at GoldMoney and enjoy international storage

GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, ­taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit:

http://www.goldmoney.com/?gmrefcode=gata



There is not enough information in the BIS' monthly reports to calculate the exact amount of swaps, but based on the information in the bank's statement for November, its month-end gold swaps of about 250 tonnes compare with 186 tonnes at October 31, 128 tonnes at September 30, 162 tonnes at August 31, 95 tonnes at July 31, 126 tonnes at June 30, 78 tonnes at May 31, 88 tonnes at April 30, 175 tonnes at March 31, 303 tonnes at February 28, 247 tonnes at January 31, 275 tonnes at December 31, 2018, and 308 tonnes in November, 372 tonnes in October, 238 tonnes in September, and 370 tonnes in August 2018.

More background on the bank's medium-term history of using gold swaps is available here:

http://www.gata.org/node/18825

On February 3 this year GATA published comments from a former gold industry executive describing the activities of the BIS in gold swaps in earlier decades:

http://www.gata.org/node/18828

The former executive wrote: "Effectively this process created a supply of 'paper gold' -- sometimes but not always marked to market -- that had a depressing effect on the gold price."

The BIS refuses to explain its activity in the gold market -- its objectives and underlying parties in interest --

http://www.gata.org/node/17793

-- and mainstream financial news organizations refuse to ask about it.

-----

Robert Lambourne is a retired business executive in the United Kingdom who consults with GATA about the involvement of the Bank for International Settlements in the gold market.

* * *

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