You are here

Renewed use of gold swaps by BIS indicates strain on price suppression

Section: Documentation

By Robert Lambourne
Sunday, September 18, 2016

This link provides the Bank for International Settlements' August 2016 statement of account:

This statement shows an even greater holding of gold by the BIS than was reported in July, presumably in the bank's gold banking business.

For the reasons explained below, from the BIS' monthly statements of account it is possible only to estimate the amount of gold swaps being used by the bank, but 325 tonnes seems a reasonable estimate of the gold swaps entered by the BIS during the five months since March 31, 2016.

* * *

By Robert Lambourne
Saturday, August 27, 2016

Recent disclosures in the monthly statement of accounts published by the Bank for International Settlements indicate the bank's renewed use of a substantial quantity of gold swaps.

The annual report of the BIS for its financial year ended March 31, 2010, disclosed that 346 tonnes of gold were acquired through gold swaps from commercial bullion banks. A review of the previous use of gold derivatives by the BIS reveled that the transactions in 2009-10 were far more substantial than anything done in the bank's recent history.

... Dispatch continues below ...


Direct Ownership and Storage of Precious Metals
Outside the Banking System in Zurich and Singapore is a precious metals investment company that enables investors to own and store gold directly in their own name (no mutualized ownership) in Zurich and Singapore.

Goldbroker's clients are not exposed to any counterparty risks. They own gold and silver in their own names (the ownership certificate cites the name of the investor and serial number of his bars) and they have storage accounts opened in their own name as well. So's storage partner knows the exact identity of each investor. doesn't store in the name of its clients; rather, Goldbroker's clients store personally. All investors have direct access to their gold and silver bars. was launched in 2011 so that investors would avoid any counterparty risk when investing in physical gold and silver. is listed among GATA's recommended monetary metals dealers:

To invest or learn more, please visit:

Yet in an article published in the Financial Times on July 29, 2010, BIS General Manager Jaime Caruana said the gold swaps were "regular commercial activities" for the bank. Here is a link to the FT article, which requires a subscription to access:

Here are excerpts from the article:

"Some analysts speculated that the swap deals were a surreptitious bailout of the European banking system ahead of last week's publication of stress tests. But bankers and officials have described the transactions as 'mutually beneficial.' ...

"'The client approached us with the idea of buying some gold with the option to sell it back,' said one European banker, referring to the BIS.

"Another banker said: 'From time to time central banks or the BIS want to optimize the return on their currency holdings.'"

It is notable that none of these comments in the FT article focused on the gold market itself but implicitly accepted that gold was being used as collateral to support dollar loans to commercial banks.

An alternative explanation -- that the swap transactions were initiated by the BIS to place more unallocated gold into the hands of certain central banks -- seemed plausible, since the gold market was tight at the time.

The use of gold swaps by the BIS increased in the financial year ended March 31, 2011, with 409 tonnes of gold swaps reported by the bank. This was the peak amount reported by the bank:

2011: 409 tonnes.
2012: 355 tonnes.
2013: 404 tonnes.
2014: 236 tonnes.
2015: 47 tonnes.
2016: 0 tonnes.

As the table makes clear, the use of gold swaps by the BIS had reduced considerably leading to March 2016, when use of gold swaps stopped.

It is an interesting coincidence that the BIS has renewed its use of gold swaps just when gold market conditions again are considered tight, as they were in 2010 and 2011.

This link accesses the July 2016 statement of account by the BIS:

From the published information it is not possible to calculate an exact amount of gold swapped, in part because the BIS has probably continued its recent policy of selling a few tonnes of its own gold each year. The bank's gold holdings have fallen from 120 tonnes in 2010 to 104 tonnes in 2016.

But it appears that the swapped by the BIS is in the range of 225 to 230 tonnes as of the end of July.

No doubt the BIS will comment at some point on its renewed use of gold swaps. But to those who consider the suppression of gold prices by central banks to be obvious, this is another sign that strain on the suppression scheme is growing.


Robert Lambourne is a business executive in the United Kingdom and a consultant to GATA.

* * *

Join GATA here:

New Orleans Investment Conference
Wednesday-Saturday, October 26-29, 2016
Hilton New Orleans Riverside
New Orleans, Louisiana

Help GATA by purchasing DVDs of GATA's London conference in August 2011 or GATA's Dawson City conference in August 2006:

Or by purchasing a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

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:

To contribute to GATA, please visit: