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Gold price steadies and rises as BIS intervention diminishes

Section: Documentation

By Robert Lambourne
Wednesday, October 17, 2018

The Bank for International Settlements has just published its September statement of account, giving summary information on its use of gold swaps and other gold-related derivatives in that month:

The information provided in BIS monthly statements is not sufficient to calculate a precise amount of gold-related derivatives, including swaps, but the bank's total estimated exposure as of September 30, 2018, was about 238 tonnes of gold, compared with about 370 tonnes at August 31, 2018, and about 485 tonnes as of July 31, 2018.

Thus there have been two straight months of substantial declines in the BIS' largely surreptitious intervention in the gold market -- a reduction of about 115 tonnes in August and another 132 tonnes in September.

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As the BIS' intervention in the gold market has diminished steadily since July 31, the gold price has ended a multi-year decline, leveled out at $1,200, and has begun to rise:

The BIS refuses to answer questions about what it is doing, why, and for whom in the gold market:

But it is evident that the bank, acting as broker for its member central banks, continues to trade actively in gold swaps.

The BIS' declining involvement in gold swaps contrasts sharply not only with the steadying and rising gold price but also with the approximately 193-tonne increase in central bank gold holdings reported in the first half of 2018 and with the recent increase of 28.4 tonnes in gold reserves reported by the Hungarian central bank:


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.

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