Koos Jansen
BullionStar Blogs
Koos Jansen
Posted on 25 Feb 2015 by

Austria Expresses Concern Over Their Gold At BOE

Yesterday the Austrian Court of Audit (Der Rechnungshof) released a report on the Austrian central bank’s official gold reserves audits (Austria holds in total 280.0 metric tonnes). This report contains (official) critical notes regarding the safekeeping of the Austrian gold.

The report is written in German, but from being Dutch (my native language is similar to German), using Google Translate, having spoken to Peter Boehringer about this and using the English introduction from the Rechnungshof’s report, we can squeeze the essential bullion points from the report.

I will sum up the highlights. Let’s start with a quote from the English introduction:

In end-2013, the OeNB (central bank of the Republic of Austria) stored some 82 % of its physical gold holdings at a depository in England [BOE] and therefore ran a high concentration risk. The current depository concept lacked adequate measures to reduce this risk. Additionally, the gold depository contract with the depository in England contained deficiencies. As regards the gold reserves stored abroad, internal auditing measures were lacking. 

The Austrian Court of Audit expresses great concern about the disproportionate amount of official gold reserves (229.6 tonnes) stored at the Bank Of England (BOE), which will be the Austrians excuse for repatriating, “the gold depository contract with the depository in England contained deficiencies” and, “gold reserves stored abroad, internal auditing measures were lacking”. They’re putting it blunt for an official source on a topic so sensitive as gold.


The OeNB didn’t have any proper auditing rights or access to their own gold at the BOE until 2013. This is line with what Bundesbank executive board member Carl-Ludwig Thiele said in 2011, “We’re in negotiations with our partner central banks [FRBNY] to develop auditing rights.” Apparently, foreign central banks had no rights whatsoever to audit their own gold at the BOE or Federal Reserve Bank of New York (FRBNY) until 2013.

Though it hasn’t been only imprudent policy from the BOE; between 2009 and 2013 there had been no audit protocol for the Austrian gold by the OeNB itself. From the February 24, 2015, report

The OeNB had no appropriate concept to perform audits of its gold reserves. … The lack of audit measures represented a gap in the internal control procedures of the OeNB. The OeNB started in March 2014 with the development of an ​​audit program, which included all the gold holdings of the OeNB.

In May 2014, for the first time, a delegation from the Austrian accountability office travelled to London in order to check on Austria’s gold reserves stored in vaults at the BOE.

Strikingly the Bundesbank’s current gold repatriation schedule was released January 16, 2013. The Austrian central bank decided on January 17, 2013, to “adopt measures … in terms of the management of gold stocks … that should reduce the risk of asset losses of the OeNB”. Repatriating gold is highly contagious at the moment.

After Germany received its first gold bars from the US in 2013, the Dutch central bank surprised the world on November 21, 2014, by stating they had successfully repatriated 122.5 tonnes from New York (which according to me was planned long before), on December 5, 2014, the Belgian central bank announced they were investigating to repatriate their gold reserves, followed by the Austrians on December 12, when newswire Der Standard stated:

…In Austria, the Court of Auditors has adopted the gold concept in its recent OeNB examination. In its draft report it provides the OeNB diverse recommendations. One of the key points: Given the “risk of a high concentration at the Bank of England”, the examiner advises to “rapidly evaluate all possibilities of a better dispersion of the storage locations”. Not only the parties should be diversified, but also the “actual spread of storing among locations”.

Gold Relocation Possible

The central bank has not ruled out such a relocation. The existing gold storage concept would be reviewed, potentially it will bring parts of the stored gold in the UK to Austria, OeNB experts have stated. Any changes will be decided upon security and economic criteria, according to the OeNB.

A brief orientation on the current gold concept: Austria has 280 tonnes of official gold reserves, only a small part of (17 %) is kept in Vienna. 80 % of the reserves are located in London, the most trading partner in gold, 3% percent is stored in Switzerland.

What more can we learn from the latest report from the Austrian Court of Auditors. Quite a lot, apparently the OeNB has been allocating gold and unwinding leases at a rapid pace since 2009. Have the Austrians been preparing repatriating a few years ago? Just like the Dutch? From the report February 24, 2015:

The composition of the gold holdings of the OeNB in the years 2009 to 2013 changed greatly. The proportion of non-physical inventory fell from 56% in 2009 to approx. 22% in 2013. 

Currently all gold loans ran out no later than September 24, 2014.

In the report there is a table of all gold holding compositions from 2009 to 2013. Here’s my best translation:

Austria official gold reserves 2009 - 2013

We can see Gold loans dropped from 116.451 tonnes in 2009 to 23.887 in 2013, down 79.49 %. Total non-physical holdings dropped from 156.589 tonnes in 2009 to 61.671 in 2013, down 60.62 %. Austria has unwounded all leases and is working towards being fully allocated.

If I compare these numbers with previous research I did on the gold holdings of the Austrian central banks, the similarities are not hard to find. It seems the Austrian Court of Auditors has labeled unallocated gold as non-physical, which is probably the best way of putting it, as unallocated gold represent a claim on gold, though the holder does not own specified bullion. From the LBMA:

UNALLOCATED ACCOUNT An account where specific bars are not set aside and the customer has a general entitlement to the metal. … The holder is an unsecured creditor. 

The next chart demonstrates the composition of Austrians allocated versus unallocated gold. We can see that by end 2013 unallocated gold accounted for 61.68 tonnes, the same as the total non-physical holdings in the chart above.

Austria official gold reserves allocated vs unallocated ratio

This chart reaches to December 2014, when Austria only had 15.58 tonnes of unallocated gold versus 264.41 tonnes allocated – nearly fully allocated.

There is more information in the report that I don’t feel comfortable publishing as I haven’t discussed it with a native German speaker. 

The Eurosystem

Austria’s allocation policy has been the main reason the Eurosystem’s total unallocated gold dropped to from 232 tonnes in 2013 to 183 tonnes by the end of 2014 (France and Malta also helped).

Eurosystem Official Gold Reserves Allocation, December 2014Reuters released an article on February 24, stating the Eurozone has increased its gold holdings by 7.437 tonnes to 10,791.885 tonnes in January 2015. I can’t verify this from the numbers I have. Perhaps it has got something to do with Lithuania joining the Eurosystem on January 1, 2015, though Lithuania holds only 5.8 tonnes (fully allocated). The article also notes Turkey has decreased its official holdings, though this is due to changes in Reserve Requirements commercial banks hold at the Turkish central bank (CBRT), not because the CBRT is trading on the open market – read this post for more details on the Turkish gold market.   

Currently Germany, Estonia, Ireland, Greece, Italy, Cyprus, Latvia, Luxembourg, The Netherlands, Slovakia and Finland are fully allocated.


Eurosystem Official Gold Reserves Allocation December 2014

Koos Jansen
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  • Sabre Sbr

    The line in the ledger “Gold Loans Commercial Banks” is disturbing. Exactly why are CBs loaning gold to commercial banks?

    • KoosJansen


      • jj

        When following the gold flows has anyone been able to account for all the recently repatriated “stolen” gold from places like Egypt (75 tons) Libya (116 tons) Iraq (90 tons) Ukraine (42 tons) ?

      • Sabre Sbr

        why would anyone lease gold to collect interest of far less than 1% when the risk of getting the gold back is legitimate. This is the whole concept of the carry trade, which is nonsense in a zirp world. There is no carry left. There is 3T in debt with negative yields.

        You don’t lease gold out to have it sold into the market so the banks can get a high yield instrument when the associated debt is zero, unless they are chasing high yield which makes risk go exponential.

        • jwr_47

          @sabre: in fractional banking you may lease a 1 ounce piece (market value: 1200$) and sell it 100x, or if you risk some more even 1000x. Each of these (paper) gold ounces may be sold for 1200$, which results in a profit of say 99×1200, respectively 999×1200$.Of course the “physical” gold will have to remain in the bankers’ vault, where it is worth 100x up to 1000x its market value. This is a very positive yield and there is no risk as long as buyers are satisfied with paper gold certificates.

  • Guy Christopher

    Koos, please hire a food taster. We cannot afford to lose you!

    • KoosJansen

      I rather save Ronan Manly 😉

  • jwr_47

    Koos: did you also read 22% of Austria’s Gold Is Missing From The Bank Of England.
    or is this the topic you don’t feel comfortable publishing as I haven’t discussed it with a native German speaker?
    -> http://thedailycoin.org/?p=19933#sthash.K63rxBz9.dpbs
    It is also referenced in Zerohedge

    Don’t feel obliged to dig into this matter if you feel uncomfortable.
    It probably describes leased out gold, but I do not understand who gave permission to lease the gold…

    • KoosJansen

      Read my reply to BB bitte

      • jwr_47

        Thank you for your analysis.

        • Peter_Boehringer

          Full agreement w/ Koos. But pls read my comment, too (above).

  • B.

    If currency deposited at a bank simply creates unsecured creditors, then does gold hypothecated to a bank with a forward lease arrangement reflect a similar risk? Is this why the repatriation game is going exponential? With GOFO no longer being reported, I think some folks are becoming very concerned. Austria is just the most recent to demonstrate this concern. I expect more repatriation demands. What about you, Koos?

  • DameEdnasPossum

    And in other news: 10 major banks face scrutiny over pricing of precious metals: WSJ

    Yet despite stories like these in the past 24 hrs, Au price has broken through it’s key 1200 support.

    In a real market, major stories such as these would have exerted upward pressure on the price of precious metals.

    What does it take?!?!!??

    I’m going back to bed…wake me when Putin announces that the Ruble has returned to the Gold Standard and China announces it is sitting on 30,000 tonnes of phyzz soon after followed by a collapse in the USD and bankers hanging from lamp-posts and swinging in the wind.

  • Dress

    What kind of idiot puts his gold into an allocated account? They don’t deserve any better!

  • http://www.bullionbaron.com/ Bullion Baron

    Koos, I’d also be interested in your view on the “22% of Gold missing” narrative. Reading your explanation above it seems that the OeNB was responsible for changing from non-allocated/leased to allocated. Is there any indication of who the OeNB had their unallocated account with? Ronan recently linked me to this speech which says that the BoE only deals with allocated Gold:

    “At all times in our custody service the customer retains ownership of the gold bar and they retain ownership of the specific gold bar. Specific gold bars are allocated to specific customers.” http://www.lbma.org.uk/assets/Speeches/Hunt%2020130930.pdf

    This seems to conflict with The Daily Coin account that suggests that the BoE was responsible for both the unallocated/leased and allocated Gold… your view?

    • KoosJansen

      Peter wrote a German post on this http://www.goldseitenblog.com/peter_boehringer/index.php/2015/02/24/unsaegliche-aber-typische-zustaende-beim and then called me to discuss the content. He didn’t have the time to write something in English, coz he’s writing a book.

      I guess some took the number 22 of Peter’s post (unallocated/ “non-physical” at the end of 2013) as the gold is gone. Typical sensation blogging / copy-paste blogging.

      Re the BOE; they also store gold for the LBMA, of course they hold gold that is in a pool of unallocated accounts. The book entry trading is likely the OTC London Bullion Market, that’s not all allocated.

      Funny, this guy’s whole presentation is about “digging out gold bars”.

      • Peter_Boehringer

        “I guess some took the number 22 of Peter’s post (unallocated/ “non-physical” at the end of 2013) as the gold is gone. Typical sensation blogging / copy-paste Blogging.”
        => Yes, this seems exactly what happened here. You cannot just Google-translate an (my) article from German to English – get crappy results, then put a sensationalistic headline and expect some reasonable article to come out…
        => Austria´s gold is of course not “gone” – not even 22%. And I had never written this in my German language article. It is however notable, that the Bank of Austria now had to disclose that 22% of their gold had been leased out in 2013 (which is not exactly surprising given cb´s behaviour for decades – but this time it is an official admission which we rarely get).
        => Actually, in 2009, Austria CB had leased out more than 56% of its Gold; but as public pressure re this matter grew, they had to bring this down to (they say) 0% as of Sep 2014.
        => If true, it is a result of our public pressure. Citizens / gold owners all over the world don´t WANT their Gold to be leased out. And yes, I would agree that leased out gold is “gone” – but just temporarily. One can and should END the leasing asap – which seems what happened in Austria as of 2010 through 2014. As all CBs – we did however not get any proof. We need far better AUDITING at the CB´s vaults! Working in that, too…

        => What IS indeed remarkable is the strong criticism against Austria´s CB by their “own” Austrian Auditing Office. Whilst I believe the Austrian Office to be “controlled opposition” – their wording is very still strong and their findings DEVASTATING for Austrian´s CB´s reputation. In the German language original text, the Auditing Office literally SLAP Austria CB in the face – basically stating “officially”:
        “You did not care about Austria´s Gold at the BoE AT ALL for many years!”
        => Only (!) public pressure can bring transparency and responsibility to the CBs!
        Thanks Koos for your work – which is not mere Google translating.
        Peter (Boehringer) for
        “Repatriate our Gold (Germany)”

        • KoosJansen

          Thanks Peter, for coming out and telling the English speaking public your angle on Austria.

          I tried to write a balanced report so the readers can fill in what’s happening for themselves. ie Maybe before 2013 the OeNB didn’t want proper audits because they had so much on lease. Now, because of public pressure, it’s being revealed.

  • Dimitri Ledkovsky

    Possession is 9/10 of the law. I wouldn’t leave a post-1964 dime at Rothschild Central.

  • Matt Lusk

    Citizens owning gold coins is the best dispersion for safety.

  • BaronGreenback_1

    Get your physicial Gold while you can,as when the music stops lot of people are going to be left with nothing.

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  • Victor Hargis

    thanks Koos for highlight this issue !

    commercial collections

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