Tag Archives: Federal Reserve Bank of New York

BullionStar quoted in Wall Street Journal article on New York Fed Gold

On August 10, the Wall Street Journal (WSJ) published an article about the Federal Reserve Bank of New York (FRBNY) custody gold and the NY Fed’s gold vault. This vault is located under the New York Fed’s headquarters at 33 Liberty in Manhattan, New York City.

The article, titled “The Fed Has 6,200 Tons of Gold in a Manhattan Basement – Or Does It?”, can be read on the subscription only WSJ site here, but is also viewable in full on both the Fox News Business and MorningStar websites, here and here. It also appeared on the front page of the Wall Street Journal print edition on Friday, August 11.

Wall Street Journal article about the NY Fed stored gold
Wall Street Journal article about the NY Fed stored gold, August 10 2017

The NY Fed offers a ‘custody gold’ storage service to its customers, customers which are exclusively foreign central banks and international financial institutions, except notably, the US Treasury is also a gold storage customer of the NY Fed. The Fed’s gold vault, which is on level E (the lowest level) of its basement area under its downtown Manhattan headquarters, open in 1924, and has been providing a gold storage service for foreign central banks since at least the mid-1920s. Custody gold means that the NY Fed stores the gold on behalf of its customers in the role of custodian, and the gold is supposed to be stored on an allocated and segregate basis, i.e. “Earmarked gold”.

NY Fed stored gold has risen in public consciousness over the last few years arguably because of recent Bundesbank gold repatriation operations from New York as well as also similar gold repatriation from the central bank of the Netherlands. The moves by the Chinese and Russian central banks to actively increasing their gold reserves have also put focus on whether the large traditional central bank / official sector gold holders (such as Germany, Italy and the International Monetary Fund) have all the gold that they claim to have, much of which is supposedly stored at the NY Fed vault.

The main theme of the August 10 WSJ piece, as per the title, is whether the NY Fed actually stores all the gold in the vault that its claims to store, a theme which it introduced as follows:

“Eighty feet below the streets of lower Manhattan, a Federal Reserve vault protected by armed guards contains about 6,200 tons of gold.

Or doesn’t.”

Front Page - Wall street Journal, August 10, 2017
Front Page – Wall street Journal, August 11, 2017: Fed gold article bottom of page

The WSJ article intersperses a number of facts about this custody gold alongside various quotes, and while I cannot speak for anyone else quoted in the article, the quotes could probably best be described as being on the sceptical side of the NY Fed’s official claims.

Since I am quoted in the article, it seems appropriate to cover it here on the BullionStar website. The relevant section is as follows:

‘But “no one at all can be sure the gold is really there except Fed employees with access,” said Ronan Manly, a precious-metals analyst at gold dealer BullionStar in Singapore. If it is all there, he said, the central bank has “never in its history provided any proof.”

Mr. Manly is among gold aficionados who wonder if the bank is hiding something about what it’s hiding.’


Extract from Wall Street Journal article on NY Fed stored gold, August 10
Extract from Wall Street Journal article on NY Fed stored gold, August 10

Let me begin by explaining the basis of my quote.

The only reporting which the New York Fed engages in for the custody gold recorded as being held on behalf of its customers (central banks and official sector organizations) is a single number communicated each month (with a 1 month lag) on Federal Reserve table 3.13 – “Selected Foreign Official Assets Held at Federal Reserve Banks” and listed as “Earmarked Gold”.

See the following link, line item 4 for the latest reporting date of July 2017: https://www.federalreserve.gov/econresdata/releases/intlsumm/forassets20170731.htm

As of the end of July 2017, the Fed reported that it was holding $7.84 billion of “Earmarked Gold” in foreign and international accounts. This amount is a valuation at the official US Treasury / Fed price of gold of US $42.22 per fine troy ounce, and which works out at approximately 5775 tonnes of gold.

Federal Reserve reported Foreign accounts stored gold – Earmarked Gold, July 2017. Source: www.goldchartsrus.com
The reason that this figure differs from the ~6200 tonnes number quoted by the Wall Street Journal is that it doesn’t include 416 tonnes of US treasury gold also claimed to be stored in the NY fed vaults. When the US Treasury claimed quantity is added, the figure comes to 6191 tonnes, hence the WSJ citation of circa 6200 tonnes.

NY Fed Gold – Opacity and Secrecy

Other than that, the Federal Reserve does not publicly communicate any other relevant information or details about the quantity of custody gold bars said to be stored in its vault, and furthermore, the Fed has never in its history publicly communicated any such relevant details or information.

So it is a fact that the Federal Reserve has “never in its history provided any proof” that all the gold it claims is there is really there, hence the quote is factual, and hence the connected quote that “no one at all can be sure the gold is really there except Fed employees with access” is a valid conclusion also.

I have done a lot of in-depth research into the NY Fed gold vault and its customer base, for example, see my articles “The Keys to the Gold Vaults at the New York Fed – Part 1“, and “The Keys to the Gold Vaults at the New York Fed – Part 2: The Auxiliary Vault“, and “The Keys to the Gold Vaults at the New York Fed – Part 3: ‘Coin Bars’, ‘Melts’ and the Bundesbank“, so I have made my conclusion based on that research.

The NY Fed has never provided any of the following:

– details of the names of the central banks and international financial institutions that it claims to hold gold on behalf of

– details of how much gold is held by each customer

– details of whether any of the gold stored in the vault is under lien, claim encumbrance or other title

– details of whether any of the custody gold is lent or swapped

– details of location swaps and / or purity swaps of gold bars between the NY Fed vaults and other central bank or commercial bank vaults around the world

– details of the fact that nearly all of the gold bars supposedly held in the NY Fed vault are a combination of old US Assay office gold bars and low grade coin bars made from melted coins

The NY fed has never allowed the conduct of any independent physical gold bar audits or published any results of its own audits. It has never published any gold bar weights lists (note one weight list for some US Treasury gold bars stored at the NY Fed vault made it into the public domain in 2011 as part of documentation that was submitted to a ‘Investigate the US Gold’ hearing in front of the US House of Representatives Committee on Financial Services. That weight list starts on page 132 of the pdf which can be accessed here.

Mainstream Media Cheerleaders and Detractors

The lack of transparency of the New York Fed as regards the custody gold that it stores for its central bank customers is therefore a valid point. The Wall Street Journal article of August 10 is merely highlighting this valid point. However, predictably this did not stop some mainstream US media critics from denouncing the WSJ article such as can be seen in the following tweet from a POLITICO ‘chief economic correspondent‘.

I would wager that this Ben White chap has never asked the New York Fed any serious questions about its custody gold, preferring instead to throw around tweets using accusatory language such as ‘lunatics’. But this sort of reaction is par for the course from elements of the cheerleading US mainstream media, who seem to feel an obligation to protect the Fed and the status quo of the incumbent central bank led financial system from any valid criticism.

However, I have asked the NY Fed serious questions about its custody gold.

On February 15 this year, I asked the Central Bank and International Account Services (CBIAS) unit of the Fed’s Markets group to confirm the following:

– the number of central banks and official sector institutions that have gold in storage with the NY Fed in Manhattan.

– the identities of these central banks / official sector institutions that have gold in storage.

– could FRBNY CBIAS / Account Relations provide me with gold bar weight lists for the gold holdings that these central banks and official sector institutions hold with the NY Fed?

As the first query went unanswered, I then resubmitted the query a month later in mid-March. On neither occasion did the Fed respond or acknowledge the request. Realistically, I didn’t expect the NY Fed to answer, since they have track record of being aloof and unanswerable to anyone but their own stakeholders, however, the outcome of the emails has established that the NY Fed does not engage on this issue nor provide any transparency in this area to the public.


I had expected the WSJ article to be a lot longer and more in-depth than it actually was, and to obtain some publishable response from the NY Fed. The WSJ however says in the article that:

“The Fed declined to comment”

The lack of any quotation by the Fed within the WSJ article is a glaring omission, and actually proves the complete lack of cooperation by the Fed on the entire topic of gold bar storage. The WSJ article does say that it filed Freedom of Information (FOIA) Requests with the NY Fed, which again underscores that without FOIAs, the Fed wouldn’t voluntarily reveal anything.

What these Freedom of Information requests actually contained is not, however, even revealed by the WSJ, except hilariously in one passing reference to “a heavily redacted tour guide manual“. Hilarious in the sense that the NY Fed would even see fit to heavily redact a simple tour-guide manual. To quote the WSJ:

‘The Wall Street Journal filed Freedom-of-Information requests with the New York Fed. Among the Journal’s findings, from a heavily redacted tour-guide manual provided by the Fed: Tour guides are informed that “visitors are excitable” and should be asked to “please keep their voices down.”‘

Why doesn’t the Wall Street Journal do a full publication of all the NY Fed FOIA responses that it received and publish them on its website? This at least would be some sort of backup evidence to the published article.

There are a multitude of angles that the Wall Street Journal could cover if it wanted to do a proper investigation into the gold bars supposedly stored in the NY Fed vault below 33 Liberty on Manhattan Island.

For example:

Why did the German Bundesbank take multiple years to transfer back a small portion of the gold that it claimed to have held at the NY Fed vaults, with much of that gold having to be recast / remelted into new bars en route to Frankfurt in Germany. If the gold was allocated and segregated to the Bundesbank account at the NYFed, there would have been no reason for the multi-year transfer delays and no reason to need to melt down and recast any gold bars.

Why did low-grade coin bars start turning up in the NY Fed vaults from 1968 onwards? The only place they could have come from is Fort Knox in Kentucky. The fact that these low-grade coin bars had to be used suggests there was not enough high-grade gold bars (995 US assay office Good Delivery gold bars) to satisfy central bank customer requirements at the NY Fed vault at that times. Some of these coins bars were over time shifted out of the NY Fed vaults and refined into high-grade bars and sent to the Bank of England in London. How much coin bar gold is still in the NY Fed vault.

For the 3 largest claimed gold holders at the NY Fed, which are the Banca d’Italia, the Bundesbank and the International Monetary Fund, and which between supposedly hold at least 4000 tonnes of gold at the NY Fed, there is no way to validate the accuracy of any of these holdings, neither from IMF, Bundesbank or Banca d’Italia sources, nor from the NY Fed. These gold holdings have, on paper, not changed since the early 1970s, but thats over 40 years ago and there is no way to check the accuracy of these 3 holdings which make up the lions share of all the gold supposedly held at the NYFed.

Why is there a tunnel between the NY Fed level E basement gold vault to the Chase Manhattan Plaza level B5 basement gold vault across the street? i.e. Why is a central bank vault linked to a commercial vault run by a commercial bank (JP Morgan Chase)?

Does, or has the JP Morgan / Chase in the past, facilitated the activation of NY Fed stored central bank gold into the commercial gold market via movements of gold bars from 33 Liberty to Chase Manhattan Plaza vaults?

Why is there no mention in the Wall Street Journal article of the NY Fed’s Auxiliary vault which was built in 1963 and its location, and which supposedly stores gold bars in a “wall of gold”. Was this not newsworthy?

Why did the 2004 version of the NY Fed gold vault brochure ‘The Key to the Gold Vault’ state that gold bars “belonging to some 60 foreign central banks and international monetary organizations” were stored at the NY Fed vault, and then the 2008 version of the same brochure had changed this statement to gold “belonging to some 36 foreign governments, central banks and official international organizations”.

Why the drop from 60 customers to 36 customers. I have heard from a very reliable senior ex-NY Fed executive that some central banks were unhappy to keep their gold in Manhattan in the aftermath of 9/11 and wanted it stored elsewhere. You wouldn’t blame then given what happened to the Scotia gold vaults under the WTC 4 on 9/11.

Why does the NY Fed decline to comment for a Wall Street Journal article? Surely this should ring alarm bells at the Wall Street Journal?

A Chink of Light into London’s Gold Vaults?

On 5 February, the Financial Times of London (FT) featured a story revealing that the London Bullion Market Association (LBMA) plans to begin publishing data on the amount of real physical gold actually stored in the London precious metals vaulting network. The article titled “London gold traders to open vaults in transparency push” can be read here (accessible via FT subscription or via free monthly FT read limit).

This new LBMA ‘monthly vault data’ will, according to the FT’s sources, be published on a three-month lagged basis, and will:

show gold bars held by the BoE, the gold clearing banks, and those [vaults] operated by the security companies such as Brink’s, which are also members of the LBMA.”

The shadowy source quoted in the FT article is attributed to “a person involved in setting up the programme”, but at the same time, although “the move [to publish the data] is being led by the LBMA“, the same LBMA ”declined to comment” for the FT story. This then has all the hallmarks of a typical authorised leak to the media so as to prepare the wider market for the data release.

On 16 February, the World Gold Council in its “Gold Investor, February 2017″ publication featured a focus box on the same gold vault topic in its “In the News” section on page 4, where it states:

“Enhanced transparency from the Bank of England

The Bank of England is, for the first time, publishing monthly data revealing the amount of gold it holds on behalf of other central banks.

 As a leading custodian of gold, with one of the largest vaults in the world, the Bank of England’s decision is highly significant. Not only will it enhance the transparency of the Bank’s own gold operations; it will also support the drive towards greater transparency across the gold market.

The data reveals the total weight of gold held within the Bank of England’s vaults and includes five years of historical data.”

The Proposed Data

Based on these two announcements, it therefore looks like the gold vault data release will be a combined effort between the LBMA and the Bank of England, the blood brothers of the London Gold Market, with the Bank of England data being a subset of the overall LBMA data. While neither of the above pieces mention a release date for the first set of data, I understand that it will be this quarter, i.e. sometime before the end of March. On a 3 month lagged basis, the first lot of data would therefore probably cover month-end December 2016, because that would be a logical place to start the current dataset, rather than, for example, November 2016.

While the Bank of England data looks set to cover a 5 year historical period, there is no indication (from the FT article) that the wider LBMA vault data will do likewise. From the sparse information in the FT article, the LBMA data will “show gold bars held“. Does it mean number of gold bars, or combined weight of gold bars? What exactly it means, we will have to wait and see.

The Bank of England data will capture “total weight of gold held“. Notice that in the above World Gold Council piece it also states that the data will cover the amount of gold that the Bank of England “holds on behalf of other central banks.” There is no mention of the amount of gold that the Bank of England holds on behalf of commercial bullion banks.

Overall, this doesn’t exactly sound like it is “enhancing the transparency of the Bank’s own gold operations” as the World Gold Council puts it. Far from it. Enhancing the transparency of the Bank of England’s gold operations would require something along the lines of the following:

  • Identities of all central banks and official sector institutions (ECB / IMF / BIS / World Bank) holding active gold accounts at the Bank of England. Active gold accounts meaning non-zero balances
  • Identities of all commercial / bullion banks holding active gold accounts at the Bank of England
  • A percentage breakdown between the central bank gold held in the Bank of England vaults and the bullion bank gold held in the Bank of England vaults
  • An indicator for each gold account as to whether it is a set-aside earmarked custody account or whether it is a fine troy ounce balance account
  • Information for each central bank and official sector institution as to whether any of “its” gold is lent, swapped or repo’d
  • Information for the bullion bank gold accounts as to whether the gold recorded in those accounts is borrowed, sourced from swaps, sourced from repos, or otherwise held as collateral for loans
  • Information on the gold accounts of the 5 LPMCL clearing banks showing how much gold each of these institutions holds each month and whether the Bank of England supplies physical gold clearing balances to these banks
  • Information on when and how often the London-based gold-backed ETFs store gold at the Bank of England, not just using the Bank of England as sub-custodian, but also storage in their own names, i.e. does HSBC store gold in its own name at the Bank of England which is used to supply gold to the SPDR Gold Trust
  • Information on whether and how often the Bank of England intervenes into the London Gold Market and the LBMA Gold Price auctions so as to supply gold in price smoothing and price stabilisation operations in the way that the Bank of England’s Terry Smeeton seems to have been intervening into the London Gold Market in the 1980s
  • Information on the BIS gold holding and gold transactions settlements accounts at the Bank of England and the client sub-account  details and central bank identities for these accounts
  • Information on gold location swaps between gold account holders at the Bank of England and gold accounts at the Federal Reserve Bank of New York, the Banque de France, and the Swiss National Bank, and BIS accounts in those locations
  • Gold for oil swaps and oil for gold swaps

Anything less is just not cricket and does not constitute transparency.

And its important to remember that any publication of gold vault data by the LBMA and Bank of England is not being done because the LBMA suddenly felt guilty, or suddenly had an epiphany on the road to Damascus, but, as the FT correctly points out:

“the LBMA, whose members include HSBC and JPMorgan, hopes to head off the challenge and persuade regulators that banks trading bullion should not have to face more onerous funding requirements.”

Bank of England

The Current Data

As a reminder, there is currently no official direct data published on the quantity of real physical gold bars held within the London gold vaulting system. This vaulting system comprises the vaults of eight vault operators (see below for list).

Once a year in its annual report, the Bank of England provides a Sterling (GBP) value of gold held by its gold custody customers, while the LBMA website states a relatively static total figure of “approximately 6,500 tonnes of gold held in London vaults” that it claims are in the vaults in its network. But beyond these figures, there is currently no official visibility into the quantity of London Good Delivery gold bars held in the London vaults. There are, various ways of estimating London gold vault data using the Bank of England annual figure and the LBMA figure together with Exchange Traded Fund gold holdings and central bank divulged gold holdings at the Bank of England.

These approaches have been documented in BullionStar articles “Central bank gold at the Bank of England” and “How many Good Delivery gold bars are in all the London Vaults?….including the Bank of England vaults“, both from September 2015, and more recently “Tracking the gold held in London: An update on ETF and BoE holdings” from September 2016.

The September 2015 estimates calculated that there were 6,256 tonnes of gold in total in the London vaults, with 5,134 tonnes at the Bank of England (as of end February 2015), and 1,122 tonnes in London “not at the Bank of England“, all of which was accounted for by gold-backed ETFs which store their gold in London. These calculations implied that there was nearly zero gold stored in London outside the Bank of England that was not accounted for by ETF holdings.

The “Tracking the gold held in London” estimates from September 2016 used a figure of 6,500 tonnes of gold in total in the London vaults, and showed that there were 4,725 tonnes inside the Bank of England vaults, of which about 3,800 tonnes was known to be held by central banks (and probably a lot of the remainder was held by central banks also) and that there were 1,775 tonnes of gold outside the Bank of England. The article also calculated that there were 1,679 tonnes of gold in the gold backed ETFs that store their gold in London, so again, there was very little gold in the London vault network that was not accounted for by ETFs and central bank gold.


The Vaults of London

Overall, there are 8 vault operators for gold within the LBMA vaulting network. These 8 vault operators are as follows:

  • The Bank of England
  • HSBC Bank plc
  • JP Morgan Chase
  • ICBC Standard Bank Plc
  • Brink’s Limited
  • Malca-Amit Commodities Ltd
  • G4S Cash Solutions (UK) Limited
  • Loomis International (UK) Ltd

HSBC, JP Morgan and ICBC Standard are 3 of the London Gold Market’s clearing banks that form the private company London Precious Metals Clearing Limited (LPMCL). The other two member of LPMCL are Scotia Mocatta and UBS. Brink’s, Malca-Amit, G4S and Loomis are the aforementioned security companies. The LBMA website lists these operators, alongside their headquarters addresses.

Bizarrely, the FT article still parrots the LBMA’s spoon-fed line that the vaults are “in secret locations within the M25 orbital motorway”. But this is far from the truth. Many of the London vault locations are in the public domain as has been covered, for example, on this website, and the FT knows this:

JP Morgan: https://www.bullionstar.com/gold-university/jp-morgan-gold-vault-london

Malca-Amit https://www.bullionstar.com/gold-university/malca-amit-london-gold-vault

G4S: https://www.bullionstar.com/gold-university/g4s-london-gold-vault

And perhaps HSBC: https://www.bullionstar.com/gold-university/hsbc-gold-vault-london

G4S location https://www.bullionstar.com/blogs/ronan-manly/g4s-london-gold-vault-2-0-icbc-standard-bank-in-deutsche-bank-out

Malca-Amit location https://www.bullionstar.com/blogs/ronan-manly/gold-vaults-london-malca-amit

HSBC possible location https://www.bullionstar.com/blogs/ronan-manly/hsbcs-london-gold-vault

And obviously, the Bank of England vaults are where they always have been, under the Bank’s headquarters in the City of London: https://www.bullionstar.com/gold-university/bank-england-gold-vaults

It’s slightly disappointing that we spend time and effort informing the London financial media where some of the London gold vaults are, and then they continue to parrot the LBMA’s misleading “secret locations” line. I put this fake news down to a decision by the FT editors, who presumably have a stake in playing along with this charade so as not to rock the boat with the powerful investment banks that they are beholden to.

The FT also reminds us in its article that “last year a gold vault owned by Barclays, which can house $80bn of bullion, was bought by China’s ICBC Standard Bank.

This Barclays vault in London was built by and is operated by Brink’s, and presumably after being taken over by ICBC Standard, it is still operated by Brink’s. Logistically then, this ICBC Standard vault is most likely within the Brink’s complex, a location which is also in the public domain, and which even hosts an assay office as was previously mentioned here over a year ago. The Barclays vault (operated by Brink’s) is even mentioned in a Brink’s letter to the SEC in February 2014, which can also be seen here -> Brinks letter to SEC February 2014.


Brink’s letter to SEC, February 2014

Given the fact that there are eight sets of vaults in the London vault system (as overseen by various groups affiliated to the LBMA such as the LBMA Physical Committee, the LBMA Vault Managers Working Party,  the gold clearers (London Precious Metals Clearing Limited), and even the LBMA Good Delivery List referees and staff, then one would expect that whatever monthly vault data that the LBMA or its affiliates publishes in the near future, will break out the gold bar holdings and have a distinct line item in the list for each vault operator such as:

  • HSBC – w tonnes
  • JP Morgan – x tonnes
  • ICBC Standard – y tonnes
  • Brink’s – z tonnes



At the LBMA conference in Singapore last October, there was talk that there were moves afoot for the Bank of England to begin publishing data on the custody gold it holds on a more regular basis. It was also mentioned that this data could be extended to include the commercial bank and security carrier vaults but that some of the interested parties were not in favour of the idea (perhaps the representative contingents of the powerful HSBC and JP Morgan). Whatever has happened in the meantime, it looks like some data will now be released in the near future covering all of the participating vaults. What this data will cover only time will tell, but more data than less is always welcome, and these data releases might also help show how near or how far we were with earlier estimates in trying to ascertain how much gold is in the London vaulting system that is not accounted for by ETF holding or central bank holdings.

Revealing the extent of the gold lending market in London is critical though, but this is sure to remain a well-kept secret, since the LBMA bullion banks and the Bank of England will surely not want the general market to have any clue as to which central banks don’t really have any gold while still claiming to have gold (the old gold and gold receivables trick), in other words, that there is serious double counting going on, and that some of the central bank gold has long gone out the door.


European Central Bank gold reserves held across 5 locations. ECB will not disclose Gold Bar List.

The European Central Bank (ECB), creator of the Euro, currently claims to hold 504.8 tonnes of gold reserves. These gold holdings are reflected on the ECB balance sheet and arose from transfers made to the ECB by Euro member national central banks, mainly in January 1999 at the birth of the Euro. As of the end of December 2015, these ECB gold reserves were valued on the ECB balance sheet at market prices and amounted to €15.79 billion. 

The ECB very recently confirmed to BullionStar that its gold reserves are stored across 5 international locations. However, the ECB also confirmed that it does not physically audit its gold, nor will it divulge a bar list / weight list of these gold bar holdings.

Questions and Answers

BullionStar recently put a number of questions to the European Central Bank about the ECB’s gold holdings. The ECB Communications Directorate replied to these questions with answers that appear to include a number of facts about the ECB gold reserves which have not previously been published. The questions put to the ECB and its responses are listed below (underlining added):

Question 1:The 2015 ECB Annual Report states that as at 31 December 2015, the ECB held 16,229,522 ounces of fine gold equivalent to 504.8 tonnes of goldGiven that the ECB gold holdings arose from transfers by the respective member central banks, could you confirm the storage locations in which this ECB gold is currently held (for example at the Bank of England etc), and the percentage breakdown of amount stored per storage location.”

ECB Response:The gold of the ECB is located in London, Paris, Lisbon, New York and Rome. The ECB does not disclose its distribution over these places. The gold of the ECB is stored there because it was already stored there before ownership was transferred to the ECB and moving it was seen and is seen as too costly.

Question 2: “Could you clarify as to how, if at all, this gold is audited, and whether it physical audited by the ECB or by a 3rd party?”

ECB Response:The ECB has no physical audit of its gold bars. The gold bars that the ECB owns are individually identified and each year the ECB receives a detailed statement of these gold deposits. The central banks where the gold is stored are totally reliable.

Question 3: “Finally, can the ECB supply a full weight list of the gold bars that comprise the 504.8 tonnes of gold referred to above?”

ECB Response:The ECB does not disclose this information.


London, New York, Paris, Rome, Lisbon

Given that some of the information shared by the ECB has arguably not been in the public record before, each of the 3 ECB answers above is worth further exploration.

In January 1999, when the Euro currency was created (Stage 3 of Economic and Monetary Union), each founding member national central bank (NCB) of the Euro transferred a quantity of foreign reserve assets to the ECB. Of these transfers, 85% was paid to the ECB in the form of US dollars and Japanese Yen, and 15% was paid to the ECB in the form of physical gold.

Initially in January 1999, central banks of 11 countries that joined the Euro made these transfers to the ECB, and subsequently the central banks of a further 8 countries that later joined the Euro also executed similar transfers to the ECB.

All of the foreign exchange and gold reserves that were transferred to and are owned by the ECB are managed in a decentralised manner by the national central banks that initiated the transfers. Essentially, each national central bank acts as an agent for the ECB and each NCB still manages that portion of reserves that it transferred to the ECB. This also applies to the transferred gold and means that the gold transferred to the ECB never physically moved anywhere, it just stayed where it had been when the transfers of ownership were made.

That is why, as the ECB response to Question 1 states: “The gold of the ECB is stored there because it was already stored there before ownership was transferred to the ECB”.

What is probably most interesting about the latest ECB statement is that it names 5 city locations over which the ECB’s gold is stored. The 5 gold storage locations stated by the ECB are London, New York, Paris, Rome and Lisbon. Since the gold transferred to the ECB in 1999 by the national central banks would have already been stored in central banks gold vaults, these 5 city locations undoubtedly refer to the gold vaults of:

  • the Bank of England
  • the Federal Reserve Bank of New York
  • the Banque de France
  • the Banca d’Italia
  • Banco de Portugal

The fact the ECB’s gold holdings are supposedly stored at these 5 locations can be explained as follows:

Table 1: Central bank FX and Gold transfers to the ECB, January 1999

Between 4th and 7th January 1999, 11 central banks transferred a total of €39.469 billion in reserve assets to the ECB (in the form of gold, cash and securities). Of this total, 15% was in the form of gold, amounting to 24 million ounces of gold (747 tonnes of gold) which was valued at that time at €246.368 per fine ounce of gold, or €5.92 billion. The 85% transferred in the form of currencies comprised 90% US Dollars and 10% Japanese Yen. See pages 152 and 153 of ECB annual report 1999 for more details.

The 11 central banks that made the transfers to the ECB in January 1999 were the central banks of Belgium, Netherlands, Germany, France, Luxembourg, Italy, Ireland, Austria, Finland, Spain and Portugal. See Table 1 for details of these gold transfers, and the amount of gold transferred to ECB ownership by each central bank.

The value of reserves transferred to the ECB by each national central bank were based on a percentage formula called a ‘capital key’ which also determined how much each central bank subscribed to the founding capital of the ECB. This capital key was based on equally weighting the percentage of population and GDP each Euro founding member economy represented, therefore central banks such as Deutsche Bundesbank, Banque de France, and Banca d’Italia comprised the largest transfers, as can be see in Table 1. It also meant that these 3 central banks transferred the largest amounts of gold to the ECB, with the Bundesbank for example transferring 232 tonnes of gold to the ECB.

The Bundesbank gold transfer to the ECB in January 1999 took place at the Bank of England. The Bundesbank actually confirmed in its own published gold holdings spreadsheet that this transfer took place at the Bank of England. See spreadsheet Column 5 (BoE tonnes), Rows 1998 and 1999, where the Bundesbank gold holdings fell by 332 tonnes between 1998 and 1999 from 1,521 tonnes to 1,189 tonnes and also see Column 20 where gold lending rose from 149 tonnes to 249 tonnes. Therefore, between 1998 and 1999, 232 tonnes of gold was transferred from the Bundesbank gold account at the bank of England to the ECB account at the Bank of England, and 100 tonnes was added to the Bundesbank’s gold loans.

Paris and Rome

The Banque de France currently stores the majority (over 90%) of its gold reserves in its own vaults in Paris, so it it realistic to assume that when the Banque de France transferred 159 tonnes of gold to the ECB in January 1999, it did so using gold stored in the Banque de France vaults in Paris. Likewise, it is realistic to assume that the Banca d’Italia, which currently stores half of its gold reserves at its own vaults in Rome, transferred 141 gold stored in its Rome vaults to the ECB in 1999. This would explain the Paris and Rome gold holdings of the ECB. While a few ex French colony central banks are known to have historically stored gold with the Banque de France in Paris, none of the founding members of the Euro (apart from the Bundesbank) are on the record as having stored gold in Paris, at least not for a long time. The Banca d’Italia is not known for storing gold on behalf of other national central banks.

Lisbon and New York

The Banco de Portugal currently holds its gold reserves in Lisbon and also at the Bank of England, the Federal Reserve Bank of New York (FRBNY), and with the BIS. The ECB gold stored in Lisbon, Portugal most likely refers to the 18.2 tonnes of gold transferred by the Banco de Portugal to the ECB in January 1999, because a) that makes most sense, and b) the Banco de Portugal is not known as a contemporary gold custodian for other central banks.

Of the other 7 central banks that transferred gold to the ECB in January 1999, the central banks of Austria, Belgium and Ireland store most of their gold at the Bank of England so are the most likely candidates to have made gold transfers to the ECB at the Bank of England. See BullionStar blog “Central bank gold at the Bank of England” for more details of where central banks are known to store gold.

The Netherlands and Finland currently store some of their gold reserves at the Bank of England and at the Federal Reserve Bank of New York and probably also did so in 1998/99, so one or both of these banks could have made transfers to the ECB at the FRBNY. Another contender for transferring gold held at the FRBNY is the Spanish central bank since it historically was a holder of gold at the NYFED. It’s not clear where the central bank of Luxembourg held or holds gold but it’s not material since Luxembourg only transferred just over 1 tonne to the ECB in January 1999.

Greece and Later Euro members

Greece joined the Euro in January 2001 and upon joining it transferred 19.5 tonnes of gold to the ECB. Greece is known for storing some of its gold at the FRBNY and some at the Bank of England, so Greece too is a candidate for possibly transferring New York held gold to the ECB. In theory, the ECB’s New York held gold may not have even arisen from direct transfers from Euro member central banks but could be the result of a location swap. Without the national central banks or the ECB providing this information, we just don’t know for sure how the ECB’s New York gold holdings arose.

Another 7 countries joined the Euro after Greece. These countries were Slovenia on 1st January 2007, Malta and Cyprus 1st January 2008, Slovakia 1st January 2009, Estonia 1st January 2011, Latvia 1st January 2014, and Lithuania 1st January 2015. The majority of these central banks made gold transfers to the ECB at the Bank of England. In total these 7 central banks only transferred 9.4 tonnes of gold to the ECB, so their transfers are not really material to the ECB’s gold holdings.

ECB Gold Sales: 271.5 tonnes

More importantly, the ECB sold 271.5 tonnes of gold between Q1 2005 and Q1 2009. These sales comprised 47 tonnes announced on 31 March 2005, 57 tonnes announced 31 March 2006,  37 tonnes over April and May 2007 announced 1 June 2007, 23 tonnes of sales completed on 30 November 2006, 42 tonnes announced 30 November 2007, 30 tonnes of completed sales announced 30 June 2008, and 35.5 tonnes completed in Q1 2009.

These sales explain why the ECB currently only holds 504.8 tonnes of gold:

i.e. 766.9 t (including Greece) – 271.5 t sales + 9.4 t smaller member transfers = 504.8 t

The ECB does not provide, nor has ever provided, any information as to where the 271.5 tonnes of gold  involved in these 2005-2009 sales was stored when it was sold. The fact that the ECB still claims to hold gold in Paris, Rome and Lisbon, as well as London and New York, suggests that at least some of the gold transferred by the Banque de France, Banca d’Italia and Banco de Portugal in 1999 is still held by the ECB.

If the ECB had sold all the gold originally transferred to it by all central banks other than France, Italy, Portugal and Germany, this would only amount to 197 tonnes, so another 74 tonnes would have been needed to make up the shortfall, which would probably have come from the ECB holdings at the Bank of England since that is where most potential central bank and bullion bank buyers hold gold accounts and where most gold is traded on the international market.

Even taking into account Greece’s 19.4 tonne gold transfer to the ECB in January 2001, and excluding the French, Italian, German and Portuguese transfers in 1999, the ECB’s 271.5 tonnes of gold sales would still have burned through all the smaller transfers and left a shortfall. So the ECB gold sales may have come from gold sourced from all of its 5 storage loacations.

It’s also possible that one or more of the original 11 central banks transferred gold to the ECB that was stored at a location entirely distinct from the 5 currently named locations, for example gold stored at the Swiss National Bank. If that particular gold was then sold over the 2005-2009 period, it would not get picked up in the current locations. It’s also possible that some or all of the 271.5 tonnes of gold sold by the ECB over 2005-2009 had been loaned out, and that the ‘sales’ were just a book squaring exercise in ‘selling’ gold which the lenders failed to return, with the loan transactions being cash-settled.

Draghi resumes ECB press conference after being attacked by protester

No Physical Audit of ECB Gold

Given that the Euro is the 2nd largest reserve currency in the world and the 2nd most traded currency in the world, the ECB’s gold and how that gold is accounted for is certainly a topic of interest. Although the ECB’s gold doesn’t directly back the Euro, it backs the balance sheet of the central bank that manages and administers the Euro, i.e. the ECB.

The valuation of gold on the ECB’s annual balance sheet also adds to unrecognised gains on gold in the ECB’s revaluation account. Given gold’s substantial price appreciation between 1999 and 2015, the ECB’s unrecognised gains on gold amount to €11.9 billion as of 31 December 2015.

It is therefore shocking, but not entirely surprising, that the ECB doesn’t perform a physical audit of its gold bars and has never done so since initiating ownership of this gold in 1999. Shocking because this lack of physical audit goes against even the most basic accounting conventions and fails to independently prove that the gold is where its claimed to be, but not surprising because the world of central banking and gold arrogantly ignores and bulldozes through all generally accepted accounting conventions. Geographically, 2 of the locations where the ECB claims to store a percentage of its gold are not even in the Eurozone (London and New York), and infamously, the Bundesbank is taking 7 years to repatriate a large portion of its gold from New York, so the New York storage location of ECB gold holdings should immediately raise a red flag. Furthermore, the UK is moving (slowly) towards Brexit and away from the EU.

Recall the response above from the ECB:

The ECB has no physical audit of its gold bars. The gold bars that the ECB owns are individually identified and each year the ECB receives a detailed statement of these gold deposits. The central banks where the gold is stored are totally reliable.

Imagine a physical-gold backed Exchange Traded Fund (ETF) such as the SPDR Gold Trust or iShares Gold Trust coming out with such a statement. They would be run out of town. References to ‘totally reliable’ are all very fine, but ‘totally reliable’ wouldn’t stand up in court during an ownership claim case, and assurances of ‘totally reliable’ are not enough, especially in the gold storage and auditing businesses.

The ECB is essentially saying that these ‘statements’ of its gold deposits that it receives from its storage custodians are all that is needed to for an “audit” since the custodians are ‘totally reliable‘.

This auditing of pieces of paper (statements) by the ECB also sounds very similar to how the Banca d’Italia and the Deutsche Bundesbank conduct their gold auditing on externally held gold i.e. they also merely read pieces of paper. Banca d’Italia auditsannual certificates issued by the central banks that act as the depositories” (the FRBNY, the Bank of England, and the SNB/BIS).

The Bundesbank does likewise for its externally held gold (it audits bits of paper), and solely relies on statements from custodians that hold its gold abroad. The Bundesbank actually got into a lot of heat over this procedure in 2012 from the German Federal Court of Auditors who criticised the Bundesbank’s blasé attitude and lack of physical auditing, criticism which the Bundesbank’s executive director Andreas Dombret hilariously and unsuccessfully tried to bury in a speech to the FRBNY  in New York in November 2012 in which he called the controversy a “bizarre public discussion” and “a phantom debate on the safety of our gold reserves“, and ridiculously referred to the movies Die Hard with a Vengeance and Goldfinger, to wit:

“The days in which Hollywood Germans such as Gerd Fröbe, better known as Goldfinger, and East German terrorist Simon Gruber, masterminded gold heists in US vaults are long gone. Nobody can seriously imagine scenarios like these, which are reminiscent of a James Bond movie with Goldfinger playing the role of a US Fed accounting clerk.”

Where is the ECB Gold Bar Weight List?

Since, as the ECB states, it’s gold bars are “individually identified“, then gold bar weight lists of the ECB’s gold do indeed exist. This then begs the question, where are these weight lists, and why not release them if the ECB has nothing to hide?

Quickly, to define a weight list, a gold bar weight list is an itemised list of all the gold bars held within a holding which uniquely identifies each bar in the holding. In the wholesale gold market, such as the London Gold Market, the LBMA’s “Good Delivery Rules” address weight lists, and state that for each gold bar on a weight list, it must list the bar serial number, the refiner name, the gross weight of the bar, the gold purity of the bar and the fine weight of the bar. The LBMA also state that “year of manufacture is one of the required ‘marks’ on the bar”.

Recall from above that when the ECB was asked to provide a full weight list of its 504.8 tonnes of gold bars, it responded: The ECB does not disclose this information.

After receiving this response, BullionStar then asked in a followup question as to why the ECB doesn’t disclose a weight list of the gold bars. The ECB responded (underlining added):

“We would like to inform you that, while the total weight and value of the gold held by the European Central Bank (ECB) can be considered to be of interest to the public, the weight of each gold bar is a technicality that does not affect the economic characteristics of the ECB’s gold holdings. Therefore the latter does not warrant a publication.

It is a very simple task to publish such a weight list in an automated fashion. The large gold backed ETFs publish such weight lists online each and every day, which run in to the hundreds of pages. Publication of a weight list by the ECB would be a very simple process and would prove that the claimed bars are actually allocated and audited.

This ECB excuse is frankly foolish and pathetic and is yet another poorly crafted excuse in the litany of poorly crafted excuses issued by large gold holding central banks in Europe to justify not publishing gold bar weight lists. The Dutch central bank recently refused to issue a gold bar weight list since it said it would be too costly and administratively burdensome. The Austrian central bank in refusing to publish a weight list claimed as an excuse that it “does not have the required list online“. Last year in 2015, the German Bundesbank issued a half-baked useless list of its gold bar holdings which was without the industry standard required refiner brand and bar serial number details.  (For more details, see Koos Jansen BullionStar blogs “Dutch Central Bank Refuses To Publish Gold Bar List For Dubious Reasons“, and “Central Bank Austria Claims To Have Audited Gold at BOE. Refuses To Release Audit Reports & Gold Bar List“, and a Peter Boehringer guest post “Guest Post: 47 years after 1968, Bundesbank STILL fails to deliver a gold bar number list“).

The more evidence that is gathered about the refusal of central banks to issue industry standard gold bar weight lists, the more it becomes obvious that there is a coordinated understanding between central banks never to release this information into the public domain.

The most likely reason for this gold bar weight list secrecy is that knowledge of the contents of central bank gold bar weight lists could begin to provide some visibility into central bank gold operations such as gold lending, gold swaps, location swaps, undisclosed central bank gold sales, and importantly, foreign exchange and gold market interventions. This is because with weight list comparisons, gold bars from one central bank weight list could begin turning up in another central bank weight list or else turning up in the transparent gold holdings of vehicles such as gold-backed Exchange Traded Funds.


Instead of being fixated with the ECB’s continual disastrous and extended QE policy, perhaps some financial journalists could bring themselves to asking Mario Draghi some questions about the ECB gold reserves at the next ECB press briefing, questions such as the percentage split in storage distribution between the 5 ECB gold storage locations, why ECB gold is being held in New York, why is there no physical audit of the gold by the ECB, why does the ECB not publish a weight list of gold bar holdings, and do the ECB or its national central bank agents intervene into the gold market using ECB gold reserves.

The lackadaisical attitude of the ECB to its gold reserves by never physically auditing them is also a poor example to set for all 28 of the central bank members of the European System of Central Banks (ESCB), and doesn’t bode well for any ESCB member central bank in being any less secretive than the ECB headquarters mothership.

If gold does re-emerge at the core of a revitalised international monetary system and takes on a currency backing role in the future, the haphazard and non-disclosed distribution of the ECB’s current gold reserves over 5 locations, the lack of physical gold audits, and the lack of public details of any of the ECB gold holdings won’t really inspire market confidence, and is proving to be even less transparent than similar metrics from that other secretive large gold holding bloc, i.e the USA.

From Gold Trains to Gold Loans – Banca d’Italia’s Mammoth Gold Reserves

Italy’s gold has had an eventful history. Robbed by the Nazis and taken to Berlin. Loaded on to gold trains and sent to Switzerland. Flown from London to Milan and Rome. Used as super-sized collateral for gold backed loans from West Germany while sitting quietly in a vault in New York. Leveraged as a springboard to prepare for Euro membership entry.  Inspired Italian senators to visit the Palazzo Koch in Rome. Half of it is now in permanent residency in downtown Manhattan, or is it? Even Mario Draghi, European Central Bank (ECB) president, has a view on Italy’s gold. The below commentary tries to make sense of it all by bringing together pieces of the Italian gold jigsaw that I have collected.

2,451.8 tonnes

According to officially reported gold holdings, and excluding the gold holdings of the International Monetary Fund (IMF), Italy’s central bank, the Banca d’Italia, which holds Italy’s gold reserves, is ranked as the world’s third largest official holder of gold after the US and Germany, with total gold holdings of 2,451.8 tonnes, worth more than US$ 105 billion at current market prices. Notable, Italy’s gold is owned by the Banca d’Italia, and not owned by the Italian State. This contrasts to most European nations where the gold reserves are owned by the state and are merely held and managed by that country’s respective central bank under an official mandate.

Italy’s gold reserves have remained constant at 2451.8 tonnes since 1999. Although the Banca d’Italia has been a signatory to all 4 Central Bank Gold Agreements and could have conducted gold sales within the limits of the agreements between 1999 and the present, it did not engage in any gold sales under either CBGA1 (1999-2004), CBGA2 (2004-2009), or CBGA3 (2009-2014), and as of now, has not conducted any sales under CBGA4 (2014-2019). With 2,451.8 tonnes of gold, the Banca d’Italia holds marginally more than the Banque de France, which claims official gold holdings of 2,435.8 tonnes.

Gold as a percentage of total reserves for both banks is very similar, with Italy’s gold comprising 69.7% of total reserve assets against 67.2% for France. Similarly, German’s gold reserves, at 3,378.2 tonnes, are 70.1% of its total reserves. See the World Gold Council’s Latest World Official Gold Reserves data for details.

So it appears that the big three European gold holders consider their gold to be a critical part of their foreign reserves and are keeping the ratio of their gold to total reserves within around the 70% mark.

Towards Transparency?

In April 2014, Banca d’Italia published a 3 page report about Italy’s gold reserves titled “Le Riserve Auree della Banca D’Italia” (published only in Italian). The report highlights that Italy’s gold is held in four storage locations, one of which is in Italy.

Specifically, in the report, Banca d’Italia confirmed that 1,199.4 tonnes of its gold, approximately half the total, is held in the Bank’s vaults which are located in the basement levels of its Palazzo Koch headquarters in Rome. The majority of remainder is stored in the Federal Reserve Bank’s gold vault in New York. The report also states that small amounts of Banca d’Italia gold are stored at the vaults of the Swiss National Bank in Berne, Switzerland, and at the vaults of the Bank of England in London.

As to why Italian gold is stored abroad in New York, London and Berne and not in other countries, is explained by historical data, and explained below.

++ Bankitalia: Visco, statuto riafferma indipendenza ++

Palazzo Koch

In its Palazza Koch vaults in Rome, the Banca d’Italia claims to store 1199.4 tonnes of gold. Of this total, 1195.3 tonnes are in the form of gold bars (represented by 95,493 bars), and 4.1 tonnes are in the form of gold coins (represented by 871,713 coins). While most of the bars in Rome are prism-shaped (trapezoidal), there are also brick-shaped bars with rounded corners (made by the US Mint’s New York Assay Office) and also ‘panetto’ (loaf-shaped) ‘English’ bars. The average weight of the bars in Palazzo Koch is 12.5 kg (400 oz), with bar weights ranging from relatively small 4.2 kgs up to some very large 19.7 kgs bars. The average fineness / gold purity of the Rome stored bars is 996.2 fine, with some of the holdings being 999.99 fine bars.

The Banca d’Italia also states that 141 tonnes of gold that it transferred to the ECB in 1999 as a requirement for membership of the Euro is also stored in Palazzo Koch. This would put the total gold holdings in the Palazzo Koch vaults at 1340 tonnes. Gold transferred to the ECB by its Euro member central banks is managed by the ECB on a decentralised basis, and is held by the ECB in whatever location it was stored in when the initial transfers occurred, subject to various location swaps which may have taken place since 1999.

The Vault is revealed

While the Banca d’Italia’s 3 page report appears to be the first official written and self-published confirmation from the Bank which lists the exact storage sites of its gold reserves, these four storage locations were also confirmed to Italian TV station RAI in 2010 when an RAI presenter and crew were allowed to film a report from inside the Bank’s gold vaults in Rome.

This RAI broadcast was for an episode of ‘Passaggio a Nord Ovest’, presented by Alberto Angela.

Translation of Video

For those who don’t speak Italian, such as myself, I asked an Italian friend to translate Alberto Angela’s video report and the other voice-overs in the report. The translation of the above video is as follows:

Banca D’Italia features a secret and extremely important place which represents Italy’s wealth: it’s our gold reserve.

We’ve had a special permission to visit this place, called “the sacristy of gold.” Here there’s a big protected door, and three high personnel from Banca d’Italia who are opening the door for me. Three keys are needed to open the door of the vault, one after the other and operated by three different people. Obviously we can’t show the security systems nor the faces of these men, but the door is huge, at least half a metre, and leads to another gate where again three keys must be used. Past this, that’s where our country’s gold is kept. 

Here we are. It’s exciting to get in here, the environment is simple, sober. [general commentary, then camera shows a large amount of gold]

This is not all the gold we own, as part of it is also stored in The Federal Reserve in the US, in the Bank of England in the UK and in Banca dei Regolamenti Nazionali in Switzerland. I’m speechless when exploring the sacristy, … you don’t see this every day. 

The value of all this gold is established by the  European Central Bank, that also establishes its price. The overall value appears in the end of year balance. In 2005 the gold was valued at 20 miliardi of Euros (billions)

There are three types of lingotti (square-shaped gold). {he says how much the bars weigh}

They feature some signs on them, to say that they have been checked. Some are almost 100% gold, pure gold. There’s also a serial number on the gold, and a swastika on some of them as the Nazi took away all our gold, transferring it first to the north of Italy and then to Germany and Switzerland. At the end of the war part of it came back featuring the Nazi sign.

This gold represents the symbol of our wealth, without this we wouldn’t be able to deal with the rest of the world, it’s a symbol for Italy, a guarantee, like a family’s jewelry. They can be used to get loans as happened when Italy asked for a loan from Germany and they demanded, as a guarantee, the value in gold. So the name Germany was put on this gold at the time.

{the reporter then talks about going from gold to notes and ‘convertibility’ – trust in the States is now the guarantee for exchanges, and not gold, says the voice. It’s a relation of trust … Banca d’Italia keeps an eye on this. After Maastricht, a lot of our gold has left Italy to join the other countries’ gold to create the communitarian reserve of the Euro}”

Note that the reporter, Angela, states that in addition to Rome, the Italian gold is stored at the Federal Reserve Bank in New York, the Bank of England in London, and at the Bank of International Settlements (BIS) in Switzerland. The reporter uses the exact words “Banca dei Regolamenti Nazionali”.

The BIS and SNB

This BIS as Italy’s gold custodian was also confirmed in 2009 by Italian newspaper “La Repubblica”, which published an article about Italy’s gold, stating that it was held in Rome, at the Federal Reserve in New York, in the ‘vaults’ of the BIS in Basel, and in the vaults of the Bank of England.

This apparent inconsistency between a) the Banca d’Italia’s report, which claims that its gold in Switzerland is at the Swiss National Bank (SNB) in Berne, and b) the RAI broadcast, which states that some Italian gold is stored with the BIS in Switzerland, is technically not a contradiction since the BIS does not maintain its own gold storage facilities in Switzerland. The BIS just makes use of the SNB’s gold vaults in Berne.

If you look on its website, under foreign exchange and gold services, the BIS specifically states that it uses ‘Berne’ as one of its safekeeping facilities for gold, i.e. it offers its clients “safekeeping and settlements facilities available loco London, Berne or New York”. Loco refers to settlement location of a precious metals transaction. By confirming that its Swiss storage is with the BIS, and that it also stores gold at the Swiss National Bank in Berne, the Banca d’Italia has, maybe inadvertently, confirmed that the BIS makes use of the Swiss National Bank’s gold vaults, and that the SNB vaults are in fact in Berne. while its knwn that the SNB gold vaults are in Berne, the SNB rarely, if ever, talks about this.

However, in 2008, Berne-based Swiss newspaper “Der Bund” published an article revealing that the SNB’s gold vaults are in Berne underneath the Bundesplatz Square. Bundesplatz Square is adjacent to the SNB’s headquarters at No. 1 Bundsplatz. BIS literature, such as the official BIS history publication “Central bank Cooperation at the Bank for International Settlements, 1930 – 1973” also confirms that the SNB gold vaults are in Berne and that the BIS and the Banca d’Italia have held gold accounts with the SNB in Berne since at least the 1930s. Note that the SNB actually has two headquarters, one in Berne, the other in Zurich at Börsenstrasse.Its quite possible that some of the SNB custodied gold is also stored in the vaults of its Zurich headquarters under Paradeplatz or Bürkliplatz.

Simple Questions met with Ultra-Secrecy

In April 2014, in two emails, I asked the Banca d’Italia’s press office specifically about this SNB / BIS situation, and also about the Banca d’Italia gold stored in New York, (and also about gold leasing – see separate section below). My questions were as follows:

“The Banca dItalia states in its April (2014) gold document that the Italian gold held in Switzerland is stored at the Swiss National Bank in Berne. Previous profiles of the Banca dItalia gold storage arrangements in an RAI TV broadcast in 2010 and in a La Republica newspaper article in 2009 state that the Italian gold in Switzerland is deposited with the Bank of International Settlements (BIS).

Given that the BIS use the SNB vaults in Berne to store gold deposited with them (since they don’t have their own gold storage facilities in Switzerland), then the reference to the SNB is not surprising.

However, my question is, does the Banca dItalia store its gold in Berne as gold sight deposits with the BIS or as earmarked custody gold with the SNB, or a combination of the two?”

“Is the gold of the Banca d’Italia that is held by the Federal Reserve Bank of New York held under earmark (custody), or held in a sight account?”

The Banca d’Italia responded (simultaneously on all questions):
“This is to inform you that unfortunately Banca d’Italia will not be giving information in addition to the website note.
Press and External Relations Division, Secretariat To The Governing Board And Communications Directorate, Bank of Italy”

By ‘website note’, the press and external relations division was referring to the 3 page report on gold reserves (see above) that the Bank published in April 2014.

Nazi Bars in Rome

The RAI television broadcast from 2010 was also notable in that it revealed that the Banca d’Italia holds bars of varied origins in its Rome vaults, including bars stamped with the official Bank of England stamp, and bars from the US Assay Office in New York including a featured bar from 1947. There are also Russian bars shown in the RAI video, one of which is shown in the video with the CCCP lettering, the hammer and sickle stamp, and the letters HKUM.

More surprisingly perhaps, is the fact that the Banca d’Italia also holds Nazi gold bars from the Prussian Mint in Berlin. The RAI broadcast video shows a 1940 Nazi bar from Berlin, stamped with the eagle and swastika insignia and with Prussian mint markings. The Nazi bar holdings can be explained by the fact that the Italian gold was confiscated by the Nazis during World War 2 and ended up being moved out of Rome up to the north of Italy and then most of it was transported onwards to Berlin in Germany or else to Switzerland. Following the war, some of the gold given back to the Italians as part of the Tripartite Commission payouts happened to be Prussian Mint bars stamped with the Nazi symbol (see below for historical account of Italian gold movements during World War 2).

riserve auree1
A view of the gold on shelves in the Palazzo Koch vaults, Rome

The Foreign held Italian gold

The Banca d’Italia gold document does not specify how much of the Italian gold is held in New York, London and Berne, apart from stating that most of the gold that is not stored in Rome is stored in New York. Note that this is even less transparent than the brief information that the Deutsche Bundesbank publishes about its gold reserves storage locations. However, the Banca d’Italia document does state that “the bulk” of foreign stored gold is in New York (“la parte più consistente è custodita a New York“), and that  “contingents of smaller size” are located in London and Berne (“Altri contingenti di dimensioni più contenute si trovano a Berna, presso la Banca Nazionale Svizzera, e a Londra presso la Banca d’Inghilterra“).

While one could argue about the meaning of ‘the bulk’ in terms of quantity, essentially the Banca d’Italia gold document implies that the London and Berne holdings are not very large. More specifically, it is possible using historical data and records of Italian gold movements to infer that there is little Italian gold in London and Berne.

Not a lot in London

It does not look like Banca d’Italia holds anything other than a very small amount of gold in London. During the late 1960s, mainly between 1966 and 1968, the Banca d’Italia transported most of the gold that it had stored at the Bank of England vaults back to Italy. Regular shipments were exported and delivered by MAT (the secure transport company) to the Banca d’Italia’s vaults in both Rome and Milan, sometimes about 4 tonnes at a time, sometimes 10 tonnes at a time. Historic Bank of England gold account “set-aside” ledger entries (C142/5 Bullion Office Set Aside Ledger, A-K, 1943-1971) show that by the end of 1969, the Banca d’Italia only held 988 gold bars in London, weighing 396,000 ozs,  or approximately 12.34 tonnes. In support of the veracity of this statement, see the specific ledger entry below.


During the Banca d’Italia’s gold transport period out of the Bank of England, various other transfers were also made from the Banca d’Italia gold account to the BIS gold account at the Bank of England. Since Italian gold reserves have not in total changed very much since December 1969, it is realistic to assume that the Banca d’Italia’s London gold holdings have not changed dramatically since December 1969, unless there have been location swaps executed since that time between London and New York or between London and Berne. This would generally only have been done for a specific reason such as to allow Italian gold lending through the London market. Significant gold lending only began in London in the mid-1980s, and the Banca d’Italia has never been on public record as having engaged in gold lending on the London Gold Lending Market.

Another possibility is that the Italians now use the BIS gold account(s) to hold gold in London in the same way that they do in Berne. This would allow the statement that some of the Italian gold is held in London to be true, even though the gold would, in this case, be held via the BIS gold account at the Bank of England, and not directly by a Banca d’Italia gold custody account in London.

Little in Berne

There does not appear to have been any Italian gold left in Berne after WWII (see historical details below), so whatever Italian balance is currently in Berne has been built up since 1946. Of relevance to the gold vaults in Berne, both the central banks of Finland (Bank of Finland) and Sweden (Riksbank) recently published the international locations of their gold reserves, and revealed that only very small percentages of their gold is kept in the Swiss National Bank vaults in Switzerland. Of the Riksbank’s 125.7 tonnes of gold reserves, only 2.8 tonnes (2.2%) is stored in the SNB vaults. For the Bank of Finland, only 7%, or 3.4 tonnes of its 49.1 tonnes of gold reserves are stored with the SNB in Switzerland.

Mostly in Manhattan

If this Swedish-Finnish 2-7% range of allocations held at the SNB was applied to the Italian gold that held outside Italy, it would result in between 25 tonnes and 87.6 tonnes of Italian gold being held at the SNB vaults in Berne. Factoring in 12 tonnes held at the Bank of England and a small amount held in Berne, this would imply nearly 1,200 tonnes of Italian gold at the Federal Reserve in New York.

There were at least 543 tonnes of Italian gold at the Federal Reserve in New York in the mid-1970s, since this was the quantity of Italian gold collateral that the Bundesbank held at the New York Fed during its first gold loan to Italy between 1974 and 1976 (see discussion below of the 1970s West Germany – Italy gold loan). If the quantities in London and Berne are as low as they appear to be, this 543 tonnes used as collateral might not have even been half the gold that Italy has custodied with the Federal Reserve Bank of New York.

A gold vault in Milan

It’s notable that the Banca d’Italia has used a vault in the city of Milan to store gold as recently as the late 1960s, although there is no mention of a Milan vault in the Banca d’Italia’s 2014 gold document. This would either imply that the gold stored in Milan in the 1960s was transported to Rome at a later date, or else that the Rome statistics may represent combined holdings stored in Rome and Milan, and are just rolled up to Rome for reporting purposes, since Rome is the head office of the Banca d’Italia. The Banca d’Italia’s Milan vault did feature as a key part of Italian gold movements during World War 2 (see below).

Historical Italian Gold

Like other central banks, the Banca d’Italia states that it uses 4 storage locations partly due to historical reasons and partly based on a deliberate strategy gold storage diversification strategy.

Although the Banca d’Italia held 498 tonnes of gold in 1925, Italian gold reserves fell to 420 tonnes in 1930, and continued to decline throughout the 1930s, falling to 240 tonnes in 1935, before another sharp fall to 122 tonnes in 1940 at the beginning of World War 2. With both Rome and Northern Italy under German occupation in 1943, the German occupiers pressurised the Banca d’Italia’s governor Azzolini to move the Italian gold north. Ultimately this led to 119 tonnes of Italian gold being transported by train from Rome to the Banca d’Italia’s vaults in Milan. But the transfer to Milan turned out to be just an interim stopover since the Germans continued to pile on pressure to move the Italian gold to Berlin.

The fascist government that controlled Northern Italy at that time initially resisted the German plan, but negotiated a compromise and agreed to move 92.3 tonnes of gold to a castle in Fortezza, in the far north of Italy near the Austrian border, close to the Brenner Pass and likewise very close (via Austria) to the German border.

Eventually the fascist government capitulated fully to the German demands and 49.6 tonnes of Italian was moved from Fortezza to the Reichsbank vaults in Berlin, followed by an additional transfer of 21.7 tonnes, so in total 71.3 tonnes of Italian gold ended up in the Reichsbank in Berlin. See here for graphic showing these wartime movements of Italian gold, and a comprehensive discussion (in Italian).

In the 1930s, the Bank for International Settlements Bank had invested substantially in Italian short-term treasury bills, which had a built-in gold conversion guarantee. Likewise, the Swiss National Bank held or was the representative for claims on some of the Italian gold. With the German pressure on the Italian gold in 1943, the BIS and SNB both became anxious about their investments and requested that their Italian gold-related be fully converted into gold with a view to moving the converted gold to the SNB vaults in Berne, Switzerland.

The Gold Trains to Berne

After intense negotiations, which the Banca d’Italia also supported (since it would allow some of the Italian gold to go to Switzerland and so avoid Berlin), the SNB and BIS succeeded in releasing the gold transfers, and over 72 years ago on 20th April 1944, 23.4 tonnes of Italian gold was sent by train from Como in Italy to Chiasso in Switzerland and then onwards by another train to Berne.

This required four railcars, two with 89 crates of gold weighing 12,605 kgs for the BIS (1,068 bars in total), and two other railcars of gold bars for the SNB which probably contained 9-10 tonnes – since this was the balance of Italian gold which did not go to Berlin or to the BIS but which had been moved to Fortezza from Milan.

A few days later on 25th April 1944, the Banca’Italia also executed an additional intra-account transfer in the Berne vault to the benefit of the BIS. This was part of a location swap with the BIS. To quote the official BIS historical narrative:

On 25th April 1944, the Bank of Italy transferred an additional 3,190 kgs of fine gold from its own gold account with the Swiss National Bank in Berne to the BIS gold account there.” (Central Bank Cooperation at the Bank for International Settlements, 1930-1973, Gianni Toniolo, BIS).

The actual transfer comprised 244 gold bars containing 2,966 kgs. An additional 233 kgs was debited from the Banca d’Italia sight account with the BIS, which suggests that the Italians only had 2,966 kgs in physical gold stored in Berne with the balance having to come from their sight deposit with the BIS (i.e. unallocated storage). (See “Note on gold shipments and gold exchanges organised by the Bank for International Settlements, 1st June 1938 – 31st May 1945.

The above suggests that the Banca d’Italia had no gold in Berne at the end of WWII. In fact, after WWII ended in 1945, the Italians essentially had very little gold anywhere except for small amounts that were left in Fortezza and found by the Allies, which was then returned to the Italians. Italy started buying gold again in 1946 with a 1.8 tonne purchase from the Banque de France. The Italians also began receiving gold back as reparations from the Tripartite Commission for the Restoration of Monetary Gold (TGC), getting 31.7 tonnes a few years after WWII ended, and another 12.7 tonnes in 1958. Since 71.4 tonnes had been taken by the Germans to Berlin, the Italians ended up with a net loss of about 27 tonnes due to theft and/or other war losses.

Some of these post-WWII gold reparations contained the Nazi Prussian Mint bars which are now stored in the Banca d’Italia’s Rome vaults. The initial gold bar reparations for Italy in the late 1940s came from the TGC account set up at the Bank of England. Records from the Clinton Library show that Italy received 575 Prussian bars set-aside from the TCG account in its early allocations. Prussian bars also made it to the Federal Reserve in New York. The same records show that were over 2,500 Prussian Mint bars held under earmark at the FRBNY for various customers as of January 1956 including the BIS, IMF, SNB, Bank of England, Netherlands and Canada among others. Some of these bars were later remelted into US Assay Office bars. (The Gold Report, Presidential Advisory Commission on Holocaust Assets in the United States, July 2000, Clinton Library).

In a similar way to other major European central banks, the Banca d’Italia’s gold reserves were mainly built up during the late 1950s and early 1960s. Although the Banca d’Italia was a relatively important official gold holder during the first half of the 20th century, it ‘only’ held 402 tonnes of gold as of 1957. But starting in 1958 and running through to the late 1960s, Italy’s gold reserves rose by nearly 600% to exceed 2,560 tonnes in 1970. See page 19 of “Central Bank Gold Reserves, An Historical perspective since 1845, by Timothy Green, Research Study No. 23, published by World Gold Council, for data on Italian gold reserve totals during the 1950s and 1960s.

Since 1970, Italy’s gold holdings have remained fairly constant, although at times some of the Italian gold has been used in various financial transactions such as:

  • gold collateral against a loan from Germany during the 1970s
  • contributions to the European Monetary Cooperation Fund (EMCF)
  • contributions to the European Central Bank (ECB)

The gold collateral transactions with Germany and the EMCF and ECB contributions explain why, in the absence of purchases or sales, Italy’s historic gold holdings statistics appear to fluctuate widely at various times since the mid-1970s.

l’Ufficio Italiano dei Cambi (UIC)

Until the 1960s, most, if not all of Italy’s official gold reserves were held not by the Banca d’Italia, but by an associated entity called l’Ufficio Italiano dei Cambi (UIC). In English, UIC translates as the “Italian Foreign Exchange Office”. The UIC was created in 1945. One of its tasks was the management of Italy’s foreign exchange reserves (also including gold).

Therefore the Italian gold purchases in the 1950s and 1960s were conducted for the account of the UIC, not the Banca d’Italia. However, during the 1960s there were two huge transfers of gold from the UIC to the Banca d’Italia, one transfer in 1960 and the second in 1965. In total, these two transactions represented a transfer of 1,889 tonnes from the UIC to the Banca d’Italia. The UIC’s main function then became the management of the national currency and not the nation’s gold. The UIC ceased to exist in January 2008 when all of its tasks and powers were transferred to the Banca d’Italia.


Gold Collateral for the Bundesbank – 1970s

In 1974, Italy required international financial aid to overcome an economic and currency crisis and ended up negotiating financial help from the Deutsche Bundesbank. This took the form of a dollar-gold collateral transaction, with the Bundesbank providing a US$ 2 billion loan secured on Italian gold collateral of equivalent value. On 5th September 1974, Karl Klasen, President of the Bundesbank, sent the specifics of the collateral agreement to Guido Carli, Governor of the Banca ‘dItalia. The details of the transaction were as follows:

US$ 2 billion was transferred from the Bundesbank to the Banca d’Italia for value date 5th September. Simultaneously, for value date 5th September, the Banca d’Italia earmarked 16,778,523.49 ounces of gold (about 522 tonnes) from its gold holdings stored at the Federal Reserve Bank in New York into the name of the Bundesbank, and received a gold claim against the Bundesbank for the same amount.  (2A96 Deutsche Bundesbank Files, 1974, Bank of England Archives).

The gold collateral was valued at $149 per ounce based on a formula of 80% of the average London gold fixing price during July and August 1974. The loan was for a six month maturity but could be rolled over up to three times, i.e. up to two years in total. It turns out that the loan was rolled over up to the maximum two years allowed. Not only that, but the entire gold-backed dollar loan was renewed in September 1976 with larger gold collateral of 17.5 million ounces or about 543 tonnes. This gold loan renewal in 1976 was underwritten by the UIC, and the 543 tonnes of gold was transferred from the Banca’Italia to the UIC prior to the loan renewal. Note that Paolo Baffi had become Governor of the Banca d’Italia in 1975, taking over from Guido Carli.

In September 1978, at the 2 year maturity date of the renewal, the 543 tonnes of gold was returned to the ownership of the Italians but instead of being transferred to the Banca d’Italia, the 543 tonnes was transferred to the balance sheet of the UIC, since the UIC had been involved in underwriting the entire loan agreement. This 543 tonnes of gold stayed on the UIC books and was revalued over the years, thereby creating a large capital gain for the UIC.

Gold capital gain Controversy – 1997/98

When the gold held by the UIC was sold to the Banca d’Italia in 1997, the UIC realised a capital gain of 7.6 billion Lira which then became taxable. The UIC then owed the Italian Exchequer 4 billion Lira, 3.4 billion Lira of which was transferred to the Italian State in November 1997. At the time in 1997, Italy was preparing for entry to the Euro, and needed to keep its deficit under the 3% ceiling required by the Maastricht Treaty criteria. Eurostat ruled that this windfall transfer to the Italian Exchequer was not allowed to be offset against the government deficit. See here for January 1998 statement from Eurostat.

However, a European Parliament parliamentary set of question in March 1998 to the European Council seems to suggests that the UIC tax payment to the Italian Exchequer was offset against Italy’s public sector deficit, and that it helped to keep the Italian deficit under the critical 3% Masstrict ceiling, thereby helping Italy to qualify for Euro membership. The parliamentary questions were from Italian politician Umberto Bossi:

“Does the Council intend to finally ascertain the nature of this transaction?

Does the Council intend to establish whether it is permissible to encourage tax revenues of this kind to be offset against the public sector deficit?

If not, does the Council not consider that this incident shows yet again that Italy has not changed its ways and is prepared to stoop to dubious accounting practices in order to enter Europe?”

The answer to this parliamentary question in June 1998 seems vague, but did not deny that the tax windfall generated by the capital gain on the 543 tonnes of gold may have helped improve the Italian fiscal condition in the run-up to Euro qualification and entry.


As referenced above, Italian gold has been contributed to various European monetary experiments since the 1970s. This explains why the yearly official total figures of Italian gold fluctuate widely over the 1970s-1990s period, and indeed have also fluctuated since 1999.

In 1979, Italy’s gold reserves dropped by 20% and stayed that way until 1998 when they increased again to the previous 1979 level. This was due to Italy contributing to the European Monetary Cooperation Fund (EMCF) which was a fund within the European Exchange Rate Mechanism (ERM) of the European Monetary System (EMS). In exchange for providing 20% of their gold and dollar reserves to the EMCF, member countries received claims denominated in European Currency Units (ECUs). [The ECU was an abstract precursor to the Euro]. The gold that was transferred to the EMCF was accounted for as gold swaps, but there was no physical movement of gold, it was just a book entry to represent a change in ownership to the EMCF.

In 1999, with the advent of the Euro (initially as a virtual currency), central bank members of the Eurozone had to again transfer gold, this time to the European Central Bank (ECB). The ECB stipulated that each member had to transfer foreign reserves assets, and 15% of these transfers had to be in the form of gold. In Italy’s case it transferred 141 tonnes of gold to the ECB, so Italy’s gold reserves fell by this amount.

The gold owned by the ECB is not centrally stored and managed by the ECB. It stays wherever it was when transferred by each member country, and the ECB delegates the management of its gold reserves to each member central bank, so essentially, it’s just another accounting transaction. It’s unclear whether the ECB gold managed by the Banca d’Italia on behalf of the ECB is “managed” any differently to the non-ECB gold (i.e. its unclear whether the same investment policy always applies to both gold holdings). One person who would certainly know the answer to that questions is Mario Draghi, current president of the ECB, former governor of the Banca d’Italia, and also born in Rome, home of the Palazzo Koch gold vault.

Is any Italian Gold pledged or leased out?

Banca d’Italia annual reports follow International Monetary Fund reporting conventions and classify the gold in its balance sheet as ‘gold and gold receivables‘. In September 2011, when I asked the Banca d’Italia to clarify what percentage of the asset category ‘gold and gold receivables’ in its 2010 balance sheet referred to gold held, and what percentage represented gold receivables, the Bank’s press office replied succinctly that “it’s only gold, no receivables.”

Following the publication of the Bank’s three page gold document in April 2014, I asked the Banca d’Italia press office a number of questions (see above), one of which was about gold leasing:

Are any of the Bank’s gold reserves subject to lease agreements, and if so, what percentage of the gold is leased out? Is any of the Bank’s gold swapped or pledged in any other way?

As mentioned above, the Banca d’Italia’s response was:

This is to inform you that unfortunately Banca d’Italia will not be giving information in addition to the website note.
Press and External Relations Division, Secretariat To The Governing Board And Communications Directorate, Bank of Italy”


Gold Audits

The Banca d’Italia states in its 3 page gold document that external auditors verify the gold held in Rome each year in conjunction with the Bank’s own internal auditors. For the gold held abroad, the external auditors are said to audit this using annual certificates issued by the central banks that act as the depositories (the  depositories being the Federal Reserve Bank of New York, the Bank of England, and either the BIS or perhaps the SNB depending on the type of certificate that is issued for BIS deposits).

This approach is analogous to the methodology used to audit the German gold reserves stored abroad, i.e. there is no independent physical audit of the gold stored abroad by the Bundesbank. The paper-pushing auditors merely audit pieces of paper.

As regards the Banca d’Italia’s gold holdings at the Bank for International Settlements (BIS), these holdings could either be in the form of a “Gold Sight Account” or a “Gold Ear-Marked Account”, as explained here by the Bank of Japan in 2000 when it switched its gold holdings at the BIS from a gold sight account to a gold earmarked account:

“The Bank of Japan has recently transferred its claims against the Bank for International Settlements (BIS) embodied in a “Gold Sight Account” to a “Gold Ear-marked Account” with the BIS.” (July 2000)

If the Banca d’Italia’s gold holdings at the BIS are just in a sight account, then this is just a claim on a balance of gold, not a holding of specific gold bars.

It’s also surprising to me that the mainstream media have taken a significant, albeit superficial, interest in the Bundesbank’s ongoing exercise to repatriate 300 tonnes of its gold reserves from New York to Frankfurt, but zero interest in the fact that the Banca d’Italia supposedly has a huge amount of gold stored in New York that has never physically audited it and does not even see a need to repatriate it.

Banca d’Italia office in Manhattan

Like the Bundesbank,  the Banca d’Italia also maintains a representative office in New York, at 800 Third Avenue – 26th Floor, New York – NY 10022 (see representative office contact details here). The head of this representative office is Giovanni D’Intignano (see LinkedIn). Therefore, it should be very easy for the Banca d’Italia to ask the Federal Reserve Bank of New York to conduct an on-site physical gold audit of the Italian gold at the vaults of the New York Fed, all 1000 plus tonnes of it.

In fact, the Banca d’Italia also maintains another of its only 3 representative offices abroad in London at 2 Royal Exchange, London EC3V 3DG, which is right across the road from the Bank of England’s headquarters and gold vaults. It should therefore also be a simple matter for the Banca d’Italia to also organise a physical on-site audit of its gold reserves stored at the Bank of England in London, something the Bank of England has been allowing its gold storage customers to do since 2013.

Political Awakening

There has been a developing political trend recently in Italy for more transparency on the Italian gold and also calls for its ownership and title to be protected against control by outside entities.

In January 2012, Italian politican Rampelli Fabio (co-signed by Marco Marsilio) submitted some written questions to the Italian Ministry of Economy and Finance, a department headed at the time by Mario Monti (Monti was also simultaneously Italian Prime Minister at that time), asking the following questions about the Italian gold (questions 4-14567 : Italian version and English version):

“When and under what agreement or statutory provision were the storage location decisions (regarding New York, London and BIS Switzerland) taken and whether that strategic decision is still considered to serve the interests of Italy?

Who owns the gold reserves held at Palazzo Koch (in Rome) and the gold reserves held at the foreign locations?

Does Italy have full availability to the gold reserves held at the Bank of Italy and at the foreign locations?”

Even though these questions were submitted nearly 5 years ago, the official status of the questions on the parliamentary website still says “In Progress”,  suggesting that they have not been answered by the Ministry of Finance. I can find no other evidence elsewhere either that these questions were ever answered.

Senators visit Palazzo Koch vault

Three Italian senators of the political party Movimento Cinque Stelle visited the Banca d’Italia gold vaults in Rome on 31 March 2014 and are calling for the ownership of the gold to be transferred from the Banca d’Italia to the Italian public so that its control cannot be compromised. See video below of their before and after visit which was broadcast from outside the Palazzo Koch vault in Rome.

These 3 representative (in the above video) are Senator Giuseppe Vacciano, Senator Andrea Cioffi and Senator Francesco Molinari.  I do not have a direct English translation of this video, however, anyone interested can translate this page from Italian,  which was published on 3 April 2014, and features Senator Vacciano explaining the senators’ vault visit.

In his report, Vacciano confirm some interesting facts, such as that the Italian gold belongs to the Banca d’Italia and not the Italian State.  The ownership issue is also confirmed by the Banca d’Italia’s 3 page gold report (see above) which states:

“La proprietà delle riserve ufficiali è assegnata per legge alla Banca d’Italia” – (Ownership of official reserves is assigned by law to the Bank of Italy)

Unusually for a central bank, Banca d’Italia’s share capital is held by a diverse range of Italian banks and other financial institutions as well as by the Italian state

Vaccciano also confirmed that in the vault they saw some South African gold bars, many American gold bars, and “several bearing the Nazi eagle”. And in a similar way to the RAI reporter Alberto Angela, who said in 2010 that he was speechless when viewing the gold in the sacristy, Vacciano says:

from a purely human perspective, we could see with our own eyes a quantity of precious metal that goes beyond an ordinary perception … I must say that arouses feelings that are difficult to explain“.

Italian Citizens

The Italian business community and public appear to be quite aware of the importance of the country’s gold reserves. In May 2013, the World Gold Council conducted a survey of Italian business leaders and citizens which included various questions about the Italian gold reserves. The findings showed that 92% of business leaders and 85% of citizens thought that the Italian gold reserves should play an important role in Italy’s economic recovery. There was very little appetite to sell any of the gold reserves, with only 4% of both citizens and business leaders being in favour of any gold sales. Finally, 61% of the business leaders and 52% of the citizens questioned were in favour of utilising the gold reserves in some way without selling any of them. The World Gold Council interpreted this sentiment as allowing the possibility for a future Italian gold-backed bond to be issued with Italian gold as collateral. The Italian gold could thus play a role similar to that used to collateralise the international loans from West Germany to Italy in the 1970s.

Mario Draghi – Last Word

For now, the last word on the Italian goes to Draghi. Even Mario Draghi, former governor of the Banca d’Italia, and current president of the European Central Bank, has a similar view to the Italian public about not selling the Italian gold. In the video below of a 2013 answer to a question from Sprott’s Tekoa Da Silva, Draghi says that he never thought it wise to sell Italy’s gold since it acts as a ‘reserve of safety’. However, as would be expected from a smoke-and-mirrors central banker, Draghi doesn’t reveal very much beyond generalities, and certainly no details of storage locations or whether the Italian gold comprises gold receivables as well as unencumbered gold.


Update on Bundesbank Gold Repatriation 2015

Deutsche Bundesbank has just released a progress report on its gold bar repatriation programme for 2015 – “Frankfurt becomes Bundesbank’s largest gold storage location“.

During the calendar year to December 2015, the Bundesbank claims to have transported 210 tonnes of gold back to Frankfurt, moving circa 110 tonnes from Paris to Frankfurt, and just under 100 tonnes from New York to Frankfurt.

As a reminder, the Bundesbank is engaged in an unusual multi-year repatriation programme to transport 300 tonnes of gold back to Frankfurt from the vaults of the Federal Reserve Bank of New York (FRBNY), and simultaneously to bring 374 tonnes of gold back to Frankfurt from the vaults of the Banque de France in Paris. This programme began in 2013 and is scheduled to complete by 2020. I use the word ‘unusual’ because the Bundesbank could technically transport all 674 tonnes of this gold back to Frankfurt in a few weeks or less if it really wanted to, so there are undoubtedly some unpublished limitations as to why the German central bank has not yet done so.

Given the latest update from the German central bank today, the geographic distribution of the Bundesbank gold reserves is now as follows, with the largest share of the German gold now being stored domestically:

  • 1,402.5 tonnes, or 41.5% now stored domestically by the Bundesbank at its storage vaults in Frankfurt, Germany
  • 1,347.4 tonnes, or 39.9%, stored at the Federal Reserve Bank in New York
  • 434.7 tonnes or 12.9% stored at the Bank of England vaults in London
  • 196.4 tonnes, or 5.8%, stored at the Banque de France in Paris

In January 2013, prior to the commencement of the programme, the geographical distribution of the Bundesbank gold reserves was 1,536 tonnes or 45% at the FRBNY, 374 tonnes or 11%, at the Banque de France, 445 tonnes or 13% at the Bank of England, and 1036 tonnes or 31% in Frankfurt.

The latest moves now mean that over 3 years from January 2013 to December 2015, the Bundesbank has retrieved 366 tonnes of gold back to home soil (189 tonnes from New York (5 tonnes in 2013, 85 tonnes in 2014, and between 99-100 tonnes in 2015), as well as 177 tonnes from Paris (32 tonnes in 2013, 35 tonnes in 2014, and 110 tonnes in 2015)). The latest transfers still leave 110 tonnes of gold to shift out of New York in the future and 196.4 tonnes to move the short distance from Paris to Frankfurt.

In the first year of operation of the repatriation scheme during 2013, the Bundesbank transferred a meagre 37 tonnes of gold in total to Frankfurt, of which a tiny 5 tonnes came from the FRBNY, and only 32 tonnes from Paris. Whatever those excessive limitations were in 2013, they don’t appear to be so constraining now. In 2014, 85 tonnes were let out of the FRBNY and 35 tonnes made the trip from Paris. See Koos Jansen’s January 2015 blog titled “Germany Repatriated 120 Tonnes Of Gold In 2014” for more details on the 2014 repatriation.

Those who track the “Federal Reserve Board Foreign Official Assets Held at Federal Reserve Banks” foreign earmarked gold table may notice that between January 2015 and November 2015 , circa 4 million ounces, or 124 tonnes of gold, were withdrawn from FRB gold vaults. Given that the Bundesbank claims to have moved 110 tonnes from New York during 2015, this implies that there were also at least 14 tonnes of other non-Bundesbank withdrawals from the FRB during 2015. Unless of course the other gold was withdrawn from the FRB, shipped to Paris, and then became part of the Paris withdrawals for the account of the Bundesbank. The FRB will again update its foreign earmarked gold holdings table this week with December 2015 withdrawals (if any), which may show an even larger non-Bundesbank gold delta for year-end 2015.

Notably, the latest press release today does not mention whether any of the gold withdrawn from the FRBNY was melted down / recast into Good Delivery bars. Some readers will recall that the Bundesbank’s updates for 2013 and 2014 did refer to such bar remelting/recasting events.

Today’s press release does however include some ‘assurances’ from the Bundesbank about the authenticity and quality of the returned bars:

The Bundesbank assures the identity and authenticity of German gold reserves throughout the transfer process – from when they are removed from the storage locations abroad until they are stored in Frankfurt am Main. Once they arrive in Frankfurt am Main, all the transferred gold bars are thoroughly and exhaustively inspected and verified by the Bundesbank. When all the inspections of transfers to date had been concluded, no irregularities came to light with regard to the authenticity, fineness and weight of the bars.”

This above paragraph in today’s press release was actually lifted wholesale from the Bundesbank’s gold repatriation press release dated 19 January 2015 , minus one key sentence:

The Bundesbank assures the identity and authenticity of German gold reserves throughout the transfer process – from when they are removed from warehouses abroad until they are stored in Frankfurt am Main. As soon as the gold was removed from the warehouse locations abroad, Bundesbank employees cross-checked the lists of bars belonging to the Bundesbank against the information on the bars removed. Finally, once they arrived in Frankfurt am Main, all the transferred gold bars were thoroughly and exhaustively inspected and verified by the Bundesbank. When all the inspections had been concluded, no irregularities came to light with regard to the authenticity, fineness and weight of the bars.”

So, was there no list of bars this time around?

But why the need at all for such a general comment on the quality of the bars while not providing any real details of the bars transferred, their serial numbers, their refiner brands, or their years of manufacture? Perhaps remelting/recasting of bars was undertaken during 2015 and the Bundesbank is now opting for the cautious approach after getting some awkward questions last year about these topics – i.e. the Bundesbank’s approach may well be “don’t mention recasting / remelting and maybe no one will ask“.


Source: Bundesbank
Source: Bundesbank

Limited Hangout

This bring us to an important point. Beyond the Bundesbank’s hype, its important to note that the repatriation information in all of the press releases and updates from the Bundesbank since 2013  has excluded most of the critical information about the actual gold bars being moved. So, for example, in this latest update concerning the 2015 transport operations, there is no complete bar list (weight list) of the bars repatriated, no explanation of the quality of gold transferred and whether bars of various purities were involved, no comment on whether any bars had to be re-melted and recast, no indication of which refineries, if any, were used, and no explanation of why it takes a projected 7 years to bring back 300 tonnes of gold that could be flown from New York to Frankfurt in a week using a few C-130 US transporter carriers.

There is also no explanation from the Bundesbank as to why these 100 tonnes of gold were available from New York in 2015 but not available during 2014 or 2013, nor why 110 tonnes of gold somehow became available in Paris during 2015 when these bars were not available in 2014 or 2013, nor why all 374 tonnes to be brought back from Paris can’t make it back on the 1 hour 15 minute air-route between Paris and Frankfurt between which multiple aircraft fly each and every day.

The crucial questions to ask in my view are where was the repatriated gold sourced from that has so far been supplied to the Bundesbank from New York and Paris, what were the refiner brands and years of manufacture for the bars, what are the details of the quality (fineness) of the gold trasnferred, and are these bars the same bars that the Bundesbank purchased when it accumulated its large stock of gold bars during the 1950s and especially the 1960s.

In essence, all of these updates from Frankfurt could be termed ‘limited hangouts’, a term used in the intelligence community, whereby the real behind the scenes details are left unmentioned, only hanging out snippets of information, and questions about the real information are invariably left unasked by the subservient mainstream media. Overall,  it’s important to realise that the Bundesbank’s repatriation updates, press releases, and interviews since 2013 are carefully stage-managed, and that the German central bank continually uses weasel words to dodge genuine but simple questions about its gold reserves and the physical gold that is being transported back to Frankfurt.

For example, in October 2015, the Bundesbank released a partial inventory bar list/weight list of it gold holdings. At that time, on 8 October 2015, I asked the Bundesbank:

Hello Bundesbank Press Office, 

Regarding the gold bar list published by the Bundesbank yesterday (07 October https://www.bundesbank.de/Redaktion/EN/Topics/2015/2015_10_07_gold.html), could the Bundesbank clarify why the published bar list does not include,for each bar, the refiner brand, the bar refinery serial number, and the year of manufacture, as per the normal convention for gold bar weight lists, and as per the requirements of London Good Delivery (LGD) gold bars

Bundesbank bar list:https://www.bundesbank.de/Redaktion/EN/Downloads/Topics/2015_10_07_gold.pdf?__blob=publicationFile 

From the London Good Delivery Rules, the following attributes are required on LGD bars http://www.lbma.org.uk/good-delivery-rules


Serial number (see additional comments in section 7 of the GDL Rules)    

Assay stamp of refiner    

Fineness (to four significant figures)    

Year of manufacture (see additional comments in section 7 of the GDL Rules)”

 “The marks should include the stamp of the refiner (which, if necessary for clear identification, should include its location), the assay mark (where used), the fineness, the serial number (which must not comprise of more than eleven digits or characters) and the year of manufacture as a four digit number unless incorporated as the first four digits in the bar number. If bar numbers are to be reused each year, then it is strongly recommended that the year of production is shown as the first four digits of the bar number although a separate four digit year stamp may be used in addition. If bar numbers are not to be recycled each year then the year of production must be shown as a separate four digit number.

Best Regards, Ronan Manly


The Bundesbank actually sent back two similar replies t the above email:

Answer 1:

“Dear Mr Manly, 

Thank you for your query. Information on the refiner and year of production are not relevant for storage or accounting purposes, which require the weight data, the fineness and a unique number identifying each bar or melt. The Bundesbank has all of this information for each of its gold bars. By contrast, particulars relating to the refiner and year of production merely provide supplementary information. They tell us part of the gold bar’s history but do not describe its entire ‘life cycle’.”

Yours sincerely,



Answer 2:

“Dear Mr Manly,

The crucial data for storage and accounting purposes are the weight, the fineness and a unique number identifying each bar or melt. The Bundesbank has all of this information for each of its gold bars, which it records electronically and also makes available to the public. In addition to the data on weight and fineness, the Bundesbank, the Bank of England and the Banque de France identify gold bars exclusively on the basis of internally assigned inventory numbers and not using the serial numbers provided by the refiners. These custodians do not classify the bar numbers stamped onto the gold bars by the refiner as individual inventory criteria. They do not use the refiner’s bar numbers as these are not based on a unique numbering system that can be used for identification purposes. Stating the refiner and the year of production is not required for storage or accounting purposes.”

Yours sincerely, 



Even the large gold ETFs produce detailed weight lists of their bar holdings, so you can see from the above answers that the Bundesbank is resorting to flimsy excuses in its inability to explain why it is not following standard practice across the gold industry.

For additional Bundesbank’s prevarications on its gold bars, please see my blog “The Keys to the Gold Vaults at the New York Fed – Part 3: ‘Coin Bars’, ‘Melts’ and the Bundesbank” in a section titled “The Curious Case of the German Bundesbank”.

Finally, see BullionStar guest post from 8 October 2015 by Peter Boehringer, founder of the ‘Repatriate our Gold’ campaign -Guest Post: 47 years after 1968, Bundesbank STILL fails to deliver a gold bar number list“. This guest post adeptly takes apart the Deutsche Bundesbank’s stage-managed communication strategy in and around its gold repatriation exercise, and asks the serious questions that the mainstream media fear to ask.


Central Banks’ secrecy and silence on gold storage arrangements

Whereas some central banks have become more forthcoming on where they claim their official gold reserves are stored (see my recent blog post ‘Central bank gold at the Bank of England‘), many of the world’s central banks remain secretive in this regard, with some central bank staff saying that they are not allowed to provide this information, and some central banks just ignoring the question when asked.

In the ‘Central bank gold at the Bank of England’ article, I said that “A number of central banks refuse to confirm the location of their gold reserves. I will document this in a future posting.” As promised, this blog post explains what I meant by the above statement.

Some of those central banks may have made it into the Bank of England storage list if they had been more transparent in providing gold storage information. However, since they weren’t transparent, these banks make it into the alternative ‘non-cooperative’ list. One subset of this list is central banks, which to be fair to them, did actually respond and said that they cannot divulge gold storage information. The other subset is central banks which didn’t reply at all when I asked them about their official gold storage location details.

The below list, although not complete, highlights 7 central banks and 1 official sector financial institution (the BIS), which, when asked where do they store their gold reserves, responded with various similar phrases saying that they could not provide this information. Between them, these 7 central banks claim to hold 1,500 tonnes of gold. Adding in the BIS which represents another 900 tonnes, in total that’s 2,400 tonnes of gold where the central banks in charge of that gold will not provide any information as to its whereabouts. Much of this 2,400 tonnes is no doubt stored (at least in name) at the FRBNY and the Bank of England, with some stored in the home countries of some of the central banks.

I have included the 8 responses below, but have deleted any references to individuals’ names or email addresses:


Bank of Japan: 765.2 tonnes of gold

Bank of Japan



Bank for International Settlements (BIS): > 900 tonnes of gold

  • BIS manages 443 tonnes of gold under custody for central banks
  • BIS owns 108 tonnes of gold itself
  • BIS manages 356 tonnes of gold deposits from central banks
  • BIS has 47 tonnes of gold swaps outstanding




Spain: 281.6 tonnes of gold

Banco de Espana




South Africa: 125.2 tonnes of gold




Thailand: 152.4 tonnes of gold

Bank of Thailand



Singapore: 127.4 tonnes of gold

Monetary Authority of Singapore



Malaysia: 37.9 tonnes of gold

Bank Negara Malaysia



Paraguay: 8.2 tonnes of gold

Banco Central Paraguay

…which translates into English as …..”That information is classified and cannot be disclosed. I hope you understand“.


‘No Answer’ central banks

I also emailed some central banks which didn’t respond to the question, ‘where are your gold reserves stored?’. They may not have responded for various reasons, including the emails may not have reached the relevant people who would normally be responsible for such matters. These banks account for another 500+ tonnes of gold reserves. Again, some of this gold is probably at the Bank of England, such as, some of Jordan’s and Kuwait’s gold, due to historical ties with the Bank of England.

  • Banque du Liban (Lebanon): 286.8 tonnes  (said to be in Lebanon and FRB New York)
  • National Bank of Kazakhstan: 208.1 tonnes
  • Central Bank of Kuwait: 79 tonnes
  • Central Bank of Jordan: 34.2 tonnes
  • Bank Al-Maghrib (Morocco): 22.1 tonnes
  • National Bank of Cambodia: 12.4 tonnes



BIS – Transparency in name only

The following slide, from a 2007 Bank for International Settlements presentation, shows how ridiculous the claims of central banks are when they use the meme that they are transparent and accountable, when in fact, they are nothing of the sort.

The BIS’ response above on the gold storage question, i.e. “the information that you have requested is not made publicly available” makes a mockery of its own claims in the below slide that central banks are required to be transparent and accountable.

The only ‘gold’ that the BIS is willing to discuss is its pie-in-the-sky corporate-speak ‘Golden Triangle’ of central bank Autonomy complimented by Transparency and Accountability when it states:

 – TRANSPARENCY – important for holding central bank to account

- ACCOUNTABILITY – crucial counterpart of autonomy in an open society, makes transparency more credible

 (I added the 2 red arrows to the slide to highlight these points)

BIS transparency



Conclusion: Finland’s change of heart

The fact that staff of some central banks won’t discuss that bank’s gold storage arrangements is no doubt an internal rule, or a storage depository rule, or some such nonsense. The nonsensical nature of their non-cooperation and evasion is highlighted by the below about-turn from the Bank of Finland, when in January 2013 it childishly told me that “We are not allowed to tell the exact depository, town or country“, and then 9 months later in October 2013, the powers-that-be at the gold depositories gave the go-ahead, for the Bank of Finland then spilled the beans, squealing that its gold was stored at a cornucopia of the usual suspects, namely, the Bank of England, the Federal Reserve Bank of New York, the Swiss National Bank, and smaller amounts at the Swedish Riksbank and the Bank of Finland.

Given that the Bank of England, the Federal Reserve Bank of New York, and the Swiss National Bank all agreed to the Bank of Finland’s request in 2013 to publish the individual storage locations of its gold, and given that the vaults of these 3 banks store the vast majority of internationally stored central bank gold, therefore it also makes a mockery of central banks which persists in claiming that they cannot divulge information on the storage of their own gold, which in most cases is supposedly spread between the very same 3 sets of vaults.

And after the Bank of Finland press release, which most Finns and most of the world probably didn’t even see, Helsinki and the world continued about its business as before. The point being that the storage locations of central banks’ gold reserves is not that big of a deal. Its only the central banks that make it into a big deal with their secrecy….unless of course, they are hiding something bigger, and the gold is not even where its supposed to be.

Bank of Finland – 31 January 2013

Bank of Finland January 2013


Bank of Finland – 25 October 2013

Bank of Finland

Central bank gold at the Bank of England

In a recent article, “How many Good Delivery gold bars are in all the London Vaults?….including the Bank of England vaults“, I considered how much gold is actually in the London Gold Market, and highlighted how the amount of gold stored in the London wholesale market has fallen noticeably in recent years.

That article highlighted that the amount of gold stored in custody at the Bank of England (BoE) fell by 350 tonnes during the year to 28 February 2015, after also falling by 755 tonnes during the year to end of February 2014. Therefore, by 28 February 2015, there was, according to the BoE’s own statement, £140 billion or 5134.37 tonnes of gold in custody of the BoE, or in other words ~ 410,720 Good Delivery gold bars.

The article also reviewed snapshots of the total amount of gold stored in the London vaults at various recent points in time.

Firstly, a reference on the London Bullion Market Association (LBMA) web site for a date sometime before 2013 stated that there had been 9,000 tonnes of gold (i.e. 720,000 Good Delivery bars) stored in London with two-thirds of this amount, or 6,000 tonnes, stored in the Bank of England (about 482,000 bars), and 3,000 tonnes stored in London ex Bank of England vaults (238,000 bars). (Nick Laird of Sharelynx subsequently pointed out to me that the earliest reference to this 9,000 tonne figure was from a LBMA presentation from November 2011.)

Secondly, by early 2014, the LBMA web site stated that there were only 7,500 tonnes of gold in all London vaults, i.e. ~600,000 bars, and of this total, three-quarters or 5,625 tonnes were at in Bank of England, ~ 450,000 bars, and only one-quarter or 1,875 tonnes was stored at LBMA London gold vaults excluding the Bank of England’s gold vaults.

So, the entire London market including the Bank of England had lost 1,500 tonnes (120,000 bars) between 2011 and early 2014, with 375 tonnes less in the BoE and 1,125 tonnes less in the London market outside the BoE.

Finally, on 15 June 2015, the LBMA stated that “There are ~500,000 bars in the London vaults, worth a total of ~US$237 billion”. This ~ 500,000 bars equates to 6,256 tonnes. (On 15th June 2015, the morning LBMA Gold Price was set at $1178.25, which would make $237 billion worth of gold equal to 201.145 million ounces, which is 6,256 tonnes).

Therefore, another ~1,250 tonnes of gold (approximately 100,000 Good Delivery bars) departed from the London gold vaults compared to the early 2014 quotation of  7,500 tonnes of gold in the London vaults.

So overall, between the 9,000 tonnes quotation in 2011, and the 6,256 tonnes 2015 quotation, some 2,750 tonnes (~ 220,000 Good Delivery bars) disappeared from the London gold vaults. With 6,256 tonnes of gold stored in the entire London vault network in 2015, and with 5,134 tonnes of this at the Bank of England, that would leave 1,122 tonnes of gold in London outside the Bank of England vaults.

To reiterate, “the London gold vaults“, in addition to the Bank of England gold vaults, refer to the storage vaults of JP Morgan and HSBC Bank in the City of London, the vaults of Brinks, Malca Amit and Via Mat (Loomis) located near London Heathrow Airport, the vault of G4S in Park Royal, and the Barclays vault managed by Brinks.

Because the Bank of England reveals in its annual report each year the value of gold it has stored in custody for its customers (central banks, international official sector institutions, and LBMA member banks), then it is possible to compare 3 years of gold tonnage figures, namely the years 2011, 2014 and 2015, and then show within each year how much of this gold is stored at the Bank of England, and how much is stored in London but outside the Bank of England vaults.

Nick Laird of www.sharelynx.com / www.goldchartsrus.com has done exactly this in the following sets of fantastic charts which he has created to graphically capture the above London gold trends, and a lot more besides. These charts are just a subset of a suite of inter-related gold charts that Nick has created to address this critical subject in the London Gold Market.

LBMA and BoE Holdings AU 01

Although the Bank of England is not a LBMA member, the Bank of England gold vaults are a critical part of the LBMA gold vaulting and gold clearing system, and LBMA bullion banks maintain gold accounts with the Bank of England which facilitate, among other things, gold lending and gold swaps transactions with central banks. Hence the above and below charts are titled “LBMA Vaulted Gold in London”.

LBMA and BoE Holdings AU 02

My “How many Good Delivery gold bars are in all the London Vaults” article had also quantified that nearly all of this ~1,122 tonnes consists of gold from physical gold-backed ETFs which store their gold in the London vaults. (previously rounded up to 1,125 tonnes for ease of calculation).

I had included 5 gold ETFs in my previous analysis namely, SPDR Gold Trust (GLD), Shares Gold Trust (IAU), ETF Securities – ETFS Physical Gold ETF (PHAU & PHGP), ETF Securities – Gold Bullion Securities (GBS & GBSS), and Source Physical Gold ETC (P-ETC), and also some smaller holdings at BullionVault and GoldMoney. In total these ETFs and other holdings accounted for just over 1,000 tonnes of gold in the London market.

However, I had missed a few other gold ETFs which also store their gold in the London vaults. Nick Laird, whose Sharelynx website maintains up-to-date gold ETF data and gold holdings, took the initiative to fill in the missing ETF blanks and Nick re-calculated the more comprehensive ETF holdings figures for London, which worked out at an exact 1,116 tonnes of gold, astonishingly close to the implied figure represented by the 1,122 tonnes outside the Bank of England vaults.

The additional gold backed ETFs also included in Nick Laird’s wider catchment were Deutsche Bank db Physical Gold ETC and associated Deutsche ETFs, ABSA gold ETF (of South Africa), Merk Gold ETF, and some smaller holdings from Betashares and Standard Bank. The following chart from Sharelynx shows the full data for physically backed gold ETFs storing their gold in London:

LBMA vaults ETF gold in London AU 06


We then discussed an approach, in conjunction with Koos Jansen and Bron Suchecki, to identify known central bank gold stored in the Bank of England vaults by tallying up this storage data on a country level basis. So, for example, assuming 5,134 tonnes of gold stored at the Bank of England in early 2015, the aim would be to try to account for as much of this gold as possible using central bank sources.

As mentioned in the ‘How many gold bars‘ article, the Bank of England stated in 2014 that 72 central banks (including a few official sector financial organisations) held gold accounts with the Bank. It is not known if any of these gold accounts are inactive or whether any of these accounts have zero gold holdings. The LBMA stated in 2011 that “The Bank of England acts as gold custodian for about 100 customers, including central banks and international financial institutions, LBMA members and the UK government”. Therefore there could also be more than 25 LBMA member commercial banks with gold accounts at the Bank of England.

Some of the Bank of England 5,134 tonne total would therefore be gold held in LBMA member bank gold accounts at the Bank of England, for which data is not public. Likewise, a lot of central banks do not reveal where their gold is stored, let alone how much is stored in specific vaults such as at the Bank of England and Federal Reserve Bank of New York.

However, many central banks have more recently begun to provide some information on where they say their official reserve gold is stored. Other central banks have always been to some extent transparent. Overall, a variety of sources, where possible, can be used to source locational data regarding central bank gold storage locations. There will continue to be gaps however, since some central banks remain non-cooperative, even when asked directly about where they stored their gold.

Tallying this type of central bank gold storage data will probably be a work in progress. However, there has to be a cut-off point for doing a first pass through the data, and this is a first pass. As a group, the European central banks have been especially forthcoming with gold storage data, compared to even 3-4 years ago (except for Spain). For other central banks, I looked in various places such as their financial accounts, and I contacted some of them by email with varying degrees of success.  About half of the 72 central banks on the Bank of England’s list were identified, again, with varying degrees of accuracy.

The following fantastic chart by Nick Laird captures an overview of this Bank of England gold storage data. Essentially the chart shows that the banks listed hold, or have stated that they hold, the respective quantity listed, and in total the named banks could account for x tonnes gold stored at the bank of England. This is labelled ‘Known Gold‘. Given ‘Known Gold’, this leaves the residual as ‘Unknown Gold‘.

Bank of England vaulted gold AU 03

The remainder of this article explains the logic and the sources behind each country, and why that country appears on the list. When a central bank claims to have stored gold at the Bank of England, or the evidence suggests that, it does not necessarily mean that the gold in question is held in custody in a gold set aside account or that it is allocated in identifiable bars, or even that it is actually there. Many central banks engage in gold lending, or have done so in the last 15-20 years, and have at times, or permanently, transferred control of that gold to LBMA bullion banks.

Until all central banks come clean about what form their gold holdings are in, which will never happen, then the amount of central bank gold that’s encumbered by bullion banks or under claims, liens, loan agreements etc will not be apparent.


Sweden holds 125.7 tonnes of gold, and 48.8%, or 61.4 tonnes are stored at the Bank of England.

Swedish Riksbank - distribution of gold reserves
Swedish Riksbank – distribution of gold reserves



Finland holds 49.035 tonnes of gold, and 51%, or 25 tonnes are stored at the Bank of England.

Bank of Finland - Distribution of gold reserves
Bank of Finland – distribution of gold reserves



Germany holds 3,384 tonnes of gold, and 12.9%, or 438 tonnes are stored at the Bank of England. The Bundesbank’s ongoing repatriation of gold from New York and Paris does not alter the amount of Bundesbank gold held at the Bank of England.

Deutsche Bundesbank - distribution of gold reserves
Deutsche Bundesbank – distribution of gold reserves



Austria hold 280 tonnes of gold, and 80%, or 224 tonnes are stored at the Bank of England.

Oesterreichische Nationalbank (OeNB) - distribution of gold reserves
Oesterreichische Nationalbank (OeNB) – distribution of gold reserves



Switzerland holds 1,040 tonnes of gold, and approximately 20%, or 208 tonnes are stored at the Bank of England.

Swiss National Bank - distribution of gold reserves
Swiss National Bank – distribution of gold reserves



Portugal holds 382.5 tonnes of gold (annual report 2014), and 48.7%, or 186.3 tonnes are stored at the Bank of England.

Banco de Portugal - distribution of gold reserves
Banco de Portugal – distribution of gold reserves



The following commentary about Denmark’s gold contains some key points on understanding how to identify which countries store gold at the Bank of England.

As of August 2015, Danmarks Nationalbank (the Danish central bank) holds 65.5 tonnes of gold.

In August 2015, the Nationalbank said that:

“Most of Danmarks Nationalbank’s gold is stored at the Bank of England, where it has been since it was moved for safety reasons during the Cold War. In March 2014, Danmarks Nationalbank inspected its stock of gold in the Bank of England.”

However, an earlier Nationalbank publication in 1999 said that 94%, or 62.7 tonnes was stored at the Bank of England.

Danmarks Nationalbank - location of gold reserves
Danmarks Nationalbank – location of gold reserves

Therefore, the assumption here is that 62.7 tonnes of Danish gold is stored at the Bank of England.

Note the Danmarks Nationalbank’s assertion that in order for gold to be lent it has to be moved to the London, since London is the centre of the gold lending market.

In 1999 “Almost 99 per cent, or 93 per cent of the Nationalbank’s total gold stock, had been lent.” The same 1999 Danish central bank article also said that:

Denmark gold lending BoE

I have underlined the above sentence since it’s of critical importance to understanding that in gold lending, central bank gold lent to LBMA bullion banks at the Bank of England does not necessarily move out of the Bank of England vaults. Lent gold may or may not move out the door, depending on what the borrower plans to do with the borrowed gold.

It also means that the total gold in custody figure that the Bank of England reveals each year (for example £140 billion in February 2015), consists of:

a) central bank gold stored at the Bank of England

b) bullion bank gold stored at the Bank of England

c) central bank gold that has been lent or swapped with bullion banks (gold deposits and gold swaps) and that has not been moved out of the Bank of England vaults. This category of gold is still in custody at the Bank of England. The central bank claims to still own it, the bullion bank has control over it, and the Bank of England still counts it as being in its custody.


The Netherlands holds 612.5 tonnes of gold, and 18%, or 110 tonnes are stored at the Bank of England.

De Nederlandsche Bank (DNB) - distribution of gold reserves
De Nederlandsche Bank (DNB) – distribution of gold reserves


United Kingdom

The UK gold reserves are held by HM Treasury within the Exchange Equalisation Account (EEA). EEA gold reserves totals 310.3 tonnes, and all 310.3 tonnes are stored at the Bank of England.


Notice that the UK gold reserves includes holdings of gold coin, as well as gold bars.



Ireland hold 6 tonnes of gold in its official reserves, a small amount of which is in the form of gold coins, but nearly all of which is in the form of gold bars stored at the Bank of England.

CB 1 Ireland

Recently, I submitted a Freedom of information (FOI) request to the Central Bank of Ireland requesting information such as a weight list of Ireland’s gold stored at the Bank of England. After the FOI request was refused and the Central Bank of Ireland claimed there was no weight list, I appealed the refusal and was provided with a SWIFT ‘account statement’ from 2010 that the Bank of England had provided to the Central Bank of Ireland. See below:

Central Bank of Ireland - gold bars at the Bank of England
Central Bank of Ireland – gold bars at the Bank of England

This statement shows that as of 31 December 2010, the Central Bank of Ireland held 453 gold bars at the Bank of England with a total fine ounce content of 182,555.914 ounces, which equates to an average gold content of 402.993 fine ounces per bar. It also equates to 5.678 tonnes, which rounded up is 5.7 tonnes of gold stored at the Bank of England.

The fact that no weight list could be tracked down is highly suspicious, as is the fact that Ireland had in earlier years engaged in gold lending, so did not, at various times in the 2000s have all of its gold allocated in the Bank of England. How a central bank can claim to hold gold bars but at the same time cannot request a weight list of those same bars is illogical and suggests there is a lot more that the Central Bank of Ireland will not reveal.



Belgium holds 227 tonnes of gold, most of which is stored at the Bank of England with smaller amounts held with the Bank of Canada and with the Bank for International Settlements. Banque Nationale de Belgique (aka Nationale Bank van België (NBB)) does not publish an exact breakdown of the percentage stored at each location, however, in March 2013 in the Belgian Parliament, the deputy Prime Minister and Minister for Finance gave the following response in answer to a question about the Belgian gold reserves:

Most of the gold reserves of the National Bank of Belgium (NBB) is indeed held with the Bank of England. A much smaller amount held with the Bank of Canada and the Bank for International Settlements. A very limited amount stored in the National Bank of Belgium.

Furthermore, there were a series of reports in late 2014 and early 2015 that would suggest that Belgium stores 200 tonnes of its gold at the Bank of England. Firstly, in December 2014, VTM-nieuws in Belgium reported that the NBB governor Luc Coene had said that the NBB was investigating repatriating all of its gold. See Koos Jansen article here.

On 4 February 2015, Belgian newspaper Het Nieuwsblad said that Belgium would repatriate 200 tonnes of gold from the Bank of England, but the next day on 5 February 2015, another Belgian newspaper De Tijd reported that NBB Luc Coene denied the repatriation report, and quoted him as saying:

There are other and more effective ways to verify if the gold in London is really ours. We have an audit committee that inspects the Belgian gold in the UK regularly”.

See another Koos Jansen article on the Belgian gold here.  However, Luc Coene did not deny the figure of 200 tonnes of Belgian gold stored in London.

Therefore, the assumption here, backed up by evidence, is that Belgium stores 200 tonnes of gold at the Bank of England.



Australia holds approximately 80 tonnes of gold in its official reserves, with 1 tonne on loan, and 99.9% of gold holdings stored at the Bank of England. See 2014 annual report, page 33.  According to a weight list of its gold held at the Bank of England, released via an FOIA request in 2014, Australia stores approximately 78.8 tonnes of gold at the Bank of England.

Reserve Bank of Australia


 South Korea

South Korea (Bank of Korea) holds 104.4 tonnes of gold, 100% of which, or 104.4 tonnes is stored at the Bank of England. The Bank confirmed this to me in an email on 11 September 2015. See email here ->

Bank of Korea (BOK) - location of gold reserves
Bank of Korea (BOK) – location of gold reserves


International Monetary Fund

The IMF currently claims to hold 2,814 tonnes of gold after apparently selling 403.3 tonnes over 2009 and 2010 (222 tonnes in ‘off-market transactions and 181.3 tonnes in ‘on-market transactions’). Prior to 2009, IMF gold holdings had been 3,217 tonnes, and had been essentially static at this figure since 1980 [In 1999 IMF undertook some accounting related gold sale transactions which where merely sale and buyback bookkeeping transactions].

Although the IMF no longer provide a breakdown of how much of its gold is stored in each location where it stores gold, the amount of gold held by the IMF at the Bank of England can be calculated by retracing IMF transactions from a time when the IMF did provide such details. In January 1976, the IMF held 898 tonnes of gold at the Bank of England in London, 3,341 tonnes at the Federal Reserve Bank of New York, 389 tonnes at the Banque de France in Paris, and 144 tonnes at the Reserve Bank of India in Nagpur, India. Therefore, of the IMF’s total 4,772 tonnes holdings at that time, 70% was stored in New York, 19% in London, 8% in Paris and 3% in India. See here and here.

In the late 1970s, the IMF sold 50 million ounces of gold via two methods, namely, 25 million ounces by ‘public’ auctions, and 25 million ounces by distributions to member countries.

In the four-year period between mid-1976 and mid-1980, the IMF sold 25 million ounces of gold to the commercial sector via 45 auctions. Thirty five of these auctions delivered gold at the FRBNY, 7 of these auctions delivered gold at the Bank of England, and 3 of the auctions delivered gold at the Banque de France.

Of the 7 auctions that delivered the IMF’s gold at the Bank of England, these auctions in total delivered 3.74 million ounces [Dec-76: 780,000 ozs, Aug-77: 525,000 ozs, Nov-77: 525,000 ozs, May-78: 525,000 ozs, Oct-78: 470,000 ozs, Mar-79: 470,000, and Dec 79:444,000 ozs], which is 116 tonnes. See IMF annual report 1980.

The IMF also sold 25 million ozs of gold to its member countries within four tranches over the 3 year period from January 1977 to early 1980. These sales, which were also called gold ‘distributions’ or ‘restitutions’ and covered between 112 and 127 member countries across the tranches, were initially quite complicated in the way they were structured since they involved IMF rules around quotas which necessitated the gold being transferred to creditor countries of the IMF and then transferred to the purchasing countries. In the later sales in 1979 and 1980 countries could purchase directly from the IMF.

Countries could choose where to receive their purchased gold, i.e. London, New York, Paris or Nagpur, however, the US, UK, France and India, which had the largest IMF quotas and hence the largest gold distributions, all had to receive their gold at the respective IMF depository in their own country. I don’t have the distribution figures to hand at the moment for the 25 million ozs sold to countries, but about 18 countries took delivery from the Banque de France in Paris, with the rest choosing delivery from New York and London.

Therefore an assumption is needed on the amount of gold the IMF ‘distributed’ to member countries from its Bank of England holdings between 1977 and 1980. Of the 25 million ounces distributed, the US received 5.734 million ozs, the UK received 2.396 million ozs (75 tonnes), France received 1.284 million ozs, and India received 805,000 ozs. Subtracting all of these from 25 million ozs leaves 14.78 million ozs which was distributed to the other ~120 countries. Since the IMF held 70% of its holdings at the FRBNY in 1976, 19% at the Bank of England and 8% at the Banque de France, apportioning these three weights to the remaining 14.78 million ozs would result in 10.76 million ozs (332 tonnes) being sold from the FRBNY, 2.867 million ozs (89 tonnes) from the Bank of England and 1.24 million ozs (38.5 tonnes) from the Banque de France.

Adding this 89 tonnes to the 75 tonnes received by the UK would be 164 tonnes distributed from the Bank of England IMF gold holdings. Add to this the 116 tonnes of London stored IMF gold sold in the auctions equals 280 tonnes. Subtracting this 280 tonnes from the IMF’s London holdings of 898 tonnes in January 1976 leaves 618 tonnes.

In 2009 the IMF said that it had sold 200 tonnes of gold to India, 2 tonnes to Mauritius, 10 tonnes to Sri Lanka,and then 10 tonnes to Bangladesh in 2010. The Bangladesh figures reflect its 10 tonne purchase. However, at the moment, there has been no exact confirmation that the 200 tonnes that India bought is in London. It probably is in London, but leaving this amount under the IMF holdings instead of in India’s holdings makes no difference. Subtracting the Bangladesh sale of 10 tonnes, and rounding down slightly, there are 600 tonnes of IMF gold (excluding the 2009 India 200 tonnes sale) stored at the Bank of England.

The IMF sales of gold to Sri Lanka and  Mauritius in 2009 of a combined total of 12 tonnes probably came out of the IMF’s London holdings also. The IMF’s sale of 181.3 tonnes of gold in 2010 via ‘on-market transactions’ may also have come out of the IMF’s London stored gold. These ‘on-market transactions” look to have used the BIS as pricing agent, and the IMF have gone to great lengths to hide the full details of these sales from public view. More about that in a future article.



The Reserve Bank of India holds 557.75 tonnes of gold. Of this total, a combined 265.49 tonnes are stored (outside India) at the Bank of England and with the Bank for International Settlements. In 2009 India purchased 200 tonnes of gold from the IMF via an ‘off-market transaction‘. A slide from this presentation sums up this information.

The questions then are, is the 200 tonne purchase from the IMF stored at the Bank of England, and how much of the earlier 65.49 tonnes is stored at the Bank of England.

Reserve Bank of India - gold held outside India
Reserve Bank of India – gold held outside India
A 2013 article in the Indian Business Standard which was reprinted from “Reserve Bank of India history series. Volume 4, 1981-1997, Part A”, explains that in 1991, the Reserve Bank of India entered 2 separate gold loan deals, one deal with UBS in Switzerland (which required 18.36 tonnes of RBI gold to be sent to Switzerland) and the other deal with the Bank of England and Bank of Japan (where 46.91 tonnes was required to be sent to the Bank of England). Together those 2 transactions equals 65.27 tonnes which is 0.222 tonnes short of the 65.49 total.
After the gold loan deals expired, it looks like 18.36 tonnes of Indian gold were left in Switzerland and transferred to safekeeping or deposit with the BIS, and 46.91 tonnes of Indian gold was left at the Bank of England.
Regarding India’s purchase of 200 tonnes of gold in 2009, the IMF only has gold 4 depositories, namely, the Bank of England, Federal Reserve Bank of New York, Banque de France, and the Reserve Bank of India in Nagpur, India. Given that the Indian gold stored abroad is “with the Bank of England and the Bank for International Settlements“, then for the 200 tonnes of IMF gold to end up being classified as ‘with’ the BIS, it would have to have either been transferred internally at one of the IMF depositories to a BIS account, or transferred via a location swap or a physical shipment to a BIS gold account at the vaults of the Swiss National Bank in Berne.
For now, the 200 tonnes of gold sold by the IMF to India in 2009 is reflected in the IMF holdings and not the India holdings. It does not make a difference to the calculations, since the 200 tonnes is still at the Bank of England.
Bulgaria has 40.1 tonnes of official gold reserves. The latest BNB annual report states that 513,000 ozs are in standard gold form, and 775,000 ozs are in gold deposits.
Bulgaria CB
In 2014, about 60% of Bulgaria’s gold was in gold deposits. These deposits are ‘stored’ in the Bank of England. Therefore approximately 24 tonnes of Bulgaria’s gold is at the Bank of England.

Bulgaria 2


Bank for International Settlements

The Bank for International Settlements (BIS), headquartered in Basle, Switzerland does not have run any gold vaults of its own. However, the BIS is a big player in the global central bank gold market, and it offers its central bank clientele gold safekeeping (and settlement) services using central bank vaults in London, New York and Berne. These services are possible because the BIS maintains gold accounts at the Bank of England, the Federal Reserve Bank of New York, and the Swiss National Bank in Berne. BIS gold accounts can act like omnibus accounts in that many central banks can hold gold in sub-accounts under a BIS gold account at each of these institutions in London, New York and Berne.

Gold can then be transferred around locations using gold swaps where one of the counterparties to the gold swap is the BIS.

BIS gold services to the global central bank market
BIS gold services to the global central bank market

The BIS is involved with gold in 3 main categories.

a) the BIS holds gold in custody for customers, off of the BIS balance sheet

b) the BIS has its own gold holdings which are classified as its gold investment portfolio, and which are on its balance sheet

c) the BIS accepts gold deposits from central banks. These gold deposits appear as a liability on the BIS balance sheet. Then the BIS turns around and places these gold liabilities in the market under its own name. These placing are also in the form of gold deposits and gold loans with other institutions including commercial banks. These ‘assets’ are then classified on the BIS balance sheet as BIS’ “gold banking” assets.

a) In its latest annual report, as of the end of March 2015, the BIS stated that it holds 443 tonnes of gold under earmark for its central bank customers on a custody basis. This gold is not on the BIS balance sheet. i.e. it is ‘off-balance sheet’ gold held by the BIS.

Bank for International Settlements - Off-Balance sheet gold in custody for customers
Bank for International Settlements – Off-Balance sheet gold in custody for customers
b) The BIS also holds 108 tonnes of its own gold (on balance sheet within an investment portfolio). This BIS gold is either kept in custody or transferred to bullion banks as gold deposits. The BIS does not provide granular data in its annual report as to how much of its own gold is ever put into gold deposits.
BIS 108
c) As of 31 March 2015, the BIS had 510 tonnes of gold assets on its balance sheet. Of this total, 108 tonnes was the BIS’ own gold, leaving 403 tonnes as banking assets (i.e. customer gold . Of this same 510 tonnes total, 55 tonnes were classified as gold loans, so 457 tonnes were not gold loans. If all 55 tonnes of gold loans were from customer gold, this would leave 348 tonnes of customer backed gold banking assets. On the same date (31 March 2015), the BIS held 356 tonnes of gold deposits from customers (sight deposits and short-term deposits) on the liability side of its balance sheet which originate entirely from central banks depositing gold with the BIS in sight and term deposits.
The question then is how to reflect BIS gold storage holdings at the Bank of England. While most if not all gold deposit transactions between central banks/BIS and bullion banks take place in London, the data is not readily published.
It was therefore decided, in the spirit of being conservative, to make an assumption on the BIS gold, and only use BIS customer custody gold and BIS own gold as inputs, and because BIS has gold accounts with 3 vaults (London, NY and Berne), to then just divide by 3 and say that one-third of BIS own gold and one-third of BIS ‘central bank custody gold’ is in London This would be 183.66 tonnes, i.e. (108+443)/3.
Therefore, this model states that 183.66 tonnes of BIS gold is stored in the Bank of England. This is probably being very conservative, especially given that no on-balance gold deposited by BIS customers is reflected in this figure.



Venezuela holds 361 tonnes of gold. All the Venezuelan gold is held in Caracas in Venezuela at the Banco Central de Venezuela except 50 tonnes are still stored at the Bank of England for transactions such as the gold swap with Citibank. See my article “Venezuela’s Gold Reserves – Part 2: From Repatriation to Reactivation“.



Bangladesh Bank (Central Bank of Bangladesh) holds 14 tonnes of gold, and 84.2%, or 11.8 tonnes are stored at the Bank of England.

Bangladesh Bank - distribution of gold reserves
Bangladesh Bank – distribution of gold reserves

In September 2010, the IMF sold 10 tonnes of gold to Bangladesh Bank, bringing total gold holdings up from 3.5 tonnes to 13.5 tonnes. The fact that this gold is stored at the Bank of England shows that the IMF sold this gold from its holdings that were stored at the Bank of England. (Note, Bangladesh has recently added some small amounts of domestic confiscated gold to its reserves).



Mexico’s central bank, Banco de Mexico (Banxico) currently hold 122.1 tonnes of gold.  At the end of 2012, Mexican official gold reserves totalled 4,034,802 ounces (125 tonnes), of which only 194,539 ounces (6 tonnes) was in Mexico, and 119 tonnes abroad.

According to a response from Banxico to Mexican economist Guillermo Barba, 99% of Mexico’s gold stored abroad is at Bank of England. So that  is 117.8 tonnes of Mexico’s gold stored at the Bank of England.

With Banxico now holding 122 tonnes according to the World Gold Council, and not 125 tonnes, the assumption is that the 3 tonne reduction came from domestic holdings.

Banxico - location of gold reserves
Banxico – location of gold reserves



Poland holds 102.9 tonnes of gold in its reserves. Poland’s central bank (Narodowi Bank Polski (NBP)) published a guide to Poland’s gold in 2014 in which it confirmed that nearly all of its gold is at the Bank of England. See pages 86-90 of the guide.

“How much gold did Poland possess before 1998? Approximately 746,463 ounces, of which almost 721 thousand was invested in deposits in commercial banks. In turn, the gold kept in the country was mainly coins, gold bars and various types of gold “scrap” bought by NBP.” (page 86)

Before 1998, only 25,463 ozs of NBP gold was kept in Poland, and 721,000 ozs (22.43 tonnes) was deposited with bullion banks. Poland then bought 80 tonnes of gold in 1998, bringing its gold reserves up to nearly 103 tonnes. The purchase was done as follows:

“…we used the services of a bank which constantly carries out similar transactions. Next, we made a location swap and the whole of NBP’s foreign gold reserves were deposited onto our account in the Bank of England.” (page 88)

It is likely that the NBP is referring to the BIS as the bank which purchased the gold on behalf of Poland, and then transferred it from one of the BIS gold accounts at the Bank of England to the NBP gold account at the Bank of England.

So that is 102.9 tonnes stored at the Bank of England.

Note also that, the Polish central bank explains that “It can be assumed that the gold that has been placed on the market at any time is precisely the gold that is held by the central banks in London“. In other words, central banks that have places gold on deposit (lent it) have done so with gold that they have stored in the Bank of England. See the following screenshot:

Narodowi Bank Polski - location of gold reserves
Narodowi Bank Polski – location of gold reserves

Note 6.1 on page 136 of the 2013 NBP annual report states:

“Gold and gold receivables The item comprises gold stored at NBP and deposited in a foreign bank account. As at 31 December 2013, NBP held 3,308.9 thousand ounces of gold (102.9 tonnes).

The annual report is a large file and slow to downlaod so its probably not worth downlaoding it http://www.nbp.pl/en/publikacje/r_roczny/rocznik2013_en.pdf

This statement about the “gold stored at NBP and deposited in a foreign bank account” has been in a few of the recent NBP annual reports. In April 2013, before the NBP had published the guide to its gold, I asked the NBP by email, based on the statement, to  clarify if the gold held abroad is held in custody, for example at the Bank of England or FRBNY or held in time deposits with commercial banks?”

The NBP responded: “Narodowy Bank Polski does not make gold time deposits with commercial banks”.

This may be true if the NBP is using sight deposits, but the 2013 answer, like so many other central banks currently, avoided providing any real information to the question.

Given that nearly all NBP’s 102.9 tonnes of gold was in the Bank of England when the 80 tonnes purchase was made in 1998, the assumption here is that still is the case, and that for simplicity, 100 tonnes of Poland’s gold is at the Bank of England.



Romania has 103.7 tonnes of gold in its official reserves.

National Bank of Romania - distribution of gold reserves
National Bank of Romania – distribution of gold reserves

In percentage terms, as at 31 December 2014, 27% of Romania’s gold was in ‘standard form’ which presumably means Good Delivery Bars (400 oz bars), 14% in gold coins, and 59% in ‘Deposits’ abroad. (59% of 103.7 tonnes is 61.2 tonnes)

Looking at earlier financial accounts, and going back to 2005/2004, the Romanian central bank held gold deposits with bullion banks, and gold deposits at the Bank of England, and the percentage of he gold in each of the 3 categories was very similar to 2014, specifically, in 2005 it was 32% in gold bullion in standard form, 13% in gold coins,and 55% in gold deposits.

Note the gold deposits with Bank of Nova Scotia and Fortis Bank Bruxelles in 2005 and additionally with the same two banks and with Barclays and Morgan Stanley NY in 2004.

National Bank of Romania 2005

Since the percentage breakdown between Romania’s bullion bank deposits (59%), standard bars (27%) and coins (14%) hasn’t varied much since 2005, and was at a similar mix over various years that I checked such as 2011 and 2014, the conclusion is that Romania has had more than  50% of its gold on constant deposit since at least 2004 (i.e. the original allocated gold is long gone).

The 2005 annual report also states that there were 61 tonnes of Romanian gold stored at the Bank of England. Since Romania had just under 105 tonnes of gold in 2005, this 61 tonnes was referring to the gold deposits, which central banks, as illustrated in numerous other examples, continue to count as their gold even though it has been lent to bullion banks.

Romania therefore had or has 61 tonnes of gold stored at the bank of England.

Note also the reference to central vault, which probably refers to a vault in Bucharest.



The Philippines hold 225 tonnes of gold in its official reserves. In November 2000, when the Bangko Sentral ng Pilipinas (BSP) held 225 tonnes of gold, it explained in a press release titled ‘Shipment of Gold Reserves‘ that it ended up storing 95% of its gold at the Bank of England due to the use of location swaps with a counterparty (probably the BIS) that took delivery of BSP gold, and transferred gold to the BSP account at the Bank of England.

Bangko Sentral Philippines - 95% gold at Bank of England
Bangko Sentral Philippines – 95% gold at Bank of England

Since 2000, the BSP gold reserves have risen, fallen, and risen again and now total 195 tonnes. Assuming the ‘95% of its gold’ storage arrangement is still in place, then the Philippines has 95% of 195 tonnes, or 185 tonnes stored at the Bank of England.



Greece claims to hold 112.6 tonnes of gold. In 2013, the Greek finance ministry on behalf of the Greek central bank stated that half of Greece’s gold reserves were ‘under custody’ of the Bank of Greece, and the other half was ‘under custody’ of the Federal Reserve Bank of New York (FRBNY), the Bank of England and (very vaguely) Switzerland. Who actually controls Greece’s gold reserves at this point in time is anybody’s guess.

Bank of Greece, locations of Greece's gold reserves
Bank of Greece, locations of Greece’s gold reserves

See my article from February 2015, titled “Spotlight on Greece’s Gold Reserves and Grexit” which explores Greece’s official gold reserves.

Given that the Federal Reserve Bank of New York was listed by the Greek MinFin as a foreign gold storage location ahead of the Bank of England, the assumption here is that of the 50% of Greece’s gold held abroad, the FRBNY holds more of this portion than the Bank of England. And so the assumption is that the Bank of England holds 40% of the foreign half, i.e. 20% of the total of Greece’s gold, with the FRBNY holding 50% of the foreign half. Taking 112 tonnes of gold as Greece’s total gold holding, 40% of this is 22.4 tonnes stored at the Bank of England. (Note, Greek gold reserves keep increasing incrementally each month by small amounts. As I am not sure what these increases relates to, a recent rounded figure of 112 tonnes has been chosen).



The Banca d’Italia holds 2.451.8 tonnes of gold. Although in 2014, the Banca d’Italia released a document in which it confirmed that some of this gold is held at the Bank of England, there is no evidence to suggest that Italy’s gold in London amounts to more than a few tonnes left over from 1960s transactions.

Bank of England gold set-aside ledgers show that in 1969 there were less than 1000 ‘Good Delivery’ gold bars in the Banca d’Italia gold account at the Bank of England, weighing less than 400,000 ozs in total. This is equal to about 12 tonnes. Most of the Italian gold at the Bank of England was flown back to Rome (and Milan) in the 1960s.

Since there is no public documentation that Banca d’Italia has ever engaged in gold lending (as far as I am aware), then there would be no need for Italy to keep a lot of gold at the Bank of England. Nearly all of Italy’s foreign held gold (over 1,200 tonnes) looks to be in New York (assuming it hasn’t been swapped or used as loan collateral). Italy could have engaged in non-public gold transactions from the Bank of England using gold location swaps from the FRBNY, or from Rome, but there is no evidence of this.

So, this model assumes 12 tonnes of Italian gold is stored at the Bank of England.



Brazil hold 67.2 tonnes of gold reserves. In 2012, Banco Central do Brasil told me by email that all of its gold reserves were in the form of ‘fixed term gold deposits at commercial banks only’. Since the gold would be required to be stored at the Bank of England for these gold deposit transactions to take place, Brazil therefore holds 67.2 tonnes of gold at the Bank of England. See email below:

Banco Central do Brasil - gold deposits
Banco Central do Brasil – gold deposits
Banco Central del Ecuador conducted a 3 year gold swap with Goldman Sachs in June 2014 where it swapped 466,000 ozs for US dollar cash This swapped amount of gold has been factored into the World Gold Council data for Ecuador, and the Ecuadorian reserves dropped by 14.5 tonnes in Q2 2014. from 23.28 tonnes to 11.78 tonnes. This swapped amount of 14.5 tonnes is most probably stored at the Bank of England, since Goldman Sachs proposed a similar deal with Venezuela in 2014 where the gold was required to be at the Bank of England for the swap to be initiated.
Bolivia Central de Bolivia holds 42.5 tonnes of gold, all of which is permanently on deposit with bullion banks. The Bolivian Central Bank is very transparent in explaining where its gold is ‘invested’. Hence, it has (until recently) even provided in its financial accounts, the names of the bullion banks which happened to hold its ‘gold deposits’ and the amounts held by each bank.
Banco Central de Bolivia
Banco Central de Bolivia
A recent Banco Central de Bolivia report for 2014 is less revealing and only shows the country distribution of the gold deposits, with 39% in the UK and the rest in France. While this probably refers to the headquarters of the actual bullion banks in question, i.e. Natixis is French etc, it could mean the gold is being attributed to the Bank of England and the Banque de France, so, a conservative approach here is to attribute 39% of 42.5 tonnes to the Bank of England, i.e. 16.6 tonnes stored at the Bank of England.
Banco Central de Bolivia
Banco Central de Bolivia
Peru holds 34.7 tonnes of gold in its official reserves.
At the end of December 2013, Banco Central de Reserva del Peru held 552,191 ounces (17 tonnes) of gold coins which were stored in the Bank’s own vault, and 562,651 troy ounces of “good delivery” gold bars (17.5 tonnes) which were stored in banks abroad, of which 249,702 ounces were in custody and 312,949 ounces in the form of short-term interest bearing deposits. See 2013 annual report.
Since the gold bars are all ‘good delivery’ bars (which is not the case at the FRBNY), and since Peru has still recently been engaging in gold lending, then the evidence suggests that 17.5 tonnes of Peru’s gold is stored at the Bank of England.
Peru CB

Latvia hold 6.62 tonnes of gold in its official reserves after joining the Euro on 1 January 2014 and after transferring just over 1 tonne of gold to the European Central Bank (ECB). All of Latvia’s gold is stored at the Bank of England, therefore Latvia stores 6.62 tonnes of gold at the Bank of England.

Before this transfer of gold to the ECB, Latvia had 248,706 ozs of gold, and it transferred 35,322 ozs to ECB, leaving 213,384 ozs.

Latvia CB

The latest annual report of the central bank of Latvia explains this transfer to the ECB.

Central Bank of Latvia - gold transfer to the ECB, 2014
Central Bank of Latvia – gold transfer to the ECB, 2014
European Central Bank
The ECB holds 504.8 tonnes of gold. This gold was transferred by the Euro members to the ECB at the launch of the Euro by 1 January 1999. All the ECB gold is de-centrally managed, meaning that it stays where it was when transferred and is still locally ‘managed’ by the bank which transferred that gold to the ECB. Some banks may have transferred gold stored at FRBNY in fulfillment of their requirement, some banks may have transferred gold at the BoE, and countries such as France and Italy may have transferred amounts which are still stored at Banque de France and Banca d’Italia etc. Some of the ECB gold, such as the smaller amount transferred by Latvia, is in the Bank of England. Other amounts of the ECB’s gold are most certainly also at the Bank of England in London.
It would be a separate project to track these transfers. The 1 tonne of Latvian gold transferred to the ECB at the start o 2014 was included in the figures here just as a placeholder, so as to acknowledge that ECB gold is at the Bank of England. Given that the Euro is a competing currency to the US Dollar, the ECB may have more gold than not stored in Europe and not at the Federal Reserve Bank of New York, since ECB gold would logically be safer not stored in the main Reserve Bank of a competing currency bloc.



Iceland holds 2 tonnes of gold reserves (precisely 63,831.46 ozs). Although the Bank of Iceland says that its gold is stored at the Bank of England and in its own vault also, nearly all the gold is stored at the Bank of England.

In its 2014 annual report, the Bank of Iceland said that “The Bank resumed lending gold for investment purposes in June 2014“, and “The Bank loaned gold to foreign financial institutions during the year”.

CB Iceland

The Bank of Iceland lent 99.7% of its gold during 2014 because this is the percentage of the gold reserves which are not payable on demand, but are payable in less than 3 months. See below screenshot.

Central Bank of Iceland - gold deposits
Central Bank of Iceland – gold deposits

For the purposes of this exercise, Iceland stores 2 tonnes of gold at the Bank of England.



Ghana’s central bank, the Bank of Ghana, holds 8.7 tonnes of gold in its official reserves (precisely 280,872.439 ozs). Of this total, 39.3%, or 3.42 tonnes is held at the Bank of England, with 27.5% at the Federal Reserve Bank of New York, and 29.5% with investment bank UBS. See 2014 annual report.

Interestingly, Ghana refers to its gold account at the Bank of England as a ‘gold set aside’ account, which is the correct name for a Bank of England gold custody account of allocated gold. Probably more interestingly is that most central banks do not use this ‘set aside’ term.

Bank of Ghana



A number of central banks refuse to confirm the location of their gold reserves. I will document this in a future posting. Some of the large holders undoubtedly hold quite a lot of gold at the Bank of England, as do a number of smaller holders. Countries that could fit into this category include Spain, France, Colombia, Lithuania, Sri Lanka, Mauritius, Pakistan, Egypt, Slovenia, Macedonia, Malaysia, Thailand and South Africa. In fact any central bank which has engaged in gold lending is a candidate for having some of its gold stored at the Bank of England.

Spanish people take note. Spain refused to say where its 281.6 tonnes of gold is stored, and Banco de España has the dubious record of being Europe’s least transparent bank as regards gold reserves storage locations. Maybe a project for Spanish journalists.

Banque de France keeps 9% of its 2,435 tonnes of gold reserves abroad, and has in the past engaged in gold lending. So this 9%, or 219 tonnes, is probably stored at the Bank of England.

The ECB and BIS  no doubt have more gold stored at the Bank of England than the figures currently reflect. This would also increase the ‘known gold’ total. Egypt is another country which has had a gold set aside account at the Bank of England so is in my view an obvious candidate for the list.

Adding to the known total is therefore a work in progress.

Venezuela’s Gold Reserves – Part 2: From Repatriation to Reactivation

This is Part 2 of a two-part series. Part 1, titled “Venezuela’s Gold Reserves – Part 1: El Oro, El BCV, y Los Bancos de Lingotes“, provided a historical overview of Venezuela’s gold and looked at where the gold, and the claims on gold, were located just prior to repatriation in 2011, especially the gold held abroad.

Part 1 was necessary so as to set the scene for the, in some ways, theatrical gold flights and convoys of Part 2, and to also illustrate that a percentage of Venezuela’s gold (50 tonnes) was retained in the vaults of the Bank of England so as to be available for activation into international gold transactions.

And so, the analysis below covers Venezuela’s actual gold repatriation operations in late 2011 and early 2012, especially the first and last flight. You will see that the first batch of gold bars came in on an Air France cargo flight, which opens up key questions about France and the Banque de France as a source for some of the repatriated gold. You will also see the arrival and unloading of the last flight, a World Airways cargo freighter.

The analysis wraps up with a look at the gold swap discussions between Venezuela and a set of investment banks which culminated in a gold swap being agreed with Citibank. The question then arises as to whether further similar gold swaps are in store for Venezuela’s domestically held monetary gold.


The Repatriation – Flights and Convoys

The Venezuelan gold repatriation transport operation took just over two months to complete, beginning on 25 November 2011, and winding up on 30 January 2012. During this time, 23 shipments (by air) are said to have arrived in Caracas, with 160 tonnes of gold flown in.

As Banco Central de Venezuela (BCV) governor Nelson Merentes stated in an end of year 2012 report (page 16):

“In 2012, the central bank completed the repatriation of monetary gold , which began in late 2011. This unprecedented process, which reaffirms the sovereignty of the nation, constitutes the largest movement of physical gold in the world market in recent years . A total of 23 gold shipments were moved, totalling 160 tonnes of metal that had been custodied abroad.”

Notwithstanding the fact that the German Bundesbank claims to have quietly and secretively moved 940 tonnes of its gold from the Bank of England in London to its Bundesbank headquarters in Frankfurt between 2000 and 2001, the Venezuelan gold repatriation is still probably the “largest movement of physical gold in the world market” since that time.

merentes car

The first and last shipments of Venezuela’s gold repatriation arrived into Maiquetía Airport (aka Simón Bolívar International Airport) in Venezuela’s capital, Caracas, so the presumption is that the other shipments did also. Both the first and last shipments received huge media coverage in Venezuela and extensive coverage internationally. Given that the Venezuelan State facilitated and encouraged this domestic media coverage, as well as street scenes thronged with Chavez supporters, this is not surprising. The majority of the other shipments after the first and before the last ones got little or no coverage, probably due to security procedures.

Reuters quoted Nelson Merentes on the day of the first shipment arrived as saying that:

“We cannot give exact dates (for when the rest of the bars will arrive) due to questions of security. When we bring the last shipment, the people will learn about it.

The Reuters report also quoted a Venezuelan government source as saying that there would be ‘several’ cargo flights.

“A senior government source involved in transporting the bars, which amount to 90 percent of Venezuela’s gold held abroad, has told Reuters they will be shipped in several cargo flights that will be completed before the end of the year.

The total cost of the operation will be no more than $9 million, the source said, without elaborating.”

The First Shipment (by air) came from France

The gold from the first shipment, which consisted of 5 tonnes of gold, was moved from Maiquetía airport to the central bank vaults in Caracas on Friday 25 November 2011 amid much fanfare and coverage. Although the airport to bank journey happened on 25 November, an article here claims that the “the repatriation of gold reserves began on 23 November”.

In various news footage videos below, which cover the transport of the gold from the airport on 25 November 2011, there are no shots of any aircraft being unloaded, which may suggest that the first shipment did indeed arrive prior to 25 November, possibly on 23 November. The first shipment was flown in using Air France (see below).

In contrast, during the last operation on 30 January 2012, the arrival of the aircraft into the airport played a starring role in proceedings, possibly because the shipments were then being wrapped up and there was little harm in broadcasting the identify of aircraft, which you will see below was a chartered World Airways MD-11 cargo freighter.

The first video below from 25 November 2011 shows black plastic crates (presumably with the gold in them) on pallets which in turn are on trailers, positioned beside a line of armoured cars ready for loading.

Very interestingly, central bank governor Merentes (at 0:22) states that this first shipment of gold came from European countries “via Francia” (by way of France).

This is very odd that the first shipment came from France. Given that the gold was stored at the Bank of England and with the BIS, none of the Venezuelan gold should ever have been in France. And with air charters from Europe, there would be no need to fly into and out of a French airport en route from London to Caracas.

A November 2013 article from Venezuelan newspaper ‘El Nacional’ stated that the first batch of gold had come directly from France:

Los primeros lingotes vinieron de Francia en medio de un operativo denominado Oro Patrio y en el que participaron más de 500 funcionarios.”

The first ingots came from France in the middle of an operation called Golden Homeland and in which over 500 staff participated.”

The most compelling piece of evidence, however, that the first shipment came from France is the fact that the gold was flown into Caracas on Air France, and there were labels on the side of the crates stating this. See screenshot below taken from one of the videos:

Air France - air waybill

This label above shows the ‘Air Waybill No’ of ‘057-53208470′, the ‘Destination’ of CCS (Caracas), and the ‘Total No of Pieces’ – 10, i.e. 10 crates.

See also the below photo of one of the crates, with the same Air Waybill number 057-53208470, after it was loaded into the back of one of the armoured security cars:

Air France labelled crate on pallet

Air France Cargo fleet consists of 2 long-range Boeing 777- 200LRF cargo freighters, registration numbers F-GUOB and F-GUOC. You can see a video of F-GUOC taking off (from another airport) here.

These 777F aircraft have “a maximum payload of 102 tonnes, a total capacity of 37 pallets and a maindeck that can take 3-metre pallets“. The videos below of the first gold shipment, and the video of the last unloading on 30 January 2012, shows these huge 3-metre pallets on the ground and, in the case of the last shipment, being unloaded.

Since the gold in the first shipment was flown from France, this gold may have come from the Banque de France in Paris, which would suggest that the bullion banks and/or the BIS had to resort to sourcing gold from the Banque de France. BNP Paribas was one of the five bullion banks that had a borrowed gold liability to the BCV, so this fact may be relevant. (See a section below about the French connection).

The second Venezuelan video from 25 November 2011 states that gold which was located in US, Canadian, and English banks was being repatriated to Venezuela. This does not mean, however, that the gold flights originated in all or any of these locations. The US, Canada and England just refer to the headquarters of the bullion banks involved in the repatriation.

The third video from 25 November 2011 refers to “foreign banks,” “principally in Europe,” and mainly English banks.

Reuters quoted Merentes as having said that “The gold comes from several European countries.


1. Length: 2:26 – Nelson Merentes interview, and gold ready for loading. 25 November 2011


2. Length: 2:06 – Armoured cars and convoy getting ready to leave the airport, and then departing the airport. 25 November 2011


3. Length 1:53 – Convoy leaves airport and drives to the central bank. 25 November 2011


4. Length 11:03 – Air France label is shown beginning at 9:42. This longer video has extended footage of the unloading and loading operation. 25 November 2011


The BCV’s 2011 Economic Report (see link above, page 92) states that the first shipment on 25 November 2011 consisted of 5 tonnes of gold. In the media coverage of the first shipment, the exact tonnage of gold involved was not stated beyond the fact that  “Nelson Merentes said a little over 300 million dollars was brought in the first batch of gold that came to the country on Friday.”

At a price of $1,688 per ounce on 25 November 2011, that would be roughly 5.5 tonnes. Whether it was 5 tonnes of 5.5 tonnes is not that important. With each of the crates holding 500 kgs or 0.5 tonnes, that would be 10 – 11 crates in the first shipment. There appear to have been 10 crates given that’s what it said on the crate labels and that’s what the BCV maintain their were.

Once the gold was loaded up into the fleet of security vans, a huge convoy of military vehicles and personnel (said to be between 400 – 500 personnel) accompanied the vans out from the airport (by the ocean) and around the mountain to the central bank building in downtown Caracas, on a route, some of which was lined with Chavez’ supporters, especially where they had congregated near the bank’s entrance.

 As mentioned, there was little coverage after the first shipment, although a local media article referred to a second shipment arriving from Europe on Tuesday 6 December 2011. After this, the media didn’t really cover the repatriation until the last shipment arrived by air on Monday 30 January 2012.

repatriation gold caracas

The Last Shipment – The Final Flight of MD-11, N275WA

The final shipment arrived into Maiquetía – Simón Bolívar airport on Monday 30 January 2012 consisting of 14 tonnes of gold in 28 boxes. The novel significance of the media coverage on this day was that news crews were allowed to film the airplane taxiing into the landing area and unloading its cargo.

The arriving aircraft was a three-engine long-range McDonnell Douglas MD-11 CF (convertible freighter), registration number N275WA, serial number MSN 48631, registered to World Airways. You can see the fleet number (nose code) of ‘275’ above the front (nose) wheel in the photo below.

flight N275WA

Six of these MD-11 CFs were built and World Airways were flying two of them at this time. Ironically, the parent company of World Airways, called Global Aviation Holdings Inc, filed for chapter 11 bankruptcy protection on 5 February 2012, six days after N275WA had delivered the last shipment of Venezuela’s gold to Caracas. Interestingly, Global Aviation Holdings was also “the largest commercial provider of charter air transportation for the US military”.

Other photos of World Airways’ N275WA from around the world can be seen here and here. N275WA, which had been converted into a freighter in 2002, went out of service and into storage in July 2012. Global Aviation Holdings again entered bankruptcy in November 2013, after which time World Airways was shut down. This explains why one of the MD-11 captain for World Airways (possibly captaining some of the gold flights) left World Airways in March 2014.

See video below of aircraft N275WA arriving into Caracas on 30 November 2012


5. Length 1:53 – N275WA arriving and unloading its cargo on 30 November 2012


6. Length 3:27 – This is a well produced promotional video from “Servicio Pan Americano de Protección”, the company that transported the gold from the airport to the bank. The video shows the entire unloading and loading operation from 30 January 2012 and is well worth watching.


An MD-11 CF freighter can transport 26 large pallets and has a maximum payload of 89,000 kgs (or 89 metric tonnes). Technically, Venezuela could have had all of its repatriated gold flown in on a lot less than 23 flights. Insurance and other risk management considerations probably dictated the diversification requirement, as well as the gold possibly only becoming available in piecemeal fashion from November 2011 to January 2012.

BCV address and lot 20

If there were indeed 23 flights over 2 months totalling 160/161 tonnes, each flight could have flown in 7 tonnes of gold, since this adds up to 161 tonnes (23 * 7). Given that the last batch was said to be 14 tonnes and the first batch 5 tonnes, each of the other 21 flights could have carried a batch of about 6.70 tonnes.

However, a number of batches could have arrived on the same flight, such as the last flight which is said to have flown 14 tonnes. Video footage from the last shipment day, 30 January 2012, shows a crate with lot number ’20’ displayed on it – See above screen shot. So there were at least 20 ‘lots’. Overall, there would have been about 360 crates.

Given that Venezuela was able to repatriate 160 tonnes of gold in cargo flights over the Atlantic Ocean from Europe within 2 months, this proves that the German Bundesbank could have easily repatriated its intended target of 300 tonnes of gold from New York in 2013, by flying the entire 300 tonnes over to Frankfurt within 4 months. Venezuela’s successful operation proves that the Bundesbank’s seven-year repatriation plan is laughable, and that the excuses coming out of Frankfurt are hiding something far more critical to the Bundesbank and the Federal Reserve and US Treasury than logistical flight details.


The French Connection – Banque de France

It’s not clear where the last gold shipment on World Airways N275WA aircraft originated from, although Nelson Merentes made the general statement for the overall operation that “the gold comes from several European countries.

However, in the case of the first shipment on Air France from France, there are not that many places where the flight could have come from, the main suspect being from Charles de Gaulle airport (CDG) in Paris, where Air France has one of its two main cargo hubs (the other hub being Amsterdam – i.e. these are Air France-KLM’s two cargo hubs). This then also makes a good case for the first shipment of gold having come from the Banque de France. If this was the case, then it meant that bullion banks and/or the BIS needed to source gold from the Banque de France. Would this have been feasible? Yes.

A May 2012 article from CentralBanking.com (subscription only) quoted George Milling-Stanley, independent gold consultant, and formerly of the World Gold Council, who had some interesting insights into the role of the Banque de France in being able to mobilise gold:

‘”Gold stored at the Bank of England vaults … can easily be mobilised into the market via trading strategies, or posted as collateral for a currency loan. The London vaults of JPMorgan, HSBC, and other bullion dealing investment banks have a similar status,” says Milling-Stanley.’

‘Of the Banque de France, Milling-Stanley says it has “recently become more active in this space [mobilising gold into the market], acting primarily as an interface between the Bank for International Settlements in Basel [BIS] and commercial banks requiring dollar liquidity. These commercial banks are primarily located in Europe, especially in France”.’

Milling-Stanley’s reference to the Banque de France acting as an interface to the BIS and commercial banks in Europe may be implying that the Banque de France was a party to the 2010 BIS gold swaps which involved 10 commercial banks including BNP Paribas, Societe Generale and HSBC.

In July 2010 the FT said that “three big banks – HSBC, Société Générale and BNP Paribas – were among more than 10 based in Europe that swapped gold with the Bank for International Settlements in a series of unusual deals.” Note that BNP Paribas and HSBC are two of the five bullion banks with which the BCV had outstanding gold loans to in August 2011.

Despite the BIS’ cryptic, short, and obscure explanation that in these swaps, the commercial banks provided gold to the BIS in return for US dollar liquidity, it could be the case that commercial bullion banks borrowed central bank gold held at the Banque de France via financing from the BIS as part of a tripartite transaction.

Under this type of tripartite transaction, which was first proposed by Adrian Douglas, a Venezuelan – Banque de France version would have involved the Banque de France arranging gold lending to the bullion banks who then transfer the title of this gold to the BIS. The BIS transfers US dollars to the bullion banks who then either transfer this currency to the Banque de France, or owe a cash obligation to the Banque de France. The gold is recorded in the name of the BIS but is actually kept in the Banque de France until required by the bullion banks who borrowed it, then, when needed, gold is withdrawn by the bullion banks and used to pay back central bank gold lenders such as Venezuela’s BCV. Either French gold or Banque de France customer gold (such as IMF gold in Paris) could have been used in such a transaction. This would explain why Venezuela received crates of gold flown in to Caracas by Air France cargo.

The FT also noted in its 2010 BIS gold swap article that “In a short note in its annual report, published at the end of June, the BIS said it had taken 346 tonnes of gold in exchange for foreign currency in “swap operations” in the financial year to March 31.” (2010)

This 346 tonne BIS gold swap figure was said to have continued to grow after March 2010 and was estimated to be as high as 380 tonnes by July 2010.

Venezuela’s 50 tonnes of gold at the Bank of England

At the time of the arrival of the last gold shipment to Caracas in January 2012, Nelson Merentes was reported to have noted that “gold stored in BCV will reach 86% of the total while the rest, about 50 tonnes, will stay in the banks in which the Republic needs to maintain open accounts for international financial operations.” In August 2011, Chavez had referred to wanting to reach a target of 90% of the gold being stored in Caracas, but 86% is quite close.

The 50 ton amount remaining at the Bank of England was possibly chosen as a ’round number’ tonnage by the BCV and its international advisors. From the above bar/ingot total calculations, it seems that there were 4,089 good delivery bars left in London. This 50 tonnes, left in situ in London in January 2012, was to play a far greater role in Venezuela’s international financing arrangements than many envisaged at the time.




The Reactivation of Venezuela’s Gold Reserves

The death of Venezuelan president Hugo Chavez in March 2013, and the election of Nicolás Maduro as his successor marked a re-establishment of the relationship between the international investment banks and the Venezuelan central bank.

Recall that in August 2011 when Chavez called for the repatriation of Venezuela’s gold reserves, he also called for the transfer of the BCV’s operating reserves away from US and European banks. These operating reserves, such as cash deposits and short-term fixed interest investments, had been invested with the BIS (BPI in Spanish), Barclays, JP Morgan, BNP Paribas, Deutsche Bank, the FRB (repos), the World Bank and Bladex (the Panamanian based LatAm trade bank). Sight deposits were with JP Morgan, time deposits with the other commercial banks and the BIS, and it negotiable (fixed rate) instruments with the BIS (FIXBIS). See “Proposed Relocation of the International Reserves“.

Operating Reserves August 2011

Prior to the Chavez about-turn, Venezuela had cultivated close working relationships with some of the biggest global investment banks (or vice-versa), and seemed to be especially fond of Wall Street banks. This is illustrated, obviously, by the manner in which it used the investment banks to invest both the operating and gold components of its international reserves, where the names involved read like a who’s who of investment banking giants. But as important as the deposit taking banks appear to be to Venezuela, the advisory and corporate finance relationships look to be as equally important.

According to the Venezuelan media, in the early 2000s, JP Morgan was said to be very close to the Venezuelan finance ministry and finance minister Alejandro Dopazo, and Credit Suisse New York was also said to have had a close relationship with the government.

The use of Venezuelan gold as loan collateral was also not something new to the Maduro years. A Venezuelan media report from August 2011 claims that a few years prior to 2011, Venezuela was involved in financing discussions with New York based investment banks where the banks raised the issue of gold collateral as a means of lowering the required coupon in the financing strategies and products being discussed. These meetings were said to have taken place in the New York offices of Francisco Illaramendi, former manager of the PDVSA pension funds. According to the media report, Deutsche Bank, Credit Suisse and Barclays separately proposed that in order to  “avoid the penalty of high coupons, Venezuela could place ‘equivalent in gold in the banks’ to support the issue”, with Credit Suisse proposing that Venezuelan gold be deposited with it in London and Barclays proposing likewise.

Since the Maduro presidency, the investment banks, and especially the Wall Street based banks, have been actively involved again in Venezuela’s financial affairs. Late last year, in December 2014, Venezuela sold Goldman Sachs a $4 billion credit owed to Venezuela by the Dominican Republic which was outstanding under the Petrocaribe arrangement. Petrocaribe is a regional oil programme by which Venezuela supplies oil to other countries in the region.

Lazard, the French investment bank, is a financial advisor to the state of Venezuela, and last year Lazard was chosen by Venezuela to handle the sale of Citgo Petroleum on behalf of the Venezuelan state owned oil company PDVSA (Petróleos de Venezuela S.A.). Citgo is a US subsidiary of PVDSA. This sale didn’t go ahead but then Deutsche Bank’s New York office was chosen in January 2014 to handle a bond and loan capital raising exercise for Citgo and advisory services for PDVSA. Deutsche had previously worked with PDVSA.

Bank of America-Merrill Lynch also now has a close relationship with the Venezuelan central bank and the Venezuelan government in the form of its chief economist for the Andean region, Francisco Rodríguez. Rodríguez, was chief economist to the National Assembly of Venezuela from 2000-2004, and joined Bank of America in 2011. More about Rodríguez below.


Goldman Gold Swap Plan

The first sign that Venezuela’s gold was back in the sights of the investment banks came in November 2013, when it was reported that the BCV (and the Venezuelan government) were in negotiations with Goldman Sachs about the arrangement of a gold exchange, in other words, a gold – US dollar swap with gold as collateral. A lot of the reporting at the time did not provide very much detail about this swap, so here are some summary details of the Goldman gold swap.

The gold swap was to be between the Central Bank of Venezuela (BCV) and Goldman Sachs International in London. Eudomar Tovar was BCV president at that time. The swap would involve Venezuela swapping gold from it’s reserves with Goldman Sachs international in exchange for a US dollar loan, with the gold serving as collateral for the loan.

The swap was to be for a four-year duration between 2016 and 2020 (although another media source said it was to be for a seven-year duration from late 2013 until late 2020). The swap was to be for 1.45 million ounces of gold (or nearly 1.45 million ounces according to one media source) which was expected to be deposited at the Bank of England and transferred to Goldman Sachs International at an agreed time. At the time, 1.45m ozs of gold was valued at over $1.85 billion at the then market price of $1,282 per ounce. Venezuela would also pay an annual interest rate of 8% on the loan.

BCV Goldman Adar gold swap

The above screenshot is from a document here.

If the price of gold fell over the life of the swap, the BCV would need to deposit more gold into a margin account. If the price of gold rose, Goldman Sachs International would be required to deposit more currency into a margin account.  At the swap’s maturity, the contributions made by each party into the margin accounts would be returned to the respective parties.

The swap was said to contain a built-in hedge that would benefit Goldman, which reflected a 10% adjustment of the value of the swap if the gold price fell. The gold swap was said to be tradable on the market. The terms of the swap allowed the BCV to repay the loan and keep the gold, but if the BCV didnt repay the loan, the gold would go Goldman. One report said that the gold would continue to appear on the BCV’s balance sheet throughout the term of the swap.

The BCV had contracted Adar Capital Partners (of which Diego Marynberg is a director), as a consultant to design the swap with Goldman Sachs International. Adar Capital Partners would received 0.25% per annum of the value of the gold in the contract at beginning of each year over the life of the contract.

Any dispute between the parties would  be resolved in English courts. Some media articles on the BCV-Goldman gold swap can be viewed in Spanish here and here and here.

Given that there were said to be 16,908 of Venezuela’s gold bars held abroad, of which 12,819 bars were repatriated, this left 4,089 of Venezuela’s bars in the vaults of the Bank of England from early 2012. These 4,089 bars are roughly equal to 51 tonnes, or 1.635 million ounces. It looks like the Goldman swap factored in a 10% adjustment on 50 tonnes of gold (roughly 1,607,500 ozs) at the Bank of England,  to arrive at 1.45 million ounces (i.e. 1,607,500 * 0.9 = 1,446,750 ozs). This is the 10% adjustment referred to above. So Goldman would have had an extra buffer built-in as protection against a downward gold price movement.

The discussion of the swap at the time in November 2013 did not reveal what US dollar amount the BCV was to receive from Goldman in exchange for transferring 1.45 million ozs of gold to Goldman. i.e. it did not reveal the intended discount that the BCV was expected to take on gold with a US dollar value of $1.85 billion.

The BCV maintains that this gold swap with Goldman Sachs International did not go ahead, despite what look like detailed terms and negotiations. But the framework of the gold swap discussed with Goldman Sachs looks very similar to the swap structure that was ultimately chosen in April 2015, so it appears that the BCV re-used in some way the plan that they had drawn up with Adar Capital Partners and Goldman Sachs.

Goldman and Ecuador

Where Goldman did get a Latin American gold swap out the door was Ecuador, approximately six months after its negotiations with Venezuela hit a wall.

In early June 2014, it was announced that Ecuador had agreed to swap 1,165 bars of gold as collateral with Goldman, and in return Goldman agreed to provide Ecuador with “instruments of high security and liquidity” i.e. a loan. This gold swap was for 3 years, from 2014 to 2017 after which it will be reversed and Ecuador will get its gold back and pay the 2017 gold price to Goldman.

Rodríguez, Bank of America and the BCV vault visit

In September 2014, there was a rather unusual story from Bloomberg in which Francisco Rodríguez, the Bank of America economist (see above), related the fact that he had been allowed a rare visit into the Venezuelan central bank gold vault to view the gold bars. Rodríguez maintains that he was at a routine meeting in the BCV headquarters when his request to see the gold was granted, and that he and four other people who had attended the meeting were brought down to the underground vault in which all of the gold was stacked in “five small cells that were not even full to the top”, and that the bars were of “different types”.

While Rodríguez is said to be close to the BCV and the Venezuelan government, it still seems odd that at a routine meeting, a Bank of America representative (and some unnamed others) would pop down to see the gold in the vault, while external attendees at countless other meetings at the BCV’s headquarters would not do this tour. Could it he that the Bank of America was running the slide ruler over the Venezuelan gold in preparation for a loan of their own to the Venezuelan State?

Role Call Recall

At this point its worth recalling some of the banks that were interacting with the Venezuelan state and finance ministry, and/or interacting with the BCV (not including the gold deposits and gold lending).

In 2011, Venezuela’s operating reserves were invested with Barclays, JP Morgan, BNP Paribas and Deutsche Bank. Earlier in the 2000s, JP Morgan, Credit Suisse and Deutsche were said to be close to or working with Venezuela on various financing matters.

It was also said that a few years prior to 2011, Barclays, Credit Suisse and Deutsche, at meetings in New York held in the PDVSA offices, had proposed that Venezuela could put up gold as collateral so as to lower coupons on unspecified products.

Then there was Goldman Sachs purchasing outstanding debt that the Dominican Republic owed to Venezuela. Then there were Lazard and Deutsche advising the PDVSA and/or Citgo in the US. Finally there was Goldman Sachs negotiating a gold swap with Venezuela in 2013, and Bank of America taking a look at the gold in the BCV vaults in 2014.


Investment Bank beauty parade – March 2015

The topic of Venezuelan gold swaps was again raised on 10 March 2015 when Reuters reported that the BCV was said to be in advanced discussions with a group of Wall Street banks about conducting a 4 year gold swap for 1.4 milion ozs of gold, and that the swap operation would be agreed by the end of April. Reuters reported that the discussions involved at least two institutions, namely “Bank of America and Credit Suisse”.

At the time, the swap was said to involve an exchange of 1.4 million ozs (43.5 tonnes) of Venezuelan gold for cash, on which interest would be paid, and that Venezuela had the option of re-purchasing the gold after the expiry of the 4 year term. Interestingly, it was also said that Venezuela “would most likely be able to maintain the gold as part of its foreign currency reserves” during the swap, i.e. double-counting of gold reserves.

Amid the publicity about these March 2015 swap discussions, confusion arose as to whether the Goldman Sachs gold swap had happened or not, but the BCV stated generally that although it had “received proposals to carry out a similar operation” in late 2013, it “denied any agreements had been completed.“

Local media went further, and named additional investment bank names said to be involved in the pitch to secure the gold swap deal. On 5 March 2015, Nelson Bocaranda Sardi claimed in Venezuelan newspaper El Univeral that there was a pitch competition (implied to be for effect) by Credit Suisse, Goldman, BTGP Brazilian, Deutsche, Bank of America and Citibank, and that it was really a three horse race in which Deutsche Bank, Bank of America and Citibank would be chosen for the gold swap, but for $500 million each. Furthermore, Sardi said that Venezuela was paying $70 million to each bank as a risk premium. El Universal was previously said to be critical of Chavez, but may now not be so critical of Maduro.

On 12 March, on a web site of an organisation called Aporrea, Fresia Ipinza retorted (possibly with more up-to-date information) that rumours were saying that the gold swap would be over 4 years for 1.4 million ozs, and that allegedly Bank of America and Credit Suisse were involved. Aporrea were known to be Chavez supporters.

So, its very possible that the list of investment banks pitching to Venezuela for the gold swap were as follows: Bank of America, Credit Suisse, Citibank, Deutsche Bank, Goldman Sachs and BTGP. BTGP refers to BTG Pactual, a Brazilian investment bank.

Citigroup Rescue


The Citibank Gold Swap

In the last week of April 2015, it emerged that Citibank had exclusively won the mandate for the gold swap with Venezuela. It was reported that Citi was chosen from a group of ‘five’ banks that had pitched.

A combination of sources (see links) yield the following details about the gold swap with Citi. The details are said to be derived from newspaper ‘El Nacional’ and also a former director of the BCV, and also from Reuters.

Venezuela (via the BCV) will put up 1.4 million ozs of gold as collateral in exchange for a $1 billion loan of foreign currency from Citibank. Since 1.4 million ozs of gold, valued at the late April 2015 price of $1,200, is roughly $1.68 billion, then Venezuela is having to accept a near 40% discount on the specified gold collateral. Venezuela also pays interest on the loan at between 6% and 7% per annum.

The swap is for a 4 year duration, and Venezuela will have the “right of first refusal” to re-purchase the gold after 4 years. The 1.4 million ozs of gold (43.5 tonnes and just less than 3,500 Good Delivery bars equivalent) will be held at the vaults of the Bank of England. If Venezuela does not pay the interest payments on time, Citibank can gain control of the gold. The loan was expected to be for $1.5 billion but its unclear why this changed, but probably would have something to do with a bigger haircut being imposed.

According to ‘Venezuela Analysis‘ the “current value [of the gold] will continue to appear on the Central Bank’s balance sheet – an advantage that Goldman Sachs denied the country in earlier talks.” ‘Venezuela Analysis’ also said that some sources think Citibank holds title to the gold, while other say Venezuela holds title. Another relevant newspaper link is here.

None of the media commentary mentioned Adar Capital Partners Ltd in conjunction with the Citibank swap but its possible that this company could have been involved in the more recent swap negotiations, given that it was involved in the late 2013 gold swap negotiations involving Goldman Sachs and a lot of the swap terms are similar. On the other hand, the BCV could have just taken its gold swap file on the Goldman proposal out of the top drawer and reused the Goldman – Adar plan.

Why might Venezuela need a loan now?

Does Venezuela really need extra foreign currency now? In some ways, yes. Venezuela’s international reserves keep falling and as Nathan Crooks of Bloomberg said recently, reserves are now under $18.8 billion and at the lowest level since October 2003.

Venezuela’s international reserves fell by about US$2 billion during April from a level of $20.8 billion at the beginning of April. Lower oil prices have impacted the country’s ability to comfortably meet principal and interest payments on foreign bond borrowings and  for financing imports. Inflation in Venezuela is running high, and there are reports of a shortage of essential goods and an impact on some public services. In short, the economy is contracting.

Rodriguez, the Bank of America economist, said that the gold swap was the ‘logical’ course of action for Venezuela to take. As to why Venezuela can’t negotiate oil swap deals in the current environment or get more financing from the BRICS or China, that is probably more of an international political issue and a reputational issue with the international capital markets.


Maria Corina Machado

On 12 March 2015, Maria Corina Machado, a deputy in the Venezuelan National Assembly and political leader of the opposition party, sent an offical letter to Nelson Merentes, president of the BCV, asking the following 5 questions about the gold swap, which at the time, in early March, was being rumoured.

Questions 1 and 2 are quite standard and to be expected in light of the general rumours about the swap, but questions 3, 4, and 5 seem to suggest that Machado had heard something about the negotiations that made her think that the size of the swap was going to be far larger ($2.6 billion), and that there would be a ‘second operation’ with an even larger swap, and that this would require moving gold out of Venezuela again. See the 5 questions below:

  1. ¿Está todo el oro de las reservas venezolanas en las bóvedas del BCV de Venezuela tal como afirmó el ex presidente el Hugo Chavéz 17 de agusto 2011, cuando ordenó “repatriacion de nuestro oro”?

Are all of Venezuela’s gold reserves in the vaults of the Central Bank of Venezuela as stated by the former president Hugo Chavéz on 17 agusto 2011, when he ordered “repatriation of our gold”?

2. ¿Está el BCV en negociación con la banca extranjera para la venta o empeño del oro monetario?

Is the BCV in negotiations with foreign banks for the sale or pawning of monetary gold?

3. ¿Es cierto que en la operacion de empeño del oro actualmente en discusión se pretende disponer de oro por un valor de mercado de 2,6 mil millones US$?
¿Esto representaría comprometer casi el 20% del total de reservas en oro de la Républica en esta primera operación?

Is it true that in the operation to pawn gold currently under discussion, it is intended to dispose of gold with a market value of US$ 2.6 billion?
Does this represent / involve almost the 20% of the total gold reserves of the Republic, in this first operation?

4. ¿Es cierto que estarían negociando una segunda operacion de empeño similar a la anterior por un monto aun mayor?

Is it true that they would be negotiating a second operation similar to the previous one for an even greater amount?

5. ¿Estas operaciones implican sacar el oro de las bóvedas del BCV y regresarlas al exterior?

Do these operations involve removing the gold from the vaults of the BCV and returning it abroad?

In the letter, Machado claimed that “the [gold swap] exchange would jeopardize the achievement of economic stability” and “would compromise the future of the Republic and the welfare of millions of Venezuelans“.

She also called for the monetary gold bullion held by the BCV and the exact amount held abroad  to be “certified by an independent and trusted international body”.

There does not seem to be any publicly available response from the central bank to Machado’s letter, so its unclear as to which answers, if any, Machado received from the BCV. However, given the deteriorating state of Venezuela’s international finances and international reserves at the present time, it may be sooner rather than later before Venezuelan gold could be on the move again out of the country.

One thing is for sure. Gold leaving Venezuela on a flight back to London, New York, or elsewhere, will not get the fanfare and celebration that was accompanied by the same gold’s arrival into Caracas a few short years ago.


Venezuela’s Gold Reserves – Part 1: El Oro, El BCV, y Los Bancos de Lingotes

Venezuela’s gold reserves have rarely stayed out of the financial news headlines over the last four years. From initial gold repatriation announcements in August 2011, through to gold shipments from Europe to Venezuela’s capital, Caracas, in late 2011 and early 2012, as well as the more recent negotiations on using gold in swaps and for loan collateral, the Venezuelan gold story has filled many column inches.

However, much of the coverage has been disjointed and purely focused on the story of the day. The analysis below aims to take a broader overview and to provide a big picture treatment. To understand where Venezuela’s gold got to where it is today, you have to understand where it’s been.

The analysis is divided into two parts. Part 1 starts with a short historical overview of Venezuela’s gold up to 1992, followed by an examination of where the gold, and the claims on gold, were located just prior to repatriation in 2011. It also drills down into the composition of the gold now held in the BCV vaults and shows that these bars would be expected to consist of roughly equal percentages of London Good Delivery bars and US Assay Office ‘melt’ bars.

Part 2 examines the actual repatriation exercises in late 2011 and early 2012, and takes a look at the renewed circling of the Venezuelan gold by the international investment banks, most recently illustrated by Venezuela’s gold swap negotiations with Goldman Sachs in late 2013, and the more recent gold swap agreement with Citibank in April 2015.

Since Venezuela was able to fly 160 tonnes of gold on cargo flights across the Atlantic Ocean from Europe to Caracas in 2 months, it begs the question, why has the German Bundesbank not been able to fly 300 tonnes of gold from New York to Frankfurt in 4 months?

repatriacion del oro armoured-cars


El Oro y El BCV – Some History

According to the World Gold Council’s latest list of IMF collated and reported World Official Gold Holdings as of May 2015 (IFS), Venezuela’s central bank, Banco Central de Venezuela (BCV), officially holds 367.6 tonnes of gold within its international reserves, ranking Venezuela as the world’s 16th largest official gold holder. This gold comprises 68.9%, by value, of Venezuela’s total international reserves. Given that many of the countries on the IMF list employ very opaque reporting standards for their gold, Venezuela would probably rank a number of places higher in a more realistic world list, even since re-commencing active management of some of its gold reserves through swaps.

In March 2010, the BCV published a very useful Powerpoint presentation (in Spanish) explaining the history of the Bank’s gold reserves and how it’s gold had been accumulated since 1940. Some additional history about the Venezuelan gold is also contained in a short Venezuelan Government publication also in Spanish (Venezuela oro encarteasamblea Reservas Int).

The BCV was established as Venezuela’s central bank in 1939 and has it’s headquarters in Caracas. As early as 1940, the BCV’s international reserves totalled $31 million, of which $29 million (~26 tonnes) was in the form of monetary gold. This gold had been mostly transferred to the BCV from Venezuela’s private banks, and was used as a backing for bank-note issuance which was a function that the BCV took over from the private banks.

33 Liberty: Federal Reserve Bank of New York, Manhattan

In 1942, the BCV’s gold reserves totalled $67 million dollars (59.78 tonnes), with 36.23 tonnes in the BCV vaults and 23.55 tonnes in the custody in the gold vault of the Federal Reserve Bank of New York (FRBNY) under 33 Liberty in Manhattan.

By the end of World War II, the BCV’s gold holdings had increased to approximately 180 tonnes, most of which was classified as monetary gold. This rapid accumulation of gold at the Federal Reserve Bank of New York (in the form of US Assay office melt bars) arose from US payments of gold to Venezuela in exchange for Venezuelan oil exports to the US, i.e. gold-for-oil transactions.

Following World War II, the BCV continued to convert any surplus income not required for import payments into gold, and in 1948 Venezuela had built up holdings of 287 tonnes of gold, making it the 8th largest gold holder in the world, and the largest gold holder in Latin America. During this period, the BCV says that it “streamlined the transfer of gold” from FRBNY custody to the BCV vaults in Caracas. In 1957, the BCV also bought two large ‘lots’ of fine gold bars from the IMF. As a result, in 1957-1958, Venezuelan gold holdings reached their highest level ever at nearly 640 tonnes.

The gold-for-oil transactions between Venezuela and the US are also referenced in the BCV’s 2011 Economic Report (large file – page 91) which states:

“A mediados de los años cincuenta, el acervo de oro alcanzó 639 toneladas, en la medida en que las exportaciones petroleras a Estados Unidos fueron pagadas a la nación con barras de oro del Banco de la Reserva Federal de Nueva York.”

“In the mid-fifties, the stock of gold reached 639 tonnes, to the extent that oil exports to the United States were paid to the nation with gold bars of the Federal Reserve Bank of New York.”

In 1961, the BCV needed to acquire foreign exchange from the IMF, some or all of which was paid for with gold, and Venezuela’s gold reserves fell by nearly 300 tonnes, to approximately 340 tonnes, and then rose slightly in the 1960s to between 356 and 357 tonnes.

Fast forwarding to 1986, the BCV made a decision to engage in the “proactive management of monetary gold in the international market“, and in the late 1980’s moved “a significant portion” of gold from its vaults in Caracas to the Bank of England vaults in London as a prelude to “investing” this gold in the London Gold Market. The BCV adopted the good delivery standard for the gold sent to London and invested these holdings in interest-earning financial transactions such as swaps and gold deposits. These gold operations were established with “first-class financial institutions as enshrined in the Central Bank Law“, which “narrowed” the allowable counter-parties (i.e. narrowed the counter-parties to certain LBMA bullion banks).

To the Bank of England and beyond

Specifically, as at 31 December 1986, 14.7% of Venezuela’s 356 tonnes of gold was held at the FRB vaults in New York, and 85.3% was held at the BCV vaults in Caracas. Six years later, on 31 December 1992, 14.7% of this same 356 tonne quantity of gold was still at the FRB in New York, 43.3% was still at the BCV in Caracas, but now 28.5% had moved to the Bank of England and 13.4% was said to be with the BIS (note: this adds up to 99.9% due to rounding errors).

Distribution of Venezuelan gold in 1986 and 1992

There are slight discrepancies in the data sources as to whether the BCV held 357 tonnes or 356 tonnes in the late 1980s / early 1990s, but the Venezuelan Government figures at the end of December 1992 were 154.5 tonnes in Caracas (43.3% of the gold reserves), 101.8 tonnes at the Bank of England (28.5%), 52.2 tonnes in the FRBNY (14.7%), and 47.79 tonnes with the BIS (13.4%). This gold distribution adds up to 356.29 tonnes.

Note that initially in the late 1980’s, 89.72 tonnes of gold was transferred from the BCV to the Bank of England, and this amount appears to have been augmented slightly to 101.8 tonnes by the end of 1992. This would also suggest that the gold deposited with the BIS was via the BIS’ gold account at the Bank of England in London.

Various Venezuelan news articles such as here claim that gold began to be moved to London, initially surreptitiously, from the BCV in Caracas beginning with 8 tonnes on 5 August 1988, and then another 8 tonnes on 21 February 1989 when the newly elected president, Carlos Andres Perez, came to power for a second time.

The above historical account should go someway towards explaining how Venezuelan gold ended up at the Bank of England in the late 1980s and early 1990s. However, it is not the full story. To get a fuller picture, you also have to work in reverse from 2011 back to 1992. Luckily, the BCV has provided a roadmap that helps in this regard.


Blueprint of Venezuelan gold holdings as at 8 August 2011

In early August 2011, Venezuela’s president, Hugo Chávez, pronounced a series of directives which would dramatically alter how the country’s international reserves were invested and managed. These directives, which were contained in a document titled “Proposed relocation of the International Reserves“, called for:

  • the transfer of operating reserves from banks in Europe and the US to banks in Russia, China and Brazil, within a two month period
  • the transfer of monetary gold held abroad back to the BCV vaults in Venezuela, within a two month period

Note that the BCV classifies international reserves into a) operating reserves (“liquid reserves”), comprising short-term cash and cash like instruments invested with institutions such as investment banks and the BIS, and b) non-operational reserves such as gold and SDRs.

Throughout the 1990s and 2000s, the BCV’s gold holdings had remained static at 357 tonnes until the 2008/2009 period. During 2008, the BCV’s board made a decision to send its non-monetary gold holdings abroad for “strategic use” (i.e. investment operations). Some of this non-monetary gold was purchased from Venezuelan gold mine production. In early 2009 and 2010, the BCV “monetized its non-monetary gold” by having it refined into good delivery bars and then moved this gold to London to participate in return generating transactions. This led to the 357 tonnes total rising to 361 tonnes in 2009 and then 364 tonnes in 2010. By 2011, Venezuela’s gold holdings had reached nearly 366 tonnes.

Eagles Liberty Indian head

Type of bars held and monetary coins

In page 17 of its Powerpoint presentation (March 2010), the BCV lists an inventory of its monetary gold as consisting of:

  • Amonedado (coins) comprising “Eagles, Liberty and Indian Head”
  • Barras Bóvedas BCV (bars in the BCV vaults) comprising “Fed Melted Bars” *
  • Bóvedas BI y otros (bars in Bank of England and others) comprising “Good Delivery” bars

* The “Fed Melted Bars” that the BCV refer to are US Assay Office melts (batches of ~ 18 to 22 bars), and the BCV notes that these bars “exceed 995 fine, but lack a refiner seal certifying assay“. What the BCV means is that although these bars have the correct fineness to be good delivery bars, they are not good delivery until they have been individually weighted and individually stamped (i.e. until the Melts have been broken). See “The Keys to the Gold Vaults at the New York Fed – Part 3: ‘Coin Bars’, ‘Melts’ and the Bundesbank” for an explanation of US Assay Office ‘melts’.

Based on this BCV inventory, the entire repatriation by Venezuela would be expected to have consisted of London Good Delivery bars. It also would mean that following the repatriation, the BCV vaults held a roughly 50% – 50% combination of US Assay Office ‘melt’ bars and London Good Delivery bars. See section below on ‘How many Gold Bars did Venezuela have in August 2011′.

Venezuela’s Gold in August 2011

The August 2011 international reserves document from Chávez, which was actually issued by the then BCV president, Nelson Merentes, and the then Venezuelan finance minister, Jorge Giordani, included a detailed breakdown of the composition and location of Venezuela’s gold reserves as at 8 August 2011, in the form of the table below. This table illustrates that Venezuela’s gold that was held abroad had experienced some very interesting transformations between 1992 and 2011.

Gold on deposit vs Gold time deposits

According to the table, as at 8 August 2011, Venezuela held 365.82 tonnes of gold, with 154.47 tonnes in Venezuela custodied in the vaults of the BCV (42.22% of the gold), and 211.35 tonnes held abroad (57.78% of the gold). The gold held abroad was classified into two broad categories, namely, “Sólo Depositado” (gold deposited only or on deposit only) totalling 128.48 tonnes, and “A Plazo” (gold ‘time’ deposits or ‘term’ deposits) totalling 82.87 tonnes.

Since the English equivalent of these two phrases can be confusing, the “Sólo Depositado” can be considered to be physical gold that has been deposited with a bank, much like a sight deposit at a bank, while the “A Plazo” is gold lent by the central bank to commercial bullion banks whereby the banks pay interest to the central bank for borrowing the gold. The central bank has a claim to the gold that it lent, and the bullion banks have a gold liability to the central bank.


Bank of England, the BIS, and J.P. Morgan

Of the 128.48 tonnes of physical gold deposited abroad, this was deposited with three entities, namely, The Bank of England, The Bank for International Settlements, and J.P. Morgan. The lion’s share of this deposited gold, 99.21 tonnes, was with the Bank of England. A further 11.85 tonnes was deposited via the BIS and a further 17.42 tonnes was deposited with JP Morgan. Each of these three entities is listed next to the country of its “headquarters” i.e. England, Switzerland and the US, respectively.

It’s not clear if the Venezuelan gold held by the Bank of England was held ‘under earmark‘ (i.e. specific bars allocated in custody via a Bailor-Bailee relationship), or held ‘on a fine ounce basis‘ (i.e. within a larger pool of gold (pool allocated) where Venezuela would own a specific number of fine ounces but not specific bars). Given that there is no mention of ‘earmarked’ gold in the table, and given that the deposit was described as a sight deposit (see below), the gold attributed to the Bank of England was probably held as a deposit on a fine ounce basis.

The same logic would apply to the gold deposited into a BIS account (probably also at the Bank of England). Gold lending only works if the lent gold is fungible which enables the Bank of England or the BIS to transfer bars to the borrowers and get back other bars at a future date. Its unclear from the table as to where the gold deposited with JP Morgan was stored, and also unclear if this gold was unencumbered and free of other liens, claims and hypothecations.


Table 1: How Venezuela’s gold reserves were distributed as of 8 August 2011

Distribution of Venezuelan monetary gold as at 8 August 2011


Of the 82.87 tonnes of lent gold that comprised gold time deposits (22.65% of Venezuela’s gold), these time deposits were shared out between five bullion banks, namely, The Bank of Nova Scotia, Barclays, Standard Chartered, HSBC and BNP Paribas. The countries listed next to these five bank are, in all cases, the countries where their ‘headquarters’ are based, except for BNP Paribas, which strangely, is listed with a country of ‘United States’ despite its headquarters being located in Paris, France. So it appears that a BNP Paribas US entity was involved in borrowing Venezuelan gold. Note that BNP merged with Paribas in 2000 after a takeover battle involving Société Générale.

These gold time deposits represent the gold that was lent by the BCV to the bullion market in order to generate a return to the BCV. This gold, when lent, was either sold or lent on further by the original bullion bank borrowers or used by them in a proprietary manner, or some combination of the three.

Note that London entities of all six bullion banks in the above table are members of the London Bullion Market Association (LBMA). Five of them are now LBMA market makers (except BNP Paribas), and four of them are clearing members of London Precious Metals Clearing Ltd (LPMCL), namely HSBC, JP Morgan, Scotia and Barclays.

For all of the above deposits / investments, the BCV’s allocation table specified the year of commencement of operations (fecha de inicio de operaciones), and in the case of the time deposits, the expiration date of the placements (fecha de vencimiento de colocaciones). For the gold on deposit with the Bank of England, BIS and JP Morgan, these deposits were described as ‘sight’ deposits with no expiration date.

In this table from 2011, the gold on deposit at the Bank of England is stated as having commenced in 1980. However, this contradicts the BCV pie-chart (see graphic above) which stated that in 1986, the Venezuelan gold was only held at the BCV and the FRBNY, and also contradicts the BCV history which maintained that “initially in the late 1980’s, 89.72 tonnes was transferred from the BCV to the Bank of England”.

Given that all bar gold at the BCV and the FRBNY would have been in the form of US Assay Office melts, it implies that all of the Venezuelan bars that ended up at the Bank of England and in the London market needed to be, at a minimum, individually weighted and stamped when received. Given that there have been concerns about the quality of US Assay Office 995 fine bars (for example the gold given by the FRBNY to the Bundesbank in 1968), some US Assay Office bar holders may decide to refine them to bring them up to a correct and trustable good delivery standard.

According to the BCV table, Venezuela only deposited gold with the BIS beginning in April 2009, while the gold deposit with JP Morgan commenced in 1999 (so the JP Morgan deposit was in existence for more than 11 years). Note that JP Morgan merged with Chase Manhattan in 2000. Since Venezuela had previous deposited gold with the BIS from as early as December 1992, the record of an April 2009 deposit with the BIS looks like a fresh allocation to a BIS account at that time.

BoE Gold and forklift

Scotia, Barclays, StanChar, HSBC and BNP Paribas – Time Deposits

Of the five gold time deposits arrangements, the relationship with Bank of Nova Scotia was stated as commencing in 1992, while the operations with the other four bullion banks are listed as beginning in 2004. However, a note to the table states that “Since 2004, the Central Bank has kept automated records of the operations with these institutions. However, the first operations (manual) are dated from previous years” (i.e. prior to 2004).

Interestingly, three of these bullion banks, namely Barclays, Bank of Nova Scotia, and Standard Chartered, are the same three banks that the central bank of El Salvador had recently engaged in gold time deposits with. See “El Salvador’s gold reserves, the BIS, and the bullion banks” for details. In fact, these three names crop up hosting gold time deposits with other Latin American central banks. More on that in a future article.

The gold time deposits appear to have been generally for periods of approximately one month because, as of 8 August 2011, all of the deposits expired between 8 and 14 September 2011.

Note, the final ‘total’ row in the above table is named ‘Total Oro‘ but only totals to 237.34 tonnes. This looks like a typo whereby the 154.47 tonnes at the BCV was added to the 82.87 tonnes of time deposits, but the 128.48 tonnes of real gold deposits were omitted.

The transformation of Venezuela’s gold from 1992 to 2011

Given that we know the geographic allocation of Venezuela’s gold on 31 December 1992 (start of period) and also know how the geographic allocation stood in August 2011 (end of period), as well as when the end of period distributions started, it’s possible to draw some observations.

Recall that at the end of 1992, Venezuela held 154.5 tonnes of gold at the BCV vaults in Caracas (43.3%), 101.8 tonnes at the Bank of England (28.5%), 52.2 tonnes in the FRBNY (14.7%), and 47.79 tonnes with the BIS (13.4%).  A total of 356.29 tonnes, and note that the FRBNY and BIS holdings add up to 99.99 tonnes (let’s call it 100 tonnes).

At the beginning of August 2011, Venezuela held 154.47 tonnes at the BCV, 99.21 tonnes at the Bank of England, 17.42 tonnes with JP Morgan, 11.82 tonnes with the BIS, and 82.87 tonnes as time deposits with five bullion banks. A total of 365.82 tonnes, i.e. 9.53 tonnes more than in 1992.


Through the 1990s and 2000s

1. The 154.5 tonnes of physical gold that was at the BCV in Caracas in 1992 was still at the BCV in August 2011.

2. Gold, in a practically equivalent amount to that deposited at the Bank of England by December 1992 (i.e. 101.8 tonnes) was still deposited at the Bank of England in August 2011 (i.e. a 2.59 ton reduction to 99.21 tonnes). This was not necessarily the same gold though since it could have been involved in multiple transactions between 1992-2011.

3. The gold that was’ in custody’ at the Federal Reserve Bank of New York (FRBNY) in 1992 (i.e. 52.2 tonnes) was no longer accounted for as being at the FRBNY in 2011. This gold may have been physically moved to the Bank of England or else swapped to London, however, some or all of it may have stayed in the FRBNY vault or in the vicinity of New York. This is so because some bullion banks such as JP Morgan have in the past had gold accounts at the FRBNY when they held sovereign gold as collateral for loan advances (e.g. lending to Spain in the 1950s).

The FRBNY will insist that commercial banks cannot hold gold accounts at the FRBNY, however, commercial banks have been named gold account holders at the FRBNY (holding gold as collateral) in the past. Furthermore, JP Morgan’s gold vault is right next door to the FRBNY gold vault(s) and may be connected to the FRBNY vault area.  See “The Keys to the Gold Vaults at the New York Fed – Part 2: The Auxiliary Vault” for details. So it’s possible that the 17.42 tonnes that was deposited with JP Morgan was held in New York in JP Morgan’s vault or in the name of JP Morgan at the FRBNY vault.

Interestingly, given that there were 52.2 tonnes of Venezuela’s gold at the FRBNY in 1992, its notable that the totals for the gold deposit with JP Morgan,  and the time deposits with BNP Paribas (US), Bank of Nova Scotia and Standard Chartered in the above table add up to a combined 51.41 tonnes, which is quite close to the 52.2 ton FRBNY total (a difference of 0.79 tonnes). So the FRBNY gold could have been divided out to these four entities in the 1990s and 2000s.

4. The 47.79 tonnes at the BIS in 1992 had, by 2011, become only 11.82 tonnes at the BIS, i.e. a drop of 35.97 tonnes. Gold deposited to the Bank of England by a foreign central bank can be transferred in and out of the BIS gold accounts at the Bank of England and also in and out of the commercial LBMA bullion bank gold accounts at the Bank of England. Given these transfer possibilities, it’s not surprising that Venezuela’s gold positions with the BIS have fluctuated widely over time.

5. From being stored with four official sector entities in 1992 (according to the BCV data), the Venezuelan gold, in 2011, was being ‘minded’ by nine entities, six of which were commercial bullion banks / investment banks.

6. Roughly speaking, the combined 100 tonnes of gold custodied by the FRBNY and the BIS in 1992 had become 112.14 tonnes in 2011 spread over the BIS, JP Morgan, Barclays, HSBC, Scotia, StanChar and BNP Paribas. This transformation in the 1990s and 2000s of custodied gold into lent gold as well as physical gold deposited with a bullion bank (in the case of JP Morgan) is in line with the BCV’s stated intention in the late 1980s to proactively move some of its gold to London (in the form of good delivery gold), so as to actively participate in the financial market for gold and earn a return on the participating gold.

The 12.14 tonne increase from 1992 to 2011 among the above entities was due to a real increase in 9.53 tonnes of Venezuela’s gold over 1992 to 2011 (non-monetary gold converted to monetary gold and sent to London) as well as a net 2.59 ton reduction in the amount of gold deposited with the Bank of England (9.53 + 2.59 = 12.12).

This 12.14 ton net increase, when added to the reduction of 35.97 tonnes held with the BIS, equals 48.11 tonnes, which is very close to the combined gold lent (time deposits) to Barclays and HSBC of 48.89 tonnes ( i.e. 45.84 + 3.05 = 48.89 tonnes), and just leaves a 0.78 ton difference, which is the residual amount that was left over in the above FRBNY calculation. So in theory, the Barclays and HSBC time deposits could have been sourced from a transfer from Venezuela’s BIS gold account balance as well as the extra gold that the BCV sent to London in 2009 and 2010.

7. There may have been many other bullion banks that held gold time deposits for Venezuela over the period 1992 – 2011. The 2011 data is just an end-of-period snapshot. Likewise, some of Venezuela’s gold could have moved in and out of Bank of England and BIS gold accounts, and, less likely, moved in and out of a FRB gold account, over the intervening period. Without the inventory records, it’s not possible to know.

Chavez sign

Changes to Venezuela’s gold reserves since early August 2011

Venezuela’s current gold holdings (in May 2015) of 367.6 tonnes versus early August 2011 total holdings of 366 tonnes mask some fluctuations over the period which were due to various small purchases and sale transactions.

In late August 2011, Nelson Merentes, president of the BCV, announced that Venezuela would be purchasing 7 additional tonnes of monetary gold. This would have brought the total holdings up to 373 tonnes at the end of 2011.

Then, in the BCV’s end of year 2012 report (page 16) it was announced that:

“Purchases of gold made by the BCV in the country reached 1.6 tonnes of fine gold for Bs. 328.88 million. In 2012, 3.6 tonnes of non-currency gold in stock were refined to the condition of good delivery. Those bars bought directly from the domestic market comprised this stock. This amount was monetized and included as asset of the reserves in currency gold of the issuing body, thus maintaining the same heritage of the previous year.”

However, in October 2012, the FT reported that:

“According to the latest IMF data, Venezuela sold 3.7 tonnes in August alone, bringing total sales so far this year to about 10.9 tonnes. Venezuela now has 362 tonnes of gold reserves, compared to 372.9 tonnes at the beginning of this year [2011].”

Other small purchases since the end of 2012 brought the total back up to the current 367 tonnes.


How many Gold Bars did Venezuela have in August 2011?

In the BCV’s 2011 Economic Report (see link above) on page 92, it states that:

El instituto emisor logró la repatriación de 160 toneladas de oro monetario (12.819 barras good delivery)”

“The Central Bank managed the repatriation of 160 tonnes of monetary gold (12,819 good delivery bars)”

In a Venezuelan media article from November 2011, it states that:

“El pasado 23 de agosto, Merentes anunció la repatriación de 16.908 lingotes de oro de los 29.265 lingotes que Venezuela posee.”

“On August 23, Merentes announced the repatriation of 16,908 gold bullion ingots of the 29,265 ingots that Venezuela owns.”

These bar numbers roughly equate to tonnes as follows. Assuming a good delivery bar is a 400 oz bar, then 12,819 bars = 159.49 tonnes, and 16,908 bars = 210.36 tonnes, and the difference of 4,089 bars = 50.87 tonnes. The total of 29,265 bars = 364.10 tonnes. These figures are very close to the stated gold totals in the above BCV table from August 2011.

The reference to 16,908 bars was therefore assuming that all the gold held abroad was being repatriated, which turned out not to be the case and approximately 50 tonnes was left behind at the Bank of England in London. From the numbers above we therefore know that Venezuela owned 29,265 bars in total, with 16,908 bars held abroad (including claims on bars containing the equivalent number of fine ounces that were deposited or lent), of which 12,819 bars were repatriated, and 4,089 bars left in the Bank of England’s vaults. It also means that there were 12,357 bars held in the BCV vaults in Caracas before the gold repatriation started, and 25,176 bars in the BCV vaults when the repatriation completed.

Both the gold repatriated and the gold left in the Bank of England are assumed to be entirely made up of London Good Delivery bars, since all the bars that entered the London market would have to be Good Delivery bars. The gold that was in the BCV vaults in Caracas prior to the repatriation is assumed to entirely consist of US Assay Office or other US Mint ‘melts’. Therefore, following repatriation of the gold, 50.92% of the bars in the BCV vaults should have been London Good Delivery bars, and 49.08% should have been in the form of US ‘melts’.

Since there were 211.35 tonnes of Venezuela’s gold stored abroad, the average fineness of the good delivery bars was 401.875 fine ounces. Since there were 154.47 tonnes of Venezuela’s gold stored in Caracas before the repatriation, most if not all of which were in the form of US Assay Office melt bars, the average fineness of these bars was therefore 401.90 fine ounces. This is assuming the ingot numbers are correct and that they were not reverse calculated in any way by the BCV from older records of bar numbers and fine ounces.



Delayed Repatriation?

The Chávez declaration from 8 August 2011 called for the transfer of gold back to Venezuela so that 90% of the country’s gold would end up stored in the BCV vaults, and interestingly, it envisaged that the gold transfers would be completed by October 2011.

This timeline of an August – October repatriation never materialised, and the gold shipments to Caracas only commenced in late November 2011 and ended on the last day of January 2012. It’s unclear as to what caused this delay or indeed if the October deadline was merely an unrealistic expectation by Chavez and the BCV, or a real delay caused by gold sourcing or other logistical issues from the Bank of England, BIS and bullion banks. Neither the BCV nor the media (Venezuelan or international) appears to have covered or explained this shifting completion deadline.

What is clear is that the move by Venezuela to repatriate very large quantities of gold, which was publicly announced in early August 2011, was one of the key drivers that caused a run-up in the gold price before, during, and after August  2011, and which culminated in a multi-year high price of over $1900 on 6 September 2011. See BullionStar Chart for US Dollar gold price movements before, during, and after August 2011.

With five bullion banks needing to provide nearly 83 tonnes of gold to Venezuela in a short space of time so as to close out their gold deposit liabilities, it would be realistic to assume that this had a material impact on bullion demand in the London and possibly wider gold market. Based on normal protocols as well as market intelligence, the bullion banks in question, as well as the BIS and Bank of England would most likely have known about the approaching BCV/Chavez announcement for a significant period of time prior to August 2011.

As to whether demand tightness was heightened even more by Venezuela’s closing out of physical deposits with the Bank of England, BIS and JP Morgan is hard to quantify. It would depend on the extent to which these deposits were free of other claims, that might necessitate sourcing replacement gold elsewhere.

The manner in which all of the gold was sourced for fulfilling Venezuela’s repatriation request may never fully be known. What is known is that the repatriation operations to fly the gold to Caracas International Airport, and transport it to the BCV’s downtown vaults, included some of the largest and most public gold moving operations that most people are ever likely to witness.

These operations, over a two month period from the end of November 2011 to the end of January 2012 included gold flown in on Air France and World Airways aircraft.

Part 2 of this Venezuelan gold reserves analysis, titled “Venezuela’s Gold Reserves – Part 2: From Repatriation to Reactivation“, covers the gold repatriation operations and these very public airport operations, and features some interesting videos of the transport operations taken by camera crews who were effectively part of the operation. Part 2 also covers the extensive re-involvement with Venezuela’s gold reserves by some of the largest names in global investment banking.

The IMF’s Gold Depositories – Part 3, Gold Swaps and the Quality of the IMF Gold

The International Monetary Fund (IMF) is authorized to use its gold holdings to engage in gold location swaps and has done so frequently in the past. This has involved gold location swaps with the entities who maintain the gold vaults where the IMF stores its gold, such as the Federal Reserve Bank of New York, the Bank of England and the Banque de France, and also other entities such as the Bank for International Settlements who also maintain gold accounts at the same vaults as the IMF does.

The quality of the gold that has been held by the IMF at each of its gold depositories varies. In New York and Paris, the IMF gold is/was stored in the form of complete melts of US Assay office gold bars, as well as some coin bars. At the Bank of England, a lot of the IMF gold is/was in the form of Rand Refinery bars. At the Reserve Bank of India in Nagpur, some of the gold was of variable quality, and included confiscated smuggled gold, newly mined gold from indigenous production, good delivery gold from London, and other gold from the Reserve bank of India Issue Department.

For a background to the gold depositories of the IMF and their locations, see “The IMF’s Gold Depositories – Part 1, The Legal Background“. For more details on the depositories’ locations see “The IMF’s Gold Depositories – Part 2, Nagpur and Shanghai, the Indian and Chinese connections“.

IMF Gold Swaps with its Custodians

There have been multiple cases in the past of the IMF executing gold location swaps between its depositories using IMF Article XIII, Section 2(b) as a justification (i.e. the requirement that the Fund hold at least 50% of its gold in New York while holding at least 40% elsewhere).

IMF Staff Memo #17 written by John L Fisher of the Operations Department on 21st January 1947 estimated that  of a total of $1.448 billion in gold subscriptions by member countries (41.3 million ounces), approximately $1.006 billion or 69%  would be paid into the New York depository at the FRBNY,  $332 million (23%) would be paid into London, $80 million (6%) into Paris and $30 million (2%) into Bombay. The memo concluded that “It looks as though we shall get 69% paid in New York.” Since this distribution would not leave 40% or more of the gold in the non-US depositories (since only about 31% of the gold was outside the US), this distribution of the Fund’s gold needed to be amended.

Therefore, the first IMF gold location swap ever was between the Fund’s New York and London holdings in 1947 and involved the Bank of England as counter-party, and was done “in order to bring the initial distribution of the gold holdings of the Fund into conformity with the provisions of the Fund Agreement“.

IMF gold sign

IMF Gold Swap – New York and London: Counter-party Bank of England

The details of the 1947 New York – London swap were as follows:

“Gold Swap with the Bank of England

Under the Fund Agreement initially not more than 60% of the Fund’s gold could rest in New York. Since far more than 60% was deposited in New York, the choice lay in shipping gold immediately to another of the Fund’s depositories, or achieving a swap in the hopes of a later distribution which would obviate the Fund bearing the expense of shipping.

There was no particular reason for the Bank of England to hold gold in New York, but in the circumstance they agreed to make a swap on the following conditions:

(a) The transaction to be free of expense to the Bank of England

(b) The Bank of England to have an option to reverse the swap or to have the gold shipped to London at the Fund’s expense

No time limit was expressed on either side, and since the swap was for the convenience of the Fund and not the Bank of England, the two conditions were eminently fair.
Nevertheless, there is nothing to debar the Fund from asking at any time for the swap to be reversed, and subject to events, there seems no reason why in a few months’ time the Fund should not do so.”

(Source: Staff memo Number 74 written by John L Fisher, Operations Department, March 19, 1947)

The amount of gold swapped was not mentioned in this 1947 memo, however it was specified in the return leg of the swap – see below. It appears that the swap was undertaken with the intention of then reversing it the following year because the same memo stated that:

the managing Director has given instructions that this swap shall be reversed after the close of the fiscal year, providing that analysis at that time indicates that such a reversal will improve the distribution of the gold holdings from the standpoint of the Fund.

It turned out that the swap was not reversed until seven years later, and was reversed at the request of the Bank of England.

In a note titled “Reversal of Gold Swap with Bank of England”, dated 1st June 1954, to the Executive Board, the Acting Secretary wrote;

“The Fund affected a gold swap with the Bank of England on February 28, 1947, by transferring 4,428,582.578 fine ounces to the Bank of England’s gold account at the Federal Reserve Bank of New York against the receipt of an equivalent amount of gold in London.”

“On May 7, 1954, the Bank of England expressed its desire to exercise its option to reverse the above-mentioned gold swap, and on May 14, 1954, the original swap was reversed by the acceptance of gold in New York from the Bank of England against the release of gold from the Fund’s account with the Bank of England in London.”

 At $35 per ounce, 4.428 million ounces of gold was worth just under $155 million and represented just over 10% of the total gold subscriptions that had been referenced in the 1947 estimates of $1.448 billion. So the swap moved about 10% of the Fund’s gold from New York to London, thus boosting the non-US holdings from about 31% to over 40% as was the intention.

IMF Gold Swap – New York and Paris: Counter-party FRBNY

The IMF also engaged in gold location swaps between its gold holdings in New York and its holdings Paris using the Federal Reserve Bank of New York (FRBNY) as counter-party. This is illustrated by some very interesting gold swaps in the summer of 1968 which suggest that the FRBNY and US Treasury were scrambling to source gold in New York. This would back up the view that the US Treasury had run out of good-delivery gold in March 1968, hence the need to let the London Gold Pool collapse. (See “The Keys to the Gold Vaults at the New York Fed – Part 3: ‘Coin Bars’, ‘Melts’ and the Bundesbank” for a background on this.)

A letter dated 19th June 1968 from the IMF Managing Director to the Executive Board titled “Gold Holdings” (EBS/68/179), illustrates the proposal for one of these gold swap transactions:

“The Fund’s gold holdings are now approximately $4 million in Paris. We now have the opportunity to carry through a swap of gold with the Federal Bank of New York. The Fund has had gold swaps in the past in order to arrange a more useful distribution of its holdings.

On this occasion the Federal Reserve Bank of New York is willing to swap approximately $110 million of gold as between Paris and New York, with the result that the Fund’s holdings would then be $114 million in Paris. The swap would meet the criteria of the Articles which are that all transfers of gold shall be met with due regard to the costs of transport and the anticipated requirements of the Fund. There will be no costs involved for the Fund in the proposed swap, and the small difference between the gold swapped will be settled in dollars.

The management feels that it would be advantageous for the Fund to accept the proposed offer. Subject to any views that may be expressed before noon, Monday, June 24, 1968, it is proposed to give instructions to the staff to confirm the transaction.“

Memo EBS/68/79, Supplement 1, a week later (on 26th June 1968) confirms that this gold swap was activated:

“This is to notify the Executive Directors that, in accordance with the proposal EBS/68/179, approved by the Executive Directors on June 24, 1968, an amount of gold equivalent to $110,001,164.07 was withdrawn from the Fund’s gold account with the Federal Reserve Bank of New York, New York, against transfer of gold equivalent to $110,001,324.58 to its account with the Banque de France, Paris…..There were no coats involved in this swap.

The gold swap was effected value June 25, 1968”.

There is no indication as to why the IMF management thought “that it would be advantageous for the Fund to accept the proposed offer” from the FRBNY. The rationale for the swap seems to have been purely at the request of the Americans.

At $35 per ounce, the amount of $110 million is approximately 3.14 million ounces or about 98 metric tonnes.

Two additional similar swaps on IMF gold between New York and Paris were activated in July 1968 ($75 million) and September 1968 ($80 million), respectively, bringing the Fund’s gold holdings in Paris to approximately $269 million, with a corresponding reduction of the Funds gold in New York to approximately $2,117 million.

For the July 1968 swap, the (Acting) Managing Director proposed (EBS/68/208, 25 July 1968) that:

“The Fund now has another opportunity to engage in a similar transaction with the Federal Reserve Bank of New York for an amount of gold equivalent to $75 million. This exchange would increase the Fund’s gold holdings in Paris to about $189 million.”

After the swap was completed, Memo ‘Supplement 1 to EBS/68/208‘ confirmed that:

“an amount of gold equivalent to $75,002,578.59 was withdrawn from the Fund’s gold account with the Federal Reserve Bank of New York, New York, against transfer of gold equivalent to $75,002,628.89 to its account with the Banque de France, Paris. ….The gold swap was effected value July 30, 1968.”

 For the September 1968 swap, the Managing Director explained in EBS/68/242 that:

“On two recent occasions the Fund has swapped gold totaling the equivalent of $185 million in its account at the Federal Reserve Bank of New York against the receipt of a similar amount of gold in its account with the Banque de France, Paris (EBS/68/179 and Supplement 1 and EBS/68/208 and Supplement 1). These exchanges involved no costs to the Fund.

The Fund now has another opportunity to engage in a similar transaction with the Federal Reserve Bank of New York for an amount of gold equivalent to $80 million. This exchange would increase the Fund’s gold holdings in Paris to about $269 million and reduce its holdings in New York to about $2,117 million.

When the September swap had been completed on 20 September 1968, ‘EBS/68/242 Supplement 1‘ confirmed that:

“an amount of gold equivalent to $80,002,457.33 was withdrawn from the Fund’s gold account with the Federal Reserve Bank of New York, New York, against transfer of gold equivalent to $80,002,469.58 to its account with the Banque de France, Paris.

The gold swap was effected value September 20, 1968.”

Like the June swap, there was no indication given for the July and September 1968 swaps as to why the IMF management thought “that it would be advantageous for the Fund to accept the proposed offer” beyond the fact that the swaps were helpful to the FRBNY in that the FRBNY secured gold in New York. Unfortunately, the IMF documentation above only specifies the US dollar value of the swaps and not the quality of the gold swapped in each location, i.e. whether the gold in both legs of the swaps was good delivery gold (circa 0.995 fine) or whether the transactions involved coin bars (circa 0.90 fine).

In total, the three swaps totalled $265 million , or approximately 7.57 million ounces (235 metric tonnes), with the IMF giving up this amount of gold in New York and receiving gold with a similar amount of ‘fine ounces’ in Paris.


IMF Gold Swaps with the BIS

Additionally, the IMF has also engaged in gold location swaps with entities other than its gold depository counter-parties, using a very general interpretation of Article XIII, Section 2(b) that “all transfers of gold shall be met with due regard to the costs of transport and the anticipated requirements of the Fund”. For example, in 1970 the IMF entered a gold location swap with the Bank for International Settlements (BIS), which was logistically possible since both parties held gold accounts at the Bank of England and at the Federal Reserve Bank of New York.

A note from the Managing Director to the Executive Board, dated 2nd April 1970 (EBS/70/108), titled “Gold Holdings” states:

“Since January 1, 1970 the Fund’s gold holdings in London have increased by approximately $273.9 million to about $390.5 million. This increase is due primarily to South African sales of gold to the Fund. Further increases in that center might be expected.

At present the distribution of bar holdings is as follows: (in millions of dollars)

Federal Reserve Bank of New York, New York $1,736.6
Bank of England, London $390.5
Banque de France, Paris $271.7
Reserve Bank of India, Nagpur $114.9
Total $2,513.7

The Fund now has an opportunity to engage in a gold swap with the Bank for International Settlements, whereby the Fund would deliver up to the equivalent of $17.5 million in gold to the Bank for International Settlements in London against the receipt of about the same amount in New York.

Any small difference in the gold swap will be settled in US dollars at US$35 per fine ounce. The exchange of gold would meet the criteria of the Articles of Agreement which are that all transfers of gold shall be met with due regard to the costs of transport and the anticipated requirements of the Fund. There will be no costs for the Fund in the proposed transaction. The Fund has in the past engaged in a similar exchange of gold with the Bank of International Settlements.

The management feels that it would be advantageous for the Fund to accept the proposed offer. Subject to any views that may be expressed before the close of business, Friday April 3, 1970, it is proposed to give instructions to the staff to confirm the transaction.”

The total dollar amount of the IMF’s gold holdings in April 1970 (specified above) of $2,513.7 million is equivalent to 2,234 tonnes. Interestingly, the dollar amounts listed in each location work out at 69% in New York, 16% in London, 11% in Paris and 5% in Nagpur, India. This would again mean that only 31% of the IMF’s gold was outside the US, which is not in accordance with IMF Article XIII, Section 2(b).

There is no evidence as to why the Fund thought the April 1970 gold swap with the BIS was advantageous. At $17.5 million, the value of the swap was very small, and the ratios of gold holdings between New York and London would not have altered substantially. Therefore there may have been other factors involved in doing this swap with the Bank for International Settlements. It’s also interesting that the above note states that the IMF had engaged in similar gold swaps with the BIS prior to April 1970.

Quality of Gold held by the IMF at the Depositories

It’s worth highlighting the types and quality of gold that have been held on behalf of the IMF in each location.

New York and Paris – Melts and Coin Bars

In preparation for the IMF gold auctions, a “Gold Sales by the Fund” (EBS/76/46) summary paper in February 1976 confirmed that:

“As regards the specification of the gold to be delivered, most of the IMF’s gold is 0.995/1.000 fine or better, though a small amount is in the form of coin bars which are 0.899-0.916 fine gold. It is proposed that the Fund specify delivery of gold of 0.995/1.000 fineness or better.”

“…most of the gold of the Fund is not in the form of individually stamped and weighed bars but consists, with the exception of the gold held in depositories in the United Kingdom and India, of melts, comprising 18-22 individual bars, which will first need to be identified, weighed, and selected before they can be delivered.”

“A melt is an original cast of a number of bars, usually between 18 and 22. The bars of an unbroken melt are stamped with the melt number and fineness but weight-listed as one unit; when a melt is broken, individual bars must be weighed and stamped for identification. It is the practice in New York and Paris to keep melts intact.”

Gold in New York is primarily held in the form of melts. It is expected that sufficient melts will be broken in time for the first auction. Should this not prove possible, delivery would be made in London.”

This was reiterated in an IMF paper a few months later in April 1976 titled “Preparation for Gold Sales” (EBS/76/182):

“As indicated in the staff paper on Gold Sales (EBS/76/46, 2/2/76), most of the Fund’s gold held with the Federal Reserve Bank of New York and the Banque de France is in the form of melts. Before the gold can he offered in gold auctions a part of these holdings has to be transformed into individually weighed and identified bars.

It is estimated that the cost of stamping and weighing will be approximately US$5 per standard bar of 400 ounces in New York, and approximately F 50 in Paris. This note is to inform Executive Directors that the Managing Director has authorized the Treasurer to instruct, as necessary, the Fund’s depositories in the United States and in France to proceed with weighing and stamping sufficient individual bars for the conduct of the sales program.”

For more background explaining melts and coin bars, see “The Keys to the Gold Vaults at the New York Fed – Part 3: ‘Coin Bars’, ‘Melts’ and the Bundesbank“.

London – Rand Refinery Bars

Recall above that the Fund’s gold holdings in London had been augmented substantially via South Africa selling gold to the Fund i.e.:

“Since January 1, 1970 the Fund’s gold holdings in London have increased by approximately $273.9 million to about $390.5 million. This increase is due primarily to South African sales of gold to the Fund. Further increases in that center might be expected.”

The South African gold sales to the IMF actually began circa June 1968 but increased in frequency and magnitude after the US negotiated with South Africa to minimize South African gold sales on the open market. This strategy of keeping the South African gold off of the free market was brokered by the US in order to subdue the free market gold price.

A note dated 14th June 1968 titled “South Africa–Sale of Gold to the Fund”, prepared by the Treasurer’s Department highlights an instance where gold bars sold by the South Africans to the IMF in London were Rand Refinery bars. These are good delivery bars. The note states:

“The Executive Director elected by South Africa has informed the Fund that it should expect to receive a communication from the Republic of South Africa stating its desire to purchase 14.5 million U.K. pounds or other appropriate currencies through a sale of gold at par to the Fund, pursuant to Article V. This transaction is of an amount equivalent to US$34.8 million. The amount of gold to be sold is approximately 994,287.987 fine ounces or approximately 2,486 Rand Refinery bars of average weight of 400 troy ounces and fineness of .995 or higher, which are good delivery bars in London. The gold will be delivered to the Fund’s earmarked account at the Bank of England in London.

In fact, nearly all of the 400oz gold bars produced by South Africa and sold by the South African Reserve Bank at that time were Rand Refinery bars. This is confirmed by an IMF document dated 11th July 1968 titled “South Africa – 1967 Article XIV Consultation” (large file):

“About 95 per cent of South Africa’s gold output is refined by the Rand Refinery Limited, a subsidiary company of the Chamber of Mines. The gold is refined to a purity of 996 parts of gold in 1,000 parts.”

“All bars purchased from the gold producers weigh between 400 and 410 fine ounces; the Rand Refinery Limited, and the South African Mint, both stamp bars and issue assay certificates.”

There are numerous transactions in the early 1970s of the IMF selling currencies to South Africa and receiving Rand Refinery gold in return, such as here. All of the transactions can be searched here. It is therefore likely that a significant amount of the IMF’s gold that is held in London (or was held in London) is/was in the form of Rand Refinery bars.


Nagpur – A golden anomaly

The only gold transferred to the IMF’s account at the Reserve Bank of India (RBI) depository in Bombay (and subsequently transferred to the RBI’s vault in Nagpur) appear to have been the gold payments representing India’s initial and subsequent Fund subscriptions. In 1947, as part payment of its initial subscription of $400 million, India paid $27.5 million in gold into the RBI in Bombay. This is the same IMF gold that was transferred to the RBI, Nagpur in 1956.

When IMF quotas were revised upward in 1958-59, India’s quota rose by 50% to $600 million. Of this $200 million increase, 25%, or an additional $50 million had to be paid in the form of gold. One-fifth of this gold payment came from newly-mined and confiscated gold; the rest was purchased via the Bank of England and was shipped and flown to Bombay, and then flown on to Nagpur.

In 1965 as part of another IMF quota review, India’s IMF quota was increased again by 25%, from $600 million to $750 million. Of this $150 million increase, 25% or $37.5 million had to be paid in gold. Instead of buying additional gold via the Bank of England, India did a deal whereby $37.5 million worth of gold from the Reserve Bank’s Issue Department held at Nagpur was transferred internally to the IMF’s account at Nagpur. This $37.5 million in gold appears to have been in the form of confiscated and indigenous gold production.

In 1970, there was another approximate 25% increase in India’s Fund quota to $940 million, which was an increase of $190 million. Again, a quarter of this increase, or $47.5 million was paid in gold into the IMF’s gold account in Nagpur.

Based on India’s subscriptions and gold subscriptions in 1947, 1959, 1965 and 1970, tallying up the gold proportions of these subscriptions that were transferred to the IMF’s Nagpur gold holdings gives a grand total of 144.4 metric tonnes

($27.5m + $50m + $37.5m + $47.5 m) / $35 per ounce = ~ 144.4 metric tonnes

This 144.4 tonne IMF gold holding at the RBI vault in Nagpur is verified by the January 1976 monthly IMF financial report which reports gold held at depositories as follows, including SDR 162,499,440 in gold in the Nagpur vault:

General Account – Gold Account – Gold with Depositories II. Gold Holdings by Depositories

Federal Reserve Bank of New York     SDR 3,759,612,685
Bank of England                                      SDR 1,010,129,296
Bank of France                                         SDR 437,298,127
Reserve Bank of India                           SDR 162,499,440

Total (per Balance Sheet)                      SDR 5,369,539,548

The IMF balance sheet employs a seemingly convoluted valuation of 0.888671 grams of fine gold per Special Drawing Right (SDR). This is because the IMF values each ounce of gold at SDR 35, and with 1 ounce equal to 31.1034768 grams of fine gold, each SDR is worth 31.1034768/35 or 0.888671 grams of fine gold. (This is not a misprint; the IMF values each ounce of gold at a historic cost of SDR 35 and not USD 35.)

Therefore, the IMF’s gold held at the Reserve Bank of India in Nagpur in January 1976  valued at SDR 162,499,440 was equivalent to 144.4 million grams or 144.4 tonnes.

SDR 162,499,440 / SDR 35  = 4,643,841 ounces

4.643 million ounces  / 31,250 ounces per ton = 144.4 metric tons approximately.

See herehere and here for a history of the Reserve Bank of India which, in various places, discusses the IMF gold.

During the late 1970s IMF Gold Restitutions, IMF members could ”select any of the Fund’s gold depositories for the delivery of gold, except that members in those territories the Fund’s gold depositories are located – France, India, the United Kingdom, and the United States – were expected to take delivery of their share of the gold at the depository in their territory.” IMF Annual Report 1976.

Therefore India received some back some gold from the IMF into its Nagpur holding during the IMF Gold Restitutions which would have reduced the 144.4 IMF tonne holding. Its unclear if other countries ever transferred gold to the IMF gold account at Nagpur. Probably not. It’s also unclear if the IMF’s Nagpur holding ever increased beyond 144.4 tonnes after the 1976. Again, probably not. In its annual reports, the IMF no longer shows a breakdown of its gold holdings by depository, so its  difficult to see how much IMF gold is still in Nagpur.

The IMF sold 403 tonnes of gold over 2009-2010. Of this total, 222 tons of the sales were in the form of direct sales to India, Bangladesh, Sri Lanka and Mauritius  (i.e. 200 tonnes to India in October 2009, 10 tonnes to Sri Lanka, 2 tonnes to Mauritius, and 10 tonnes to Bangladesh) and the remainder of approximately 181 tonnes was sold on the open market supposedly.

During and after the IMF’s ‘403 tonnes’ gold sale, the IMF never commented on which depository (or depositories) this gold was sold from. The Reserve Bank of India said sometime after the 2009 purchase from the IMF that all of its gold was held either within India,  at the Bank of England, or with the Bank of International Settlements. However, it’s possible that some of the IMF’s gold sales to India, Bangladesh, Sri Lanka and Mauritius in 2009-2010 were undertaken by transferring gold from the IMF’s Nagpur holding to gold accounts of the Reserve Bank of India, the Central Bank of Sri Lanka, the Bank of Mauritius and the Bangladesh Bank held at Nagpur. It would make some sense to do this, since the three other countries are regionally proximate to India and enjoy good international relations with India, however some of the IMF gold in Nagpur was of variable quality (read non-good delivery), and furthermore the RBI In Nagpur is not a ‘major gold trading center’ so beloved of gold hoarding central bankers.

Selling from Nagpur would have zeroed out and allowed the closure of the IMF’s gold holdings at Nagpur, and left IMF gold in only three countries, namely the US, UK and France. Since the IMF has become far less inclined to share information on its gold holdings and its gold depositories since the heady days of the 1960s and 1970s, the exact structure, quality and distribution of the IMF’s gold holdings is information that only former and current IMF Managing Directors such as Michel Camdessus, Dominique Strauss-Kahn and Christine Lagarde may be privy to.

Spotlight on Greece’s Gold Reserves and Grexit

With the Greek Government and the Troika back in the news right now, it’s a good time to take a look at Greece’s official gold reserves and examine how much gold Greece claims to hold, where this gold might be located, and explore the impact that the European bailouts or a Greek Euro exit might have on the Greek gold holdings.

The 2012 Annual report of the Bank of Greece, the most recent full annual report available, provides some useful background on the Greek gold reserves. The Bank’s full 2013 annual report has not yet been posted on its website, and the 2014 annual report has not yet been published.

In the 2012 report, the Bank of Greece claims to hold on its balance sheet, ‘gold and gold receivables’ of 4,746,000 fine troy ounces (147.6 tonnes).

As of 31st December 2012, based on a gold price of €1,261.179 per fine ounce, this ‘gold and gold receivables’ asset item was valued in the balance sheet at €5.985 billion.

The 147.6 tonne total of gold reserves might seem a lot higher than figures of 112 tonnes or 117 tonnes that are sometimes quoted in economic statistics or in the media. However, the 147.6 tonne figure includes a claim, by the Bank of Greece on the Greek State, for gold that was paid by the Bank of Greece to the IMF (subscriptions and quota increases etc) on behalf of the Greek State.

As the 2012 annual report states:

“The amounts reported above comprise the Bank’s gold holdings (3,597 thousand ounces) and gold receivables from the Greek State (986 thousand ounces) corresponding to Greece’s participation in the IMF (the gold component of Greece’s quota has been paid by the Bank of Greece on behalf of the Greek State), as well as scrap gold and gold coins for melting (163 thousand ounces). A large part of gold holdings is kept with banks abroad.

(Source: ‘Notes on the balance Sheet’ 2012 Annual Report, Page 209 of the pdf, page A15 of the report).

Gold Claim on Hellenic Republic

Why the Greek State has never paid back this 986,000 oz gold debt to the Bank of Greece is puzzling, but there would appear to be little chance of the repayment happening any time soon given the Greek State’s current fiscal position.

Since Greece was one of the original members of he IMF back in 1945, the Bank of Greece gold claim on the Greek State may be a very long-standing claim and would comprise some or all of the initial gold subscription to the IMF in 1947, and various IMF quota increases that were implemented in 1958-59, 1965 and 1970.

I think it’s misleading for the Bank of Greece to throw in this gold claim against the Greek State within its “gold and gold receivables” line item in the balance sheet. Even though it is a receivable in gold, it is not even the type of gold receivable that the European central banks had in mind when they pressured the IMF back in 1999 to deem the “gold and gold receivable” classification device as a legitimate accounting approach. (See below for a background on that issue).

In my view this 986,000 Oz gold obligation on the Greek State should be itemised separately and not listed as part of the monetary gold holding line item. Where is this 986,000 Ozs of gold? It doesn’t even exist, except as a gold holding of the IMF and should not be double counted.

Excluding this 986,000 oz (30.66 tonnes) IMF related claim on the Greek State, the Bank of Greece says it holds a total of 3.76 million ozs of gold (3,597,000 ozs + 163,000 ozs) which is roughly 117 tonnes. Excluding the scrap gold and gold coins, the figure is 3.597 million ozs, which is approximately 112 tonnes.

The Fantasy of ‘Gold and Gold Receivables’

Note that the 3.76 million ounce figure from 2012, excluding the IMF gold claim, is still in itself ‘gold and gold receivables’ and not necessarily earmarked gold held. The percentage of ‘gold receivables’ within the 3.76 million ounce figure, such as gold lent or gold swapped, is not divulged.

The Bank of Greece uses the ‘gold and gold receivables’ gimmick because the Bank, along with all Eurosystem banks and most other central banks around the world, follows IMF central bank accounting guidelines when accounting for its gold holdings. And IMF accounting guidelines do not follow generally accepted accounting principles in this area.

In 1999, the IMF, following objections from European central bank officials at the Bank of England, Deutsche Bundesbank, European Central bank (ECB) and Banque de France, back-tracked on a plan to introduce individual line item categories for gold and ‘gold receivables’ in the reserves data template of its Special Data Dissemination Standard, because breaking out this data into separate items would have revealed the workings of the gold loan and gold swap market, or what the IMF calls ‘highly market sensitive’ information.

An IMF Executive Board paper from 1999, explains the issue:

“15. Central bank officials** indicated that they considered information on gold loans and swaps to be highly market-sensitive, in view of the limited number of participants in such transactions. Thus, they considered that the SDDS reserves template should not require the separate disclosure of such information but should instead treat all monetary gold assets, including gold on loan or subject to swap agreements, as a single data item. (page 6)

** The ‘central bank officials’ referred to above were as follows:

“7.  ……At the same time the (IMF) staff consulted the Bank of England, the Deutsche Bundesbank, the Banque de France, and the European Central Bank to review practical and methodological difficulties they might encounter in implementing the CGFS template, in light of recent decisions on publication of reserves data in the Eurosystem. (page 4)”

According to the latest IMF official reserves asset data for Greece,  the Bank of Greece now claims to have monetary gold holding of 3.62 million ozs, marginally up from 3.597 million ozs. In fact, the monthly foreign reserves figures for the Bank of Greece (xls) frequently show small increases in the ‘Monetary gold (millions of the troy ounces)’ category, about 9,000 ozs per year or slightly less than 1,000 ozs per month.

This increase in gold holdings could be reflecting interest in the form of gold received on gold deposits (gold loans) with bullion banks, and may suggest that the Bank of Greece has outstanding short-term gold loans that are being rolled over with the bullion banks (in the London gold market). Interest received on central bank gold deposits (time deposits) with bullion banks is often in the form of gold (accrued interest in gold).

Central Bank of Greece

Where is the Greek gold?

On the question of the location of the Bank of Greece gold reserves, the only locational information provided on the gold reserves in the 2012 annual report, was that ‘a large part‘ of the gold was held abroad.

Earlier Bank of Greece annual reports, from 2007 - 2010, state that “The largest part of gold holdings is kept in banks abroad.” It was only since 2011 that the wording ‘a large part is kept abroad‘ was introduced. Semantics maybe, however, the change in wording could indicate that some of the gold that was held abroad had been repatriated back to Greece sometime between 2010 and 2011. This was around the time that the Greek fiscal budget started to deteriorate rapidly.

Alternatively, the previous phraseology could have included the Bank’s IMF gold claim since by definition, this gold is held by the IMF in its gold despositories, which are all located outside of Greece. But it’s not clear from the wording whether the gold claim on the Greek State has ever been included or excluded from the reference to where the gold reserves were located.

Whatever the reason, it became less important on 1st March 2013, when Bloomberg published an article about the size and location of the Greek gold reserves. This article was based on a letter written by the Bank of Greece that had been forwarded by the Finance Ministry to a lawmaker in the Greek Parliament in response to the lawmaker’s query.

The letter stated that as of 31st December 2012, Greek gold reserves totalled 3.76 millon ounces (approximately 117 tonnes). This figure tallies with the figure from the above 2012 annual report.

On the location of the gold, Bloomberg said that, according to the document:

Half is held at the central bank in Greece while the remainder is held at the Federal Reserve Bank of New York, the Bank of England and in Switzerland.”

The same day, 1st March 2013, the Greek Ministry of Foreign Affairs and various Greek news agencies confirmed the Bloomberg story in slightly more detail, with the Ministry of Foreign Affairs releasing a statement stating that:

“Greece’s gold reserves totalled 3.760 million ounces at the end of 2012, worth 4.74 billion euros, the country’s central Bank of Greece (BoG) said on Friday.

In a report to Parliament, communicated through Finance Minister Yannis Stournaras responding to a question by parliament deputies over the country’s gold reserves, the central bank said that Greece’s natural gold reserves at the end of 2012 amounted to 3.760 million ounces, worth 4.74 billion euros, of which half were under the custody of the Bank of Greece and the remaining under the custody of the Federal Bank of New York, the Bank of England and Switzerland.

The central bank noted that gold reserves which had been transferred for custody to the Bank of England during the Second World War were repatriated gradually in 1946-1956.”

The Bank of Greece therefore appears to currently maintain a 50/50 split between domestic and foreign held gold. This again may suggest that something changed after 2010 which altered the wording of ‘the largest part’ of the reserves being stored abroad. Where the domestically stored Greek gold is held, I’m not sure. Possibly in a vault in the Bank’s headquarters in Athens. Who knows.

The Federal Reserve Bank of New York (FRBNY) and Bank of England as gold custodians for Greece’s gold is not surprising given that many foreign central banks store gold with these two institutions.

The Bank of Greece has historically had a gold set-aside account at the Bank of England, not least for the Tripartite Commission’s gold distributions. Separately, in the IMF gold restitutions to its members in the late 1970s, the Bank of Greece did not use the Bank of England or the Banque de France or the Reserve Bank of India to receive restituted gold, so this implies that Greece used the FRBNY and would have needed a gold account at the FRBNY.

The reference to Switzerland by the Greeks would either be a) a gold deposit or earmarked gold held with the Bank for International Settlements (BIS), b) earmarked gold held directly with the Swiss National Bank in Berne, or c) gold held with a Swiss commercial bank in Zurich such as Credit Suisse or UBS.

Swiss National Bank

As to how much of the 50% of the Greek gold that’s stored abroad is in each of the three storage locations (New York, London and Switzerland), or how much of this gold is actually earmarked in custody is unclear. Some or all of this gold could be loaned or swapped or, as central banks like to say in their gold legal agreements, the gold may have other “liens, claims or encumbrances” against it.

Given the perilous state of Greek finances, the custodial status of the Greek gold held with the Bank of England, FRBNY and in Switzerland deserves scrutiny. This would also apply to the 50% of the Greek gold that’s supposedly held by the Bank of Greece within Greece. This scrutiny will probably never be forthcoming however due to the unaccountability and lack of transparency on everything gold related within the world of central banking.

Seizing the Greek Gold? Not like Cyprus

In February 2012 during negotiations on Greece’s 2nd bailout (Second Economic Adjustment Programme of March 2012), the New York Times wrote an article quoting a Greek politician, Louka Katseli, who was unhappy that the loan deal undermined Greek sovereignty and believed that under the bailout deal, Greece’s creditors had a claim over the Bank of Greece gold reserves. As the NYTimes stated:

“Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal, and that future bonds issued will be governed by English law and in Luxembourg courts, conditions more favorable to creditors.”

According to the NYTimes, Katseli stated that:

“This is the first time ever that a European and probably an O.E.C.D. state abdicates its rights of immunity over all its assets to its lenders.

Although the NYTimes referred in its article to “the fine print of the 400-plus-page document — which Parliament members had a weekend to read and sign“, I am not sure which 400 plus page document was being referred to. I cannot find any reference to gold or gold collateral in the European Commission’s ‘Financial Assistance to Greece’ web pages, nor in the Commission’s “The Second Economic Adjustment Programme for Greece” document.

There isn’t, as far as I am aware, any collateral connection between the Bank of Greece gold reserves and the sovereign debt of the Greek State. I only say that because I can’t find the specific documentation that Katseli was referring to. However, Louka Katseli is a very credible source for making such a statement, having worked at a high level in the Greek Government, the OECD, and European Community, amongst other posts.

In comparison to the possible lack of Greek documentation, the Troika’s (ECB, IMF and European Commission) bailout deal of the Cypriot banking sector in 2013 (“The Economic Adjustment Programme for Cyprus”) did explicitly mention Cypriot gold and the possible sale of €400 million worth of gold, as follows:

27. The “programme” scenario takes into account a number of policy measures to strengthen debt sustainability, in particular (i) proceeds generated by privatisation of state-owned assets; (ii) the proceeds from the sale of excess gold reserves owned by the Republic of Cyprus;

29. Sale of excess gold reserves: It is envisaged to use the allocation of future central profits of approx. EUR 0.4 bn, subject to the principle of central bank independence and provided such profit allocation is in line with CBC rules and does not undermine the CBC duties under the Treaties and the Statute. This is estimated to generate one-off revenues to the state.

CBC is the Central Bank of Cyprus. But as the above ‘adjustment programme’ points make note of, Eurosystem central banks cannot be forced to sell their gold reserves to meet their government’s financing needs. This is due to Article 7 of the protocols on the European System of Central Banks (ESCB) and the ECB which states that the ECB and national central banks can’t seek or take direction from European Union government or institutions and, likewise, European Union governments and institutions are not allowed to influence the national central banks or the ECB.

The Central Bank of Cyprus never did sell any of its gold, but the rumours at the time, especially in April 2013, caused weakness in the gold price and were undoubtedly used by some as justification to accelerate the gold price weakness. Cyprus had, and still has, only 13.9 tonnes of gold and the sale proceeds from any Cypriot gold sale, would, like Greece, have only covered a small fraction of its bailout obligations to the Troika.

By December 2013, Reuters had released an article saying that Cyprus had “no plan to sell gold reserves to fund its €10 billion euro bailout”:

‘”We do not intend to sell the gold,’ a senior official at the central bank told Reuters, declining to be identified.”

“Asked about any alternative method to raise the 400 million euros, the official said: ‘They (the government) have to go back to the troika and say this (a gold sale) is not going to happen.'”

“While the Cypriot government had said sales would be considered, the central bank had typically been cool to the idea. The governor of the central bank would have the final say in such a sale, the central bank sources said.”

With Greek gold reserves eight times the size of those of Cyprus, any talk of Greek gold sales would be sure to have an adverse affect on the gold price. However, given that there does not seem to be any evidence that the Troika have discussed or planned for such gold sales, any suggestions of this in the media would be irresponsible.

dijsselbloem and varoufakis

Grexit and Greece’s gold claim on the ECB

In its balance sheet, the Bank of Greece also lists a claim on the European Central Bank under an item called “Claims equivalent to the transfer of foreign reserves to the ECB” (9.2).

In 1999, the founding member national central banks of the Euro (stage 3 of Economic and Monetary Union) transferred about €40 billion in foreign reserve assets to the ECB, with 85% of this total paid in US dollars and Yen and 15% paid in gold. There are now 19 European national central banks in the Euro, and Greece has a little less than a 2.8% share in the claims on this foreign reserve pool, 15% of which is in gold. The gold in this pool is managed on a decentralised basis by the member national central banks on behalf of the ECB.

In September 2011 (after the first Greek bailout [May 2010] but before the second Greek bailout [March 2012]), when fears of Greece leaving the EU were in full flight, I wrote to the ECB press office and asked them, in quite precise language, what would become of Greece’s gold contribution to the Eurozone if Greece exited from the Euro. My question to the ECB was as follows:

“In a scenario under which a Eurozone member state left the common currency zone, would the foreign reserve assets of that member state which had been contributed by that member state’s central bank to the ECB (i.e. the claims on the ECB established via Article 30 of the ESCB Statute, initially comprising 15% gold and 85% other currencies and subsequent top ups), be reimbursed to the departing members state’s central bank, or, given that a departing member state would most likely have been one to which the ECB had an outstanding loan (and so having a liability to the ECB), would the ECB seek to net the loan against the member state’s claims (made up of major currencies and gold)?”

The Communications Directorate of the ECB’s Press and Information Division promptly responded that:

Please note that there are no legal provisions for a hypothetical scenario of the kind you describe.

You may be interested in the following Legal Working Paper, although the views expressed in it do not necessarily reflect the views of the ECB:


The document that the ECB refered me to is titled Withdrawal and Expulsion from the EU and EMU – Some Reflections – by Phoebus Athanassiou, Legal Working Paper Series. No 10, December 2009.

Coincidentally, or not, Phoebus Athanassiou, the author of the paper, is Greek. According to his faculty profile at the Institute For Law And Finance (ILF) in Frankfurt, Dr Phoebus Athanassiou is “Senior Legal Counsel with the Directorate General Legal Services of the European Central Bank (ECB).”

Athanassiou also has an interesting connection to Cyprus since, according to the ILF profile, he “specialises in European Union, Greek and Cypriot financial law.” Prior to joining the ECB in 2004, Athanassiou “was in private practice, with the Athens Law Firm of Tsibanoulis & Partners, inter alia acting as consultant to the Government of the Republic of Cyprus on the transposition of the acquis in the fields of securities, banking and insurance law.” Acquis refers to Acquis communautaire, which just means the entire body of European laws (treaties, directives and regulations etc).

Athanassiou’s paper is very detailed and technical, and while there has been lots of coverage of it in the media over the last few years, the paper only discusses whether a country is allowed to exit the EU or exit EMU, not whether a departing country would get its gold back if it left EMU.

In summary, Athanassiou says in his 2009 paper:

– that before the Lisbon Treaty of 2007, there was no legal way for a member country to exit from the European Union (EU), and even though there is now (Article 50), it would be still legally problematic;

– that a member country of EMU (in the Euro) could not exit the Euro without exiting the EU;

– that “no right of withdrawal from EMU was ever intended to exist“;

– and that a member of the EU or EMU cannot be forced out because it requires the consent of all members including the member being expelled, i.e. “A Member State’s expulsion from the EU or EMU would inevitably result in an amendment of the treaties, for which the unanimous consent of all Member States is necessary under Article 48 TEU.”

Riot police stand near the euro sign in front of the European Central Bank headquarters during an anti-capitalist "Blockupy" demonstration in Frankfurt

Deal on the Table

With a Greek-Eurogroup deal now back on the table, the Athanassiou legal arguments still look to be sound. Just before the deal, there were reports of the ECB preparing for a Greek exit from the Euro. How this could even be legally undertaken is unclear. On 20th February 2015 Reuters reported that:

“The European Central Bank is preparing for the event that Greece leaves the euro zone and its staff are readying contingency plans for how the rest of the bloc could be kept intact, German news magazine Spiegel reported in a preview of its magazine.”

There is no legal way for a Euro member to exit the Euro. If it did somehow happen, a Greek exit from the Euro would have serious ramifications both financially and politically. Would the Bank of Greece also have to leave the ESCB group?

Anytime the prospect of Greece leaving the Eurozone flares up, there is always chatter that Greece would be somehow forced into selling its gold reserves.

Even though the European Central Bank Gold Agreements (CBGAs) on gold sales are supposedly not legally binding, the Bank of Greece gold holdings, worth less than €4 billion, are tiny in comparison to the colossal sovereign debts the Hellenic Republic faces, and would only make a small dent in the debt repayments.

The gold price should in theory benefit more from the financial volatility of a Grexit than it would suffer from the fear of Greek gold sales. However, the case of the feared Cypriot gold sales in 2013 shows that gold market players can use these fears to their advantage in pushing the gold price around.

If Greece stays in the Eurozone, which looks likely, it cannot independently sell its gold without the go-head of the ECB. This is because the ECB controls, or has a say in, the management of not just the gold transferred to it as part of the foreign reserve transfers of the participating national central banks, but all the monetary gold held as reserve assets by the member national central banks (under the ECB definition, reserve assets includes monetary gold).

Article 31 of the Statute of the ESCB and ECB, which addresses foreign reserve assets held by national central banks, says that beyond certain pre-existing obligations to various international organisations, “all other operations in foreign reserve assets remaining with the national central banks” are “subject to approval by the ECB in order to ensure consistency with the exchange rate and monetary policies of the Union.” So, any Euro member central bank would have to get the approval of the ECB before buying or selling any of its monetary gold.

In conclusion, Greece is not an insignificant holder of monetary gold. Its holding of 110+ tonnes makes it a reasonably sized gold holder amongst the world’s central banks. The supposed storage locations of Greece’s gold are not surprising but as to whether the gold is there and in what form the various holdings are is anyone’s guess.

Greece cannot just walk away from the Euro since such a scenario was never envisaged by the Eurocrates, and they will do whatever it takes to prevent such a scenario happening. As to whether Greece, or any Euro member, would get its gold back if it somehow managed to escape from the Euro, that is a scenario that as the ECB told me, “there are no legal provisions for.”

The Keys to the Gold Vaults at the New York Fed – Part 3: ‘Coin Bars’, ‘Melts’ and the Bundesbank

Part 1 of this series reviewed Federal Reserve Bank of New York (FRBNY) publications that cover the Fed’s gold storage vaults in Manhattan, and illustrated how the information in these publications has been watered down over time. Part 1 also showed that the number of foreign central bank customers storing gold with the FRBNY has fallen substantially since the late 1990s.

Part 2 covered the Fed’s rarely discussed ‘Auxiliary Vault’ and suggested that this auxiliary vault of the Fed is probably located in the neighbouring Chase Manhattan Plaza vault facility, now run by JP Morgan.

Part 3 now looks at ‘Coin Bars’, another rarely discussed topic which is relevant to the gold at the New York Fed and that may well explain why the Deutsche Bundesbank needed to melt down the majority of the gold that it has so far repatriated from New York.

‘Coin bars’ is a bullion industry term referring to bars that were made by melting gold coins in a process that did not refine the gold nor remove the other metals or metal alloys that were in the coins. The molten metal was just recast directly into bar form.

Because it’s a concept critical to the FRBNY stored gold, the concept of US Assay Office / Mint gold bar ‘Melts’ is also highlighted below. Melts are batches of gold bars, usually between 18 and 22 bars, that when produced, were stamped with a melt number and a fineness, but were weight-listed as one unit. The US Assay Office produced both 0.995 fine gold bars and coin bars as Melts. The gold bars in a Melt are usually stored together unless that melt has been ‘broken’.

New York Fed – Coin Bars ‘Я’ Us

I think it’s critical to note that a reference to low-grade ‘coin bars’ in the 1991 version of the Fed’s ‘Key to the Gold Vault’ (KTTGV) has been omitted in subsequent additions of KTTGV.

The text in this 1991 ‘Key to the Gold Vault’ is based on older versions of the same publication that go back to the original version written by Charles Parnow in 1973. See Part 1 for discussion of Charles Parnow and the editions of the KTTGV and the ‘A Day at the Fed‘ publications.

The reference to coin bars in the 1991 version of KTTGV is as follows:

The butter yellow bars in the vault are nearly 100 percent pure and are usually made of newly mined gold.

Reddish bars contain copper and other impurities and generally consist of melted gold coins and jewellery containing alloys. Since 1968, a number of these “coin” bars, dating back to the early 1900s, have been stored in the Bank’s vault.

Silver and platinum impurities make gold white; iron produce shades of green.” (KTTGV 1991)

In comparison, the 1998 and later versions of KTTGV have omitted the reference to ‘coin bars’, and the discussion about gold bars and other metals has been shortened as follows:

Traces of silver and platinum give the gold a whitish shade, copper is most often found in reddish bars, and iron produces a greenish hue.

The butter-yellow bars in the vault are made of newly mined gold.” (KTTGV 1991, 2004, 2008)

There is also no mention of coin bars on the current NY Fed gold information page here. This is despite the fact that there are still coin bars held in the Fed’s New York gold vaults, as illustrated by the US Treasury’s gold bar inventory weight lists at the FRBNY. See below.

New York Fed at night

What exactly are Coin Bars?

In the early 20th century, a lot of countries were on a gold standard and gold coins circulated as part of the money supply, for example in Germany, the US, France and Britain. When countries went off the gold standard (or went off a circulating gold standard), some of these gold coins were melted down into bars in the 1920s and early 1930s.

Historically, gold coins that circulated as money were not made of pure gold since other metals (about 10%) were added to the gold to improve the coin’s strength and durability. So if a batch of coins contained 90% gold and 10% of other metals, the bars made by melting these coins would contain 90% gold and 10% other metals, since no refining of the gold was undertaken after the coins were melted.

Because coin bars were being made in the early 1930s, the London Gold Market (a precursor of the London Bullion Market Association (LBMA)) included an exact definition for coin bars in its 1934 London Good Delivery List, in addition to gold bars of 995 (or above) fineness.


Specification of bars acceptable on the London Gold Market

1. Gold bars conforming to the following specification are Good Delivery in the London market:

(a) Fine bars, i.e. bars assaying 995 per mille or over and containing between 350 and 430 ounces of fine gold;

(b) Coin bars, i.e. bars assaying 899 to 901 per mille or 915 1/2 to 917 per mille and containing between 350 and 420 ounces of fine gold; provided that they bear the stamp of the following:”

(Source: The London Good Delivery List – Building a Global Brand 1750 – 2010)

The 1934 definition specified that if a coin bar was produced by one of nineteen European mints or the United States Assay Office, then it was considered a ‘good delivery’ gold bar at that time. The European mints spanned Britain, France, Germany, Belgium, Holland, Sweden and Switzerland.

The specification of coin bars with a gold content (or fineness) of between 899 to 901 in the definition allowed the inclusion of gold coins from Continental Europe such as French Napoleon coins which had this particular gold content. The gold content of some US gold coins also fell within this range since they were made of 0.899 or 0.9 gold.

The 915 ½ to 917 range was included in the definition since 22 carat gold is 22/24 or 0.91667. This 22 carat gold, known as crown gold, was used in various gold coins such as British Sovereigns, and also some US gold coins.

But coin bars were in some ways a historical anomaly or a product of their time. Even at launch in 1919, the London gold fixing was a price quotation for 400 oz bars of 995 fineness. As gold expert Timothy Green said in the book “The London Good Delivery List – Building a Global Brand 1750 – 2010″ about the 1919 gold fixing launch:

the (fixing) price was now quoted for 400-ounce / 995 Good Delivery bars, rather than the traditional 916 standard coin bars which rapidly became extinct as minting of coin virtually ceased.” 

In the 19th century and very early 20th century, some refineries used to specifically produce ‘916 standard’ coin bars back that were used as a source to make gold coins. But the now famous 400 oz fine gold bars had been accepted by the Bank of England since 1871 when Sir Anthony de Rothschild convinced the Bank of England to accept them. The Bank of England had also begun to accept US Assay Office 400 oz bars of 995 fineness (fine bars) in 1919.

There do not appear to have been that many coin bars made in the early 1930s when mints melted down gold coins. In his book, Green cites a 1930 example of the Royal Mint in London embarking on a 2 year programme to melt down 90 million British Sovereigns (916.7 fine gold coins) into 52,000 bars each weighing 450 ozs. This is about 650 – 700 tonnes of gold. Each of these bars was stamped with the stamp of the Royal Mint as well as the fineness and a serial number on each bar.

Green also explains that although in 1936 the London Gold Market produced an updated good delivery list that added some additional refineries and mints to the 1934 list, there did not seem to be a lot of coin bars produced. Green says:

“The inclusion of mints (in the 1936 list) is interesting, suggesting that some like the Royal Mint in London, were melting coin, but there is little evidence of any producing significant quantities of bars.”

By the late 1920s, gold bar demand had shifted to central banks who wanted fine gold bars for their vaults. Green says that by 1929, 90 per cent of ‘monetary’ gold resided in these central bank vaults.

(Source:  “The London Good Delivery List – Building a Global Brand 1750 – 2010. Authors: Timothy Green (Part I) and Stewart Murray (Part II). Published by the LBMA, 2010)

Roosevelt’s Coin Bars

Apart from melted coins from Europe, there is another significant source of coin bars, namely the coin bars produced from US gold coins that were melted down during the US gold confiscation period circa 1933-1934.

Some of the US Treasury’s coin bars originated from this gold coin confiscation and melting period, and these coin bars were then shipped to the US Mint’s Fort Knox facility in Kentucky when it opened in 1937.

The authoritative source for information on the different producers of gold bars worldwide is a company called Grendon International who have a web site called http://www.goldbarsworldwide.com. This web site produces guides explaining the whole spectrum of gold bar varieties. In its US Assay Office gold bar guide, Grendon states:

“It is understood that the bars (produced by the US Mint / AssayOffices) had a minimum purity of 995+ parts gold in 1,000 parts, with the exception of those 400 oz bars that contained “Coin Gold”.

“Coin Gold” 400 oz bars were manufactured by melting down and then casting into bars gold coins that had been withdrawn from public circulation, mainly as a result of the prohibition in 1933 of private gold ownership in the United States. The gold purity of these bars reflected the purity of U.S. gold coins, usually 900 or 916 parts gold in a 1,000 parts. 

Roosevelt news
In an article about the US confiscation and the US coins that were actually melted, lawyer and coin expert David Ganz demonstrates that there were not a large amount of US gold coins melted by the US authorities in the 1930s.

In his article, Ganz has a table showing the total number of gold coins minted and melted over the 1930s, classified by coin denomination up to the $20 coin. Given that the $20 coin has 0.9675 ounces, and the $10 has 0.48375 ounces etc, you can work out the total number of millions of ounces that were produced from melted coins. Ganz says:

Product of gold confiscation was gold melting; the coins were melted into bricks that ultimately found their way to Fort Knox. Although the Mint had a program from the mid-1860’s until about 1950 to melt or re-coin copper, silver and gold coinage, the majority of gold coins were taken in and destroyed in a Seven year period (1932-1939)“.

Ganz’ statistics come directly from the annual reports of the Treasury’s Director of the Mint. Ganz says “All told, over 124 million coins were melted through the years (102 million gold coins were melted as a result of government assistance from 1933- 1939).”

However when you calculate the amount of gold in these 124 million coins, it only works out at about 85.6 million fine ounces, which is 2,662 tonnes of gold.

Some of the European coin bars made it across the Atlantic circa 1934 when the US raised the price of gold to $35 per ounce and the US Treasury offered to buy all gold at this price, including coin bars from the London Gold Market.

All gold arriving into the US Treasury’s assay offices was apparently remelted into US Assay Office bars but statistics on how many European coin bars entered the US market at that time do not seem to be available.

Since there were not that many European coin bars made by European mints in the 1930s (for example, the Royal Mint 1930 programme made only 650-700 tonnes of coin bars), then there cannot have been more than a few thousand tonnes of European coin bars entering the US at that time.

 999.5 US Assay Office
Coin Bars ceased to be ‘Good Delivery’ bars in 1954

During World War II the London Gold Market essentially closed down and really only re-opened in March 1954 when the Gold Fixing restarted. When the London Gold Market re-opened, a  new 1954 London Good Delivery List for gold was published. This list only included gold bars of 0.995 fineness or higher, and coin bars ceased to be London good delivery standard. As Stewart Murray, former LBMA CEO says: “The new List published in 1954 only allowed fine bars of 995+.” (page 40, “Good Delivery Accreditation – A Short History”).

It’s therefore very strange that the Fed’s 1991 ‘Key to the Gold Vault’ publication states that it was only “since 1968″ that  “a number of these ‘coin bars’, dating back to the early 1900s, have been stored in the Bank’s vault.” This implies that coin bars were not at the New York Fed gold vaults immediately prior to 1968.

Why would these coin bars suddenly appear at the FRBNY vault in 1968? To answer this question, its important to recall that 1968 was the year in which the London Gold Pool collapsed (March 1968).

Since coin bars have not been good delivery bars since 1954, US Treasury coin bars appear to have begun to turn up in the New York gold vaults in 1968 because there was a shortage of good delivery US Assay Office gold bars to satisfy foreign central bank gold transaction settlements.

Scraping the barrel – March 1968

That the US Treasury and Federal Reserve had a major shortage of good delivery gold in March 1968 is illustrated by a Bank of England memo from 14th March 1968, which highlights that the London Gold Pool collapsed because the US monetary authorities were unable to find any good delivery gold in their own stocks, and were confronted with the prospect of having to supply their Fort Knox low-grade ‘coin bars’ to the market.

The Bank of England memo, titled ‘Gold Bars for Delivery in the London Market‘ was written by George Preston (LTGP) and addressed to the Deputy Governor Maurice Parsons and the Chief Cashier John Fforde. It discussed the ramifications of delivering coin bars to the London Gold Market. The memo is referenced as entry ’49’ from file C43/323 i.e. C43/323/49.

Points 1 and 2 in the memo described what was good delivery at that time in 1968, and are included here to illustrate that coin bars were not even being countenanced as good delivery back in 1968. No one had even thought about coin bars since the 1930s.

However, Point 3 is the critical point. A short quote from the memo:

“1. The current specification of bars which are good delivery in the London market requires that they shall be of a minimum fineness of .995 and shall have a minimum gold content of 350 fine ounces and a maximum of 430 fine ounces.”

“2. In the 1930s when the Bank were delivering bars to the market to satisfy French demands for gold, they had to deliver coin bars and the specification in the 1930’s included bars not only .995 fine but coin bars assaying between .899 and .901 and also .915 1/2 to .917. Bars of both varieties had to contain between 350 and 430 ounces of fine gold.”

“3. It has emerged in conversations with the Federal Reserve Bank that the majority of the gold held at Fort Knox is in the form of coin bars, and that in certain cases these bars have a gold content of less than 350 fine ounces. If the drain on U.S. stocks continues it is inevitable that the Federal Reserve Bank will be forced to deliver what bars they have.

Capacity to further refine coin bars to the current minimum fineness of .995 in the United States is entirely inadequate to cope with conversion on the scale that would be required if the Americans wished to continue to deliver bars assaying .995 or better. Equally the capacity in the U.K. is inadequate for this task.”

The Fed asked the Bank of England to discuss the situation with Rothschilds (the chair of the gold market) at partner level. The memo then covers some discussion with Mr Bucks and Mr Hawes of Rothschilds about the acceptability of delivering coin bars to the London Gold Market. Supplying the market with coin bars was thought by the Bank and Rothschilds to be problematic, and the memo concluded, somewhat ominously:

it would appear that the circumstances might well be such that very few bars of the current acceptable fineness could be found” (by the Americans)

Ominously, because, as some readers will be aware, the London Gold Pool collapsed that evening, Thursday 14th March 1968. On the following day, 15th March 1968, an emergency bank holiday was called for British financial markets, the London gold market remained closed (and stayed close for the next two weeks), and the gold price began to float for non-official transactions.

Migration of Coin Bars from FRBNY to the Bank of England

That foreign central banks were provided with coin bars at the New York Fed is a fact, as illustrated by the following.

In 2004, speaking at a conference of the American Institute for Economic Research (AIER), (AIER Conference May 2004 Gold Standard), H. David Willey, formerly of the Federal Reserve Bank of New York,

Gold held by foreign authorities under earmark at the Federal Reserve Bank of New York may be in the form of coin bars only approximating 400 ounces and with a much lesser purity.

In the last decades, there has been a gradual migration of central bank coin bars from the New York Federal Reserve vaults to the Bank of England. These bars have been first re-refined into London good delivery form. Once at the Bank of England, the bars can readily be used for gold loans or sales.

H. David Willey was “formerly Vice President of the Federal Reserve Bank of New York in charge of the discount window, and later responsible for oversight of the Federal Reserve’s accounts (including gold) with foreign central banks (1964-82); advisor to Morgan Stanley’s gold and fixed-income business (1982-2000).

(Source: Page 62: https://www.aier.org/sites/default/files/publications/GC%20%2704%20-%20Text.pdf)

A central bank would only be confronted with a need to convert its FRBNY coin bar holdings to good delivery gold and move them to London if it didn’t have any 995 fine gold at the FRBNY. As to how many banks engaged in this activity and sent their coin bars to the refineries is unclear.

US Treasury coin bars

While some foreign central banks seem to have tried to get rid of their non-good delivery coin bars over the years by having them melted down, there are still coin bars held in the New York Fed vault(s).

The US Treasury claims to hold gold at four locations, namely Fort Knox in Kentucky, Denver in Colorado, West Point in up-state New York, and at the Federal Reserve Bank of New York in Manhattan, NY.

According to the US Treasury’s own full gold inventory schedule (which have never been independently and physically audited), over 80% of the US Treasury gold bars listed are not good delivery bars and are in the form of coin bars and other low fineness gold bars. See pdf here for a detailed list of the gold the US Treasury claims to hold at Fort Knox, Denver and West Point. An excel version of the US Treasury list is here in xls.

There is a neat table summarising the weight and purity of the US Treasury’s gold bar ‘lists’ here, taken from the goldchat blog site.

There has been very little gold bar activity in or out of Fort Knox since 1968. If there was nothing, or next to nothing, except coin bars at Fort Knox in March 1968 (as the FRB told the Bank of England in March 1968), then how could there now be over 147 million ozs of gold (over 4,500 tonnes) at Fort Knox if its all or nearly all in the form of coin bars? The numbers don’t add up.

Said another way, if the US melted around 2,600 tonnes of US gold coins in the 1930s into coin bars, and if some European coin bars were converted into US Assay Office coin bars (also in the 1930s), how could this add up to even 4,500 tonnes, let alone add up to all the coin bar gold that the US Treasury claims to hold at Fort Knox, Denver and West Point combined, and all the coin bars held by foreign central banks at the FRBNY?

Historical Melts FRBNY

US Treasury coin bars at the FRBNY

Surprisingly, the US Treasury lists how many coins bars it holds at the FRBNY. According to its custodial inventory statement, about 5% of the US Treasury’s gold is held at the FRBNY in the form of 31,204 bars stored in 11 compartments (listed as compartments A – K).

The US Treasury gold claimed to be stored at the FRBNY is listed in weight lists here, starting on page 132 of the pdf (or page 128 of file).

FRBNY - Schedule of Inventory of Gold Held by US Treasury at FRBNY - New

Of the US Treasury’s eleven compartments listed at the FRBNY, coin bars are listed as being held in four of these compartments, namely compartments H, J, K and E.

Compartment H of the US Treasury’s gold at the FRBNY contains coin bars produced by the US Assay Office. These bars are listed in ‘melts’, with more than 60 melts listed, each with about 20+ bars. This would be in excess of 12-13 tonnes. See the following screenshots as examples.

FRBNY Compartment H - coin bars of the US Treasury - New

FRBNY Compartment H - coin bars of the US Treasury B - New

All the bars listed in the Treasury’s Compartment J are US Assay Office coin bars, listed in melts. This amounts to 968,000 fine ounces, or about 30 tonnes. See the following two screenshots.

FRBNY Compartment J - coin bars of the US Treasury 1 - New

FRBNY Compartment J - coin bars of the US Treasury 2 - New

Compartment K also contains about 5 tonnes of coin bars belonging to the US Treasury. Screenshot not shown for brevity.

Additionally, Compartment E contains approximately 1 tonne of coin bars that are not US Assay Office coin bars. These coin bars are listed as being produced by refiners such as Marret-Bonnin, Rothschild, Comptoir-Lyon and the Royal Canadian Mint. All four of these refiners were listed on the 1934 Good Delivery List of refiners of coin bars.

FRBNY Compartment E - non US Assay Office coin bars of the US Treasury B - New

FRBNY Compartment E - non US Assay Office coin bars of the US Treasury C - New

Source: http://financialservices.house.gov/uploadedfiles/112-41.pdf

Overall, a quick calculation of the above weight lists suggests that the US Treasury holds about 50 tonnes of coin bars at the New York Fed. Interestingly, this is roughly the same amount of gold that the Bundesbank says that it melted/smelted in 2014 after repatriating it from the New York Fed.

Melt Bars stacked

US Assay Office 0.995 fine bars vs US Assay Office coin bars

Its important to understand the difference between good delivery US Assay Office gold bars and US Assay Office coin bars (circa 0.90 fine). US Assay Office gold bars that have a gold content of 0.995 fine or higher are still good delivery in the London Gold Market and in international transactions because US Assay Office 0.995 bars are still on the ‘former’ London good delivery list.

The LBMA’s London Good Delivery List is a list of refineries worldwide whose gold bars are acceptable by the London Gold Market. This list contains two parts, a current list and a former list. The former list includes refineries whose gold bars are still accepted by the London Gold Market but who no longer produce these gold bars.

In September 1997, the LBMA transferred ‘US Assay Office’ gold bars to the former list because they were no longer produced by the US Assay Office after this date. These are bars that were produced by the New York Assay Office and the San Francisco and Denver Mints.

Gold bars that are on the former list are still accepted as London Good Delivery as long as they have been produced prior to the date of transfer to the former list, and as long as the bars meet the London Good Delivery standards.

Therefore, US Assay Office gold bars (995 fine) are still accepted as London good delivery bars. Just look at the bar list for the SPDR Gold Trust (GLD) and you will see plenty of US Assay Office gold bars listed. These bars have appeared at various times recently with a variety of descriptions such as ‘US ASSAY OFFICE NY’, ‘U.S Assay Office’, ‘United States Assay Offices & Mints’, ‘US ASSAY OFFICE NEW YORK’, ‘UNITED STATES ASSAY OFFICE’ etc etc.

US Assay Office gold bar MELTS

Its important to grasp what a MELT is as applied to US Assay Office Gold because it applies to a lot of the gold held at the FRBNY vaults. Non US refineries and mints also produced gold bars in batches but they didn’t make use of a melt numbering system in such an obvious way as the US Assay Office.

Here’s the Federal Reserve Board explaining 0.995 Melts:

“US Assay Office bars, like bars in other countries, are produced in melts or a series of bars, numbered in succession. For instance, melt No. I contains 20 bars. Hence, the bars are stamped 1-1, 1-2, etc… , 1-20.”

“US Assay Office bars are gold bars that are originally issued by the US Assay Office and that have not been mutilated and which, if originally issued in the form of a melt, are re-deposited as a complete melt. These bars are not melted and assayed. They weigh approximately 400 troy ounces, the fineness of their gold content is .995 (99.5% purity or better), and they come in complete melts.

“When an US Assay Office bar is removed from a melt, it is referred to as a mutilated US Assay Office bar.”

Source: ‘Final report of the gold team’, draft June 30th, 2000. Page 13 of document: (http://www.clintonlibrary.gov/assets/storage/Research-Digital-Library/holocaust/Holocaust-Theft/Box-227/6997222-final-report-of-gold-team.pdf)

Here’s a very good description of Melts from none other than the International Monetary Fund. This description comes from an IMF document in 1976 when they were preparing their gold auctions and restitutions:

“..most of the gold of the Fund (IMF) is not in the form of individually stamped and weighed bars but consists, with the exception of the gold held in depositories in the United Kingdom and India, of melts, comprising 18-22 individual bars, which will first need to be identified, weighed, and selected before they can be delivered. 1/ “

Footnote 1/ on the same IMF page describes ‘Melts’ as:

“1/ A melt is an original cast of a number of bars, usually between 18 and 22. The bars of an unbroken melt are stamped with the melt number and fineness but weight-listed as one unit; when a melt is broken, individual bars must be weighed and stamped for identification. It is the practice in New York and Paris to keep melts intact.”

Swiss National Bank refining operations

The Swiss National Bank (SNB) admits that it too has held non-good delivery gold, and has sought, over a 30 year period from 1977-2007, to get it refined to good delivery status:

The National Bank has commissioned numerous refining operations during the last thirty years in order to obtain the ‘good delivery’ quality label for its entire gold holdings.

Swiss gold refining firms were prepared to undertake these operations free of charge, as the SNB provided them, in return, with a ‘working capital’ of several tonnes – more than was strictly necessary for their activity on behalf of the central bank.

This mutually profitable arrangement was challenged in 1982, when the SNB’s legal services concluded that it raised a number of problems, in particular that it effectively constituted an unsecured advance, similar to a gold loan. The National Bank’s deposits with refining firms were therefore liquidated in the same year, and subsequently, the cost of refining operations was invoiced directly to the SNB.

(page 433, section 8.2 The National Bank’s gold operations, from the 800+ page publication “The Swiss National Bank 1907 – 2007” (large file: 800+ pages.)

The SNB  had a lot of gold at the FRBNY up until at least the mid to late 1990s (since there are large FRBNY gold outflows during that period), and the Swiss gold sales appear to have targeted this New York gold, however, the Swiss gold sales settled out of London so it looks like Swiss gold may have been on the move in the late 1990s, even before the SNB had got the go-ahead to engage in gold sales over the 2000-2004 period. Perhaps the SNB’s Swiss refinery operations cited above involved some of the SNB’s New York gold as it stopped off in Switzerland on its way to London?

The Curious Case of the German Bundesbank

There has been widespread coverage of the Deutsche Bundesbank’s attempts to repatriate some of its gold reserves from New York and Paris back to Frankfurt. A lot of this coverage is, in my view, failing to ask the right questions about the fineness of the gold bars repatriated.

In January 2014, the Bundesbank announced that it had repatriated a paltry 5 tonnes of gold from the New York Federal Reserve Bank during 2013.

The Bundesbank press release from 20th January 2014, quoted Bundesbank Executive Board member Carl-Ludwig Thiele as follows:

‘”We had bars of gold which did not meet the ‘London Good Delivery’ general market standard melted down and recast. We are cooperating with gold smelters in Europe,” Thiele continued. The smelting process is being observed by independent experts. It is set up in such a manner that the Bundesbank’s gold cannot be commingled with foreign gold at any time.’

Since the Bundesbank is fond of using the term ‘smelting‘ and ‘smelters‘ in their gold bar discussions, what exactly does ‘smelting’ mean?

SMELT dictionary definition: Smelt (verb):

1. to fuse or melt (ore) in order to separate the metal contained

2. to obtain or refine (metal) in this way.

To me, it appears that the Bundesbank melted down and refined coin bars into London Good Delivery bars, otherwise why else would they need to bring gold up to good delivery standard? After all, normal US Assay Office gold bars of 0.995 fineness are already good delivery. So I emailed the Bundesbank at that time (January 2014) and asked them straight out:

How many tonnes of coin bars does the Bundesbank hold at the Federal Reserve in New York in addition to the 5 tonnes of coin bar gold recently remelted? And will all the gold (circa 300 tonnes) that is planned to be brought back from New York be in the form of coin bars? Regards,

The Bundesbank replied, directing me back to their press release:

in the Link attached you will find more information about your matter.

Since I had asked about ‘coin bars’ and the Bundesbank had sent me a link to the press release about smelting, could the Bundesbank have been conceding that the smelting was of coin bars? Quite Possibly.

On 19th February 2014, Carl-Ludwig Thiele popped up again referring to the  ‘smelting’ operation in an interview conducted with German newspaper Handelsblatt:

Some of the bars in our stocks in New York were produced before the Second World War.”

“Our internal audit team was present last year during the on-site removal of gold bars and closely monitored everything. The smelting process is also being monitored by independent experts.”

“The very same gold arrived at the European gold smelters that we had commissioned.”

“The gold was removed from the vault in the presence of the internal audit team and transported to Europe. Only once the gold had arrived in Europe was it melted down and brought to the current bar standard.”

The frequent use of the words ‘smelting’ and ‘smelters’, in my opinion, suggests that not only were the Bundesbank’s gold bars melted and reformed into fresh bars, but that the gold was smelted and refined from a lessor purity to a ‘good delivery’ purity. This is why the opaque manoeuvres of the Bundesbank suggest ‘coin bars’.

Thiele’s reference to “some of the bars in our stocks in New York were produced before the Second World War” is again hinting at the 1930s, and to me is clearly suggesting ‘Coin Bars’.

Bundesbank bar display

From 5 to 50 tonnes

The 2013 five tonne smelting mystery was merely a prelude to much more of the same in 2014, because in January 2015, the Bundesbank issued a press release in which it claimed to have repatriated 85 tonnes of gold from the FRB in New York, of which approximately 50 tonnes was melted and recast.

Smelting/Melting expert Carl-Ludwig Thiele was again on hand to explain:

“The Bundesbank took advantage of the transfer from New York to have roughly 50 tonnes of gold melted down and recast according to the London Good Delivery standard, today’s internationally recognised standard.”

I then emailed the Bundesbank and asked:

“The Bundesbank press release from yesterday (see link below) refers to the fact that 50 tonnes of gold that was repatriated from the Federal Reserve in New York was recast / remelted before being received by the Bundesbank.

Can you clarify what the gold fineness (parts per thousand of gold in the bars) of these 50 tonnes of bars was before they were recast / remelted?


The Bundesbank replied to my email:

“Please understand that we do not provide any information on the physical details of single gold bars owned by Deutsche Bundesbank. Nevertheless, we would like to draw your attention on the fact that no irregularities where found concerning the gold melted down and recast according to the London Good Delivery standard. Please take into account that this standard asks i.a. for a minimum fineness of 995 parts per thousand.

(i.a.= inter alia = among other things)

Notwithstanding that I didn’t ask about single gold bars, its very interesting that the Bundesbank mentions 995. Why mention the fineness of 995? If the bars were already 995, why melt them down in the first place?

I then sent the Bundesbank a follow-up email:

“Thanks for the reply but I wasn’t asking about the details of single gold bars. 

My question is what was the average fineness of the 50 tonnes of gold bars that the Bundesbank had remelted in 2014. That’s the average fineness on approximately 4,000 bars. 

The Bundesbank replied:

“Please understand that we do not provide any further information on the
details of specific gold bars or a specific amount of gold bars owned by
Deutsche Bundesbank.”

In my view, the Bundesbank’s complete secrecy on this smelting issue speaks volumes. And you also see now that the Bundesbank cannot give a straight answer when asked simple questions about its gold.

In both January 2014 and January 2015, the Bundesbank claims that the Bank for International Settlements (BIS) was in some way involved in the Bundesbank’s gold smelting shenanigans. This makes little or no sense unless there was some type of location swap involved or the BIS has some deal with a refinery such as Metalor in Neuchâtel.

In January 2014 Thiele said:

“The Bundesbank has repatriated the gold from New York City in close cooperation with the Bank for International Settlements. “The Bank for International Settlements is a repository of expertise in the repatriation of gold. It is a very trustworthy institution.”

In January 2015 Thiele said:

“We also called on the expertise of the Bank for International Settlements for the spot checks that had to be carried out. As expected, there were no irregularities.”

Carl-Ludwig Thiele

The BIS trades gold ‘loco Berne’ using its account at the Swiss National bank (SNB) vaults, and the BIS maintains safekeeping and settlements facilities that are “available loco London, Berne or New York.”

Bundesbank gold looks like it left the FRBNY vaults during 2013 and 2014 in batches of 5.16 tonnes. See the Fed’s foreign earmarked gold statistics here. But on a net basis there is a shortfall of about 32 tonnes in 2014  between the amount of gold that left the FRBNY vaults and the amount of gold that the Bundesbank and De Nederlandsche Bank combined claim that they repatriated from the FRBNY during 2014.

Therefore, there may have been a gold location swap involved somewhere along the line. For some of the Bundesbank’s melting operations, gold may not have moved physically from the FRBNY at all. A gold location swap could have been done between a BIS FRBNY gold account and a BIS SNB gold account. Since the gold needed to be remelted / recast (to bring it to good delivery status), that would mean there were coin bars at the SNB.

The Metalor gold refinery (one of the 4 big gold refineries in Switzerland and one of the 6 biggest in the world) is very near the SNB’s Berne vault. Its located at Neuchâtel, about 50kms from Berne. The three other large Swiss gold refineries are all quite far from Berne as they are situated in southern Switzerland near the Italian border within a mile or two of each other, (Valcambi is in Balerna, Pamp in Castel San Pietro, and Argor-Heraeus is in Mendrisio).

If the BIS did some location swaps between the FRBNY and the SNB, it could get coin bars at the SNB vaults remelted at Metalor and then get the new gold bars flown to the Bundesbank in Frankfurt.

This would prevent the need to fly gold from New York City, and it would explain the “close cooperation” of the BIS in the operations.

Going Dutch

In contrast, that other great gold repatriating nation of 2014, namely the  Netherlands, did not see the need to melt any of the bars that it repatriated. In its press release in November 2014, the De Nederlandsche Bank simply said they had repatriated their gold to Amsterdam, apparently in quite a quick fashion.

And why would the Dutch need to melt anything, since after all, their gold in New York was in 995 Melts, as confirmed by Dutch Central Bank official Jan Lamers.

Here is Lamers in 2005 talking about the DNB’s gold bar holdings at the FRB, which were held in normal US Assay Office Melts:

“The New York stock does not meet the standards prevailing on the international gold market, the so-called London “good delivery” standards. The biggest difference is that the bars in New York are not individualized, but are part of a package of about 20 bars, wherein the package as a whole has an overall weight and number. The bars in the package would need to be weighed and numbered individually to meet ‘good delivery’ standards.”

I translated the above, so here is the original Dutch from Lamers:

“De voorraad in New York voldoet echter niet aan de standaarden die gelden op de internationale goudmarkt, de zogenoemde Londense ‘good delivery’ standaard. Het grootste verschil is dat de baren in New York niet zijn geïndividualiseerd, maar onderdeel zijn van een pakket van circa 20 baren waarbij het pakket als geheel een gewicht en nummer heeft. Door de baren in het pakket individueel te wegen en te nummeren, konden deze op‘good delivery’ standaard worden gebracht.”

(Source: “Gold Management of the Bank” by Jan Lamers, Senior Policy, Financial Markets Division. http://web.archive.org/web/20081117183716/http://www.dnb.nl/binaries/goudbeheer%20van%20DNB_tcm46-146095.pdf pages 7-8 of the pdf.)

So, the fact that the Dutch didn’t need to smelt anything but the German’s did shows that the bars that the Germans sent to the European Smelters were not regular 995 fine US Assay Office bars. If the Germans had possessed 995 US Assay Office bars, they would just need to be weighed and individually stamped with their weights, not melted down and recast.

The fact that the Bundesbank will not publish any weight lists is very suspicious. Even the US Treasury published their weight lists of their bars held at the FRBNY (see above).

Peter Boehringer, of the German ‘Repatriate our Gold’ campaign, says that allegedly, the bar lists of the gold that the Bundesbank had melted have now been destroyed. If this has happened, then this is further bizarre behaviour from the Bundesbank.

There are various other theories apart from ‘coin bars’ as to why the Bundesbank may have wanted to melt down gold bars from New York but the other alternatives are also embarrassing to the bar holder.

The old bars may have had cracks or fissures in them. This has happened to some of the old gold that is stored in the Bank of England as this report from 2007 shows.  The Bank of England spokesman at the time said:

“This is not about purity, this is about physical appearance.”

Speaking of Peter Boehringer, a recent Bloomberg article from February 2015 about Boehringer and the Bundesbank gold quoted a Bundesbank spokesman as telling Bloomberg, on the subject of gold melting, that:

meeting the London good delivery standard “cannot be reduced entirely to the weight of a gold bar but needs to take various other features into account, one criterion being the outer appearance.”

However, this Bloomberg article is the first time that the Bundesbank has mentioned ‘appearance’ of bars, and to me it looks like a story that keeps changing, possibly with some inspiration from the Bank of England 2007 story.

Cracks and fissures in 55 tonnes of gold would be quite alarming given that the LBMA said that ‘defects’ are ‘fortunately not typical!’ (see slide 13 here), and this would throw the quality of all the Fed’s New York held gold into doubt.

The quality of US Assay Office 995 fine bars was seen to be less than perfect by London refiners in 1968, as demonstrated by this 2012 article from Zerohedge, but if the Bundesbank was melting down US Assay Office 995 fine bars this would also be an alarm bell for all holders of similar gold. And why would the Dutch not think its necessary to melt down their repatriated US Assay Office bars if the Germans thought this was a problem?

The Bundesbank gives some details of a gold swap with the FRB back in 1968, and claim that a portion of the gold returned to the  Bundesbank (the return leg of the gold swap) was gold of a lessor quality than good delivery. They say “the remaining bars with a countervalue of $750 million were of a different quality”. This is absolutely not correct. All of the gold bars returned to the Bundesbank in that potion of the swap were good delivery US Assay Office bars and a lot of it came from Ottawa where the Fed had sourced some bars from the Canadians.

I have the details on that swap from Bank of England gold ledgers and the 1,200 gold bars (sent to Johnson Matthey) out of over 50,000 bars shipped to London were merely being ‘adjusted’ into good delivery bars, and were supposed to be good delivery bars, hence the need to remelt and recast.  I will cover this Bundesbank gold swap in a future article. The Bundesbank seems to be using this gold swap as as some sort of ambiguous evidence of why they are melting down 55 tonnes of gold but it is misleading to do so.

So, in conclusion, I would lean towards the probability that the Federal Reserve Bank of New York has given the Deutsche Bundesbank tonnes of coin bars and the smelting operations have been bringing this gold up to London Good delivery purity levels. This begs the question, where did all the other Bundesbank gold bars stored at the New York Fed disappear to?

The alternative to the coin bar thesis, that the Bundesbank does not trust the gold purity of supposedly 995 fine US Assay Office bars, is probably more concerning since it undermines confidence in the purity levels of all US Assay Office fine gold Melts.