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Ireland’s Monetary Gold Reserves: High Level Secrecy vs. Freedom of Information – Part I

This article and a sequel article together chronicle a long-running investigation that has attempted, with limited success to date, to establish a number of basic details about Ireland’s official monetary gold reserves, basic details such as whether this gold is actually allocated, what type of storage contract the gold is stored under, and supporting documentation in the form of a gold bar weight list. Ireland’s gold reserves are held by the Central Bank of Ireland but are predominantly stored (supposedly) with the Bank of England in London.

At many points along the way, this investigation has been hindered and stymied by lack of cooperation from the Central Bank of Ireland and the Irish Government’s Department of Finance. Freedom of Information requests have been ignored, rejected and refused, and there has also been outright interference from the Bank of England. Many of these obstacles are featured below and in the sequel article.

6 Tonnes of Gold

Ireland ‘only’ owns 6 tonnes of gold in its monetary reserves, which is a fraction of the gold holdings that many of the large European central banks are said to hold. For such a small holding, it may be surprising that basic details of the Irish gold remain a closely guarded secret. However, it’s worth remembering that Ireland is a member of the Eurozone, that the Central Bank of Ireland is a member bank of the European Central Bank (ECB), and that the Irish gold is (supposedly) stored at the Bank of England vaults. Given the clubs that the Central Bank of Ireland is in or is a part of, it is arguably ECB policy and Bank of England policy on gold secrecy which primarily dictates what the Central Bank of Ireland is allowed to say or not to say about the Irish gold reserves.

But don’t forget though that central bankers in general, and Irish central bankers included, are an arrogant and narcissistic bunch who consider themselves immune from having to answer to anyone other than themselves and sometimes their governments. Furthermore, the out of control arrogant culture and ‘cult’ of independence of these organisations also explains their disdain for public discourse, especially on a topic as highly sensitive to them as monetary gold.

For many years Ireland held 14 tonnes in its monetary gold reserves. This remained the case until the end of 1998. In January 1999, as part of Eurozone foreign exchange transfers to the newly established ECB, the Central Bank of Ireland transferred 8 tonnes of gold to the ECB at the birth of the Euro, leaving it as the guardian of just 6 tonnes of gold. This 6 tonne holding has remained static ever since, at least at a reporting level. Most of this 6 tonnes of gold is supposedly stored at the Bank of England in London in the form of gold bars. A small residual of the 6 tonnes is held in the form of gold coins and stored at one of the Central Bank of Ireland sites in Dublin.

Central Bank Act (1942) and FOI Acts

The Central bank of Ireland was established via “The Central Bank Act, 1942″ which states that:

“The Bank is a state corporation established under Statute (the 1942 Act) wherein its capital is held by the Minister. The Minister for Finance is the sole shareholder of the Bank.

In Ireland, the Minister for Finance heads up the Department of Finance and this Minister is also a member of the Cabinet, i.e. the Government or Executive branch. The current Minister for Finance is Michael Noonan who has held this position since March 2011.

Freedom of Information requests in Ireland were introduced in Ireland by the relatively recent Freedom of Information (FOI) Act 1997 which was enacted by a coalition government and which advanced the concepts of transparency and openness in government records and cabinet meetings etc. However, the powers of this 1997 Act were diluted somewhat by a 2003 Amendment to the 1997 Act which aimed to row back on some of the advances of the 1997 Act and which introduced fees for submitting FOI requests.

I first examined the Irish gold reserves in August 2011. At that time the FOI Act covered government departments such as the Department of Finance, but not the Central Bank of Ireland. A subsequent FOI Act of 2014 replaced the 1997 FOI Act and the 2003 FOI Amendment, and also extended the coverage of FOI requests to all public bodies including the Central Bank of Ireland. The 2014 Act (in section 42 and Schedule 1 ) specifies a number of exemptions for certain types of information of certain types of public bodies including a few exemptions for certain types of central bank information. A government website http://foi.gov.ie summaries the basic framework for FOI’s in Ireland. An independent Office of the Information Commissioner (OIC) also exists to review decisions made by public bodies in relation to the FOI.

At the time in 2011, I began noticing the difficulties which gold researchers in other countries were having in obtaining basic information from their central banks about other countries’ gold reserves, and I thought that going through an investigative process with the Irish equivalent might prove easier to navigate given that the Irish gold holdings were far smaller, and given that the Central Bank of Ireland is not exactly as big as the behemoths of the Bundesbank or Banque de France, and so might be more approachable. However, what the process ended up proving was exactly what others had experienced, that the subject of monetary gold reserves is a subject which central banks do their utmost not to discuss any real details of.

This investigative summary into Ireland’s gold reserves is divided into 2 parts. Part 1 here details all of the investigations submitted to the Department of Finance and Central Bank of Ireland prior to my submission of a FOI request to the Central Bank of Ireland in 2015. The Central Bank of Ireland became subject to Freedom of Information requests in 2014 after the FOI Act of 2014 was enacted.

Part 2 looks at the FOI submitted to the Central Bank of Ireland in 2015, how this was rejected, and how it was then appealed and became ‘partially’ successful. I have redacted certain information in emails and FOI letters such as names of FOI officers and various addresses and phone numbers.

Dame Street

2011 – Central Bank First Refusal

The saga began on 26th August 2011 with an email to the Central Bank of Ireland posing a number of seemingly innocuous questions about Ireland’s gold reserves. My questions were as follows:

Could you clarify a number of points on the gold holdings of the Central Bank of Ireland.

Note 10 on page 98 of the Bank’s 2010 annual report states that ‘Gold and gold receivables represent coin stocks held in the Bank, together with gold bars held at the Bank of England’.

Of the Central Bank of Ireland’s bars held at the Bank of England, could you clarify if any of this holding is swapped or loaned out or has any other receivable status recorded against it, and if so, what percentage? Additionally, is this held in an allocated account and do you have a gold bar list for the custody that you can provide?

The Central Bank of Ireland responded a week later on 01 September 2011:

“Good morning,

We received your query in connection with gold custody, please find our response below.

The notes to our accounts confirm the locations at which the Central Bank of Ireland maintains its Gold Holdings.  The Bank is not, however, in a position to provide further information nor to outline its investment strategy in relation to the Gold Holdings.

Trusting this is our assistance to you.”

Knowing at that time that the FOI Act did not cover the Central Bank of Ireland but did cover the Irish Government’s Department of Finance, I emailed the (independent) Office of the Information Commissioner in September 2011 and asked if they thought that a FOI request to the Department of Finance about a topic connected to the central bank would be within the scope of FOI coverage given that the central bank itself was not covered by the Act at that time.

The Office of the Information Commissioner replied to me on 20 September 2011 and advised me as follows:

“you should contact the FOI Central Policy Unit of the Department of Finance for advice
in relation to whether or not certain information might be releasable or not under the FOI Acts. Their email address is: cpu@finance.gov.ie

The same day I sent the following email to the Department of Finance FOI CPU:

I have a hypothetical question regarding a FOI to the Department of Finance, on a matter that might refer to the Central Bank. The scenario would be as follows:
If I made a FOI request to the Department of Finance on a topic that included correspondence between the Department of Finance and the Central Bank, would the information released to me still include items on the Department of Finance side that might reference the Central Bank, or would references or communications with the Central Bank exclude that particular document or communication from the FOI response.”
The Department of Finance FOI CPU responded same day:

“Good afternoon

Under the Freedom of Information Act, the decision to grant or not grant records lies with the decision maker in the organization that holds the records. The Central Bank does not come under the remit of Freedom of Information.  More information can be found at www.foi.gov.ie;”

Slightly cryptic and not very helpful, so I decided to submit a FOI request to the Department of Finance.

Department of Finance – Irresponsible or Incompetent?

On 8 November 2011, I submitted the following FOI request to the Department of Finance:

“Please direct this email to FOI officer XXXX XXXXXXX, or the appropriate FOI officer at the Department of Finance.

I would like to make the following request under the FOI Act.

In accordance with the Freedom of Information Act, I request access from the Department of Finance of all records and correspondence between 1997 and 2011 relating to:

  • The Irish State’s gold reserves managed by the Central Bank of Ireland, which are custodied at the Bank of England
  • The investment strategy of the State’s gold reserves
  • The Irish State’s gold reserves transferred to the ECB between 1999 and 2011″

More than four weeks later I had still not received either an acknowledgement or a response from the Department of Finance about my FOI submission. Under the Irish FOI Acts, a lack of reply within 4 weeks of your initial application is deemed a refusal of your request and allows you to seek to have the refusal decision re-examined.

On 13 December 2011, I sent the following email to the Department of Finance FOI unit:

“Since you have not sent me a decision on my FOI request within the four-week deadline as stipulated by the Office of the Information Commissioner, and I note that I did not receive a reply or even an acknowledgement, this issue has now become a “refusal of my FOI request by non-reply” and I wish to escalate this as an ‘internal review’.

Can you confirm receipt of this internal review request immediately or I will be informing the Office of the Information Commissioner of this matter by end of day tomorrow.”

 Two days later the Department responded as follows with what can only be described as an incredible excuse:

“Thank you for your e-mail and apologies for the delay in processing your case.  Unfortunately the FOI Officer in the division has been out for sometime. If you could give me a call on 669xxxx we can go through it.  Requests are processed on receipt of a €15.00 fee. I am not quite sure what happened in your case but I am happy to discuss it further with you. I am in the Office in the mornings only.

Kind regards, Xxxxxxx Xxx, FOI Unit, Extn xxxx

 To which I replied:

“What happened is that no one responded to me within the four-week timeframe and I have informed the Office of the Information Commissioner of this lack of coverage at your department. If an FOI officer is unavailable, there has to be an alternative officer available. That is part of the OIC guidelines. That is why I also stated in my original email that the request was to “FOI officer Xxxx Xxxxxxx, or the appropriate FOI officer”.

 As per the FOI Acts,  “A person should be available to handle queries from members of the public in each organisation.”

Additionally, since your department hosts the FOI Central Policy Unit [for the entire Irish Government], I find it hard to believe that you don’t have multiple FOI officers. 

So I would like a full explanation of why my request was ignored and a fee waiver since I have been waiting for over 5 weeks now.”

Merrion Street

On 20 December 2011, just before Christmas, I received a phone call from a FOI officer at the Department of Finance. The FOI Officer told me, and I quote the conversation, since I jotted it down:

“there are no records or correspondence of gold reserves. I talked to various people in the Department and they told me to tell you there are no records. They said responsibility for gold reserves was transferred to the central bank prior to 1999.”

The FOI Officer said she would send a letter confirming this, and said that I could appeal, and that “a principal officer will check the type of searches undertaken”.

The next day, an email from the same FOI Officer arrived which stated:

“Further to our telephone conversation. A request for Internal Review has to be submitted to this Office within 15 days of receipt of our letter.  The cost of an Internal Review is €75. The letter will issue to-morrow.”

The official letter duly arrived in the post, and it’s uploaded and can be viewed here -> FOI Response Dept of Finance Dec 2011. In summary, the letter said:

“22nd December 2011

Your request was received by email in this Department on 9th November. I as the deciding officer have today made a final decision on your request. I may be contacted by telephone. The delay in responding to your request is regretted.

I regret to inform you that a search of the Department has not yielded any of the records sought by you. Consequently I must refuse your request in accordance with section 10(1)(a) of the FOI Act.  

…Right of Appeal (as above)”

Given that I had no confidence in a Department of Finance internal review finding anything after being told on the phone that “they told me to tell you there are no records“,  I did not see the point of wasting €75 in confirming this with an internal review. As an aside, unless an internal review is pursued, the independent Information Commissioner cannot normally review the FOI. As the Office of the Information Commissioner told me when I reported the Department of Finance shenanigans to them:

“Under  the  terms  of the FOI Acts, requesters must, apart from a number of exceptional  circumstances, avail of their right to seek internal review by the public body before the Commissioner can review the matter.

If after three weeks (15 working days) you have received no internal review decision,  or  if  you  are not satisfied with the internal review decision that  the Department issues, you can then apply to this Office for a review of your case by the Information Commissioner.”

However, for a number of reasons, it’s quite unbelievable that the Irish Department of Finance would have zero records or correspondence about the Irish gold reserves.

Firstly, it was only a few months earlier on 16 June 2011, in Dáil Éireann (the Irish Parliament), that the very  head of the Department of Finance, the Minister for Finance, Michael Noonan, in answer to a parliamentary question, stated that he had been “informed by the Central Bank that the value of gold and gold receivables held by the Bank at the end of 2010 was some €203.792 million (€147.975 million at end-2009)”. To wit:

Deputy Seamus Kirk asked the Minister for Finance  if the suggestion that gold profits in the EU central banks should be used to tackle the debt crisis in the peripheral countries in the eurozone such as Greece, Portugal and Ireland; and if he will make a statement on the matter. [15924/11]

Minister for Finance (Deputy Michael Noonan):  I am informed by the Central Bank that the value of gold and gold receivables held by the Bank at the end of 2010 was some €203.792 million (€147.975 million at end-2009). Gold is valued at the closing market price and securities at mid-market closing prices at year-end. The increase in the balance sheet entry for the value of the Bank’s gold holdings at end-2010 is due to the change in the market value of gold during the year.

Note that Noonan did not say that he or one of his juniors had looked in the central bank’s annual report. He said that he was informed by the central bank. If Noonan was informed by the central bank, this would have to have been documented in Department of Finance files as part of official departmental and parliamentary business. If these files don’t exist as the FOI response from the Department of Finance claimed, then it would indicate that the Department of Finance engages in sloppy record keeping and operates in an unprofessional and irresponsible manner. If files do exist about Noonan’s interactions with the central bank concerning the gold reserves, it shows that the Department of Finance had records about Irish gold reserves and lied when they said to me that they didn’t.

More fundamentally, the Irish Nation and people of Ireland essentially entrust to the care of the Irish State and it’s Department of Finance, the Nation’s gold reserves. In turn, the Department of Finance employs the Central Bank of Ireland as an agent or custodian, and so the Central Bank of Ireland is answerable to the Minister for Finance on these gold reserves. Also, the Bank of England is (on paper) acting as sub-custodian (or maybe deposit taker) to the Central Bank of Ireland.

The FOI response and phone call from the Department of Finance stating that it had no record whatsoever of the Irish gold reserves, no records of how these reserves are managed, and no records of the gold transferred to the ECB, if true, indicates complete lack of oversight by the Irish Government and Department of Finance into an important component of Ireland’s foreign exchange reserves, and indicates a complete dereliction of due diligence over a substantial monetary asset of the Irish State.

2012 – Central Bank Second Refusal

The Central Bank of Ireland annual report is usually published in late April of the year following financial year-end. After the 2011 Central Bank of Ireland Annual Report was published in late April 2012, I decided in May 2012 to submit some additional questions about the gold reserves to the central bank in the hope that whoever answered might be more cooperative than the previous non-cooperative individual in September 2011 (see above).

On 24 May 2012, after reading the relevant sections of the annual report and establishing how the auditors and bank staff prepared the annual accounts in relation to the balance sheet items, I posed the following seven specific and reasonable questions about the Irish gold reserves to the publications@centralbank.ie email address of the central bank:

“Hello, I have some questions on an item in the annual accounts 2011 Central Bank of Ireland annual report.

 Item 1 in the balance sheet on page 98 as of 31 December 2011 lists “Gold and gold receivables“ of € 234,967,000. Note 10 to the accounts on page 112 states that “Gold and gold receivables represent coin stocks held in the Bank, together with gold bars held at the Bank of England“.

Given that the valuation difference in this line item between 2010 and 2011 represents an increased gold price and no holding increase, the 2011 valuation represents approximately 193,000 fine troy ounces, which is equivalent to  6 fine troy tonnes, or about 485 london good delivery bars.

 My questions are as follows – 

Is the Central Bank of Ireland bar gold held at the Bank of England on a specific bar basis or a fine ounce basis?

Is the Central Bank of Ireland bar gold held at the Bank of England earmarked in a set-aside account or is it construed as a gold deposit? 

Is the Central Bank of Ireland bar gold held at the Bank of England held under a contract of bailment (with the Central Bank of Ireland as bailor and the Bank of England as bailee), or is the relationship a creditor/debtor relationship?

Is the Central Bank of Ireland bar gold held at the Bank of England beneficially and legally owned by the Central Bank of Ireland free and clear of liens, charges, encumbrances, claims or defects?

Is any of the Central Bank of Ireland bar gold held at the Bank of England currently loaned or swapped out to the Bank of England or other parties?

Given that the quantity of the Central Bank of Ireland bar gold held at the Bank of England did not vary between 2010 and 2011, what verifications and checks did the members of the Central Bank Commission use for gold and gold receivables when preparing the 2011 Statement of Accounts?

And finally, given that the quantity of the Central Bank of Ireland bar gold held at the Bank of England did not vary between 2010 and 2011, what sources of material did the Comptroller and Auditor General use for verification of gold and gold receivables in his audit of the 2011 accounts?”

 On 12 June 2012, the Central Bank of Ireland responded as follows:

“Thank you for your email request of 24th May 2012 to our Publications email address . As I do not have a postal address for you, I am responding by this email.

I can inform you that the gold bars held by the Central Bank of Ireland are held in safe custody at the Bank of England.

It is not Bank policy to enter into financial/commercial detail (beyond that contained in the Bank’s Annual Report & Accounts) relating to these or other financial assets that are held. You will note that the Bank’s external auditors have certified that its statement of Accounts gives a true and fair view of the Bank’s affairs.

Xxxxxxx Xxxxxxx, Strategy, Planning  & Publications, General Secretariat Division

 On the same day, 12 June 2012, I sent a follow-up email to the central bank employee from this Strategy, Planning  & Publications group.

“Dear Mr Xxxxxxx,

Thank you for your reply. Could you direct me to the published Bank Policy, statutory, compliance or otherwise, that covers Bank discussion of its financial assets and investments, so that I can relate this policy to my questions?

 On 20 June 2012, I received a reply from this individual:

“Dear Mr Manly, Thank you for your email of 12th June 2012.

The Bank’s management and staff comply with an employment provision that the Bank’s business must not be disclosed, or discussed with, outside parties.

The duties and obligations of management and staff in this regard are governed by Section 33AK of the Central Bank Act, 1942 (as inserted).  All staff are given copy of this Section on appointment and are required to familiarise themselves with its provisions and to comply with them at all times.

Xxxxxxx Xxxxxx, Strategy, Planning  & Publications, General Secretariat Division”

Section 33AK of the Central Bank Act of 1942 is a long and restrictive section that was only inserted into Act in 2003. It details specific circumstances of the central bank not disclosing confidential information, one part of which relates to:

“any matter arising in connection with the performance of the functions of the Bank or the exercise of its powers”

Importantly, Section 33AK of the Central Bank Act of 1942 has been routinely criticised in Ireland as a ridiculous secrecy cop-out by the Department of Finance and Central Bank to allow them not to answer all manner of questions in relation to the activities of the central bank, for example it has been used by the Minister of Finance to avoid discussing multiple issues related to Ireland’s economic collapse and subsequent bail-outs. The frequent abuses of Section 33AK were succinctly summed up in an Irish bailout blog in 2013 in an article titled “Is 33AK undermining the banking sector in Ireland?“:

“Section 33AK had never been mentioned by Minister Noonan before November 2012, but 33AK is now routinely used by Minister Noonan to tell pesky TDs (Members of Parliament) to “get lost” when they try to ask important questions about the banking sector…”

“No doubt the mandarin discoverer of Section 33AK in the Department of Finance is regularly patted on the back, but for the sake of our Republic, shouldn’t this legislation be repealed?”

According to Ireland’s independent Information Commissioner whose role it is to oversee compliance with the FOI Act, the Central Bank of Ireland had described Section 33AK as deriving:

“primarily from the obligations of ‘professional secrecy’ that arise as a result of certain EU law obligations contained within what were previously called the Supervisory Directives and are now called the supervisory EU legal acts”.

In my opinion, this invocation of Section 33AK by the above mentioned Central Bank of Ireland employee of the Strategy, Planning  & Publications group to decline answering simple questions about Ireland’s gold reserves and the central bank’s published financial statements is pure obstruction, it is an abuse of power, it is an abuse of the legislation, it is an outrage, it has nothing to do with the EU, and it goes far beyond the meaning of the legislation’s original intention.


Freedom of Information Act (2014) – A New Hope

In October 2014, the Irish President signed the Freedom of Information Act (2014) into law. This repealed and replaced the FOI Acts of 1997 and 2003. The FOI Act (2014) extended “FOI bodies” to “all Public Bodies” unless specifically exempted. Exemptions were either full or partial. Importantly, the Central Bank of Ireland was included under the FOI Act (2014) but with partial exemptions.  But for new public bodies (with exemptions), the Act only covers access to information and records created from 21 April 2008 onwards.

Part 2 of this article (forthcoming) details a FOI request about the Irish gold reserves that I made to the Central Bank of Ireland in the 2015 on the back the introduction of this updated FOI Act. As you will see, the central bank deciding officer initially refused all parts of my request and even liaised with the Bank of England on a number of occasions where they discussed by FOI request. That refusal contained such gems as:

“the release of detailed information regarding the gold bars held at the Bank of England on behalf of the Central Bank of Ireland could have a serious, adverse effect on the financial interests of the State”

“‘the record concerned [a gold bar weight list] does not exist or cannot be found after all reasonable steps to ascertain its whereabouts have been taken,’

I appealed this FOI refusal. The appeal was partially successful in producing some very limited details of the supposed Irish gold reserve holdings, including at the Bank of England and gold coins within storage in Dublin, Ireland. Full details in Part 2.

Austrian Mint sells 41 tonnes of gold coins and gold bars in 2015

Earlier this year, the director of marketing and sales at the Austrian Mint confirmed to Bloomberg in an interview that the Mint’s combined gold bar and gold coin sales in 2015 had totalled 1.32 million troy ounces, a 45% increase on 2014, while the Mint’s silver sales in 2015 had reached 7.3 million ounces, a figure 58% higher than in 2014.

Since Münze Österreich, or the Austrian Mint in English, only publishes its annual report in July of each year, we had to wait a few months to see the granular details behind these sales numbers. Now that the Austrian Mint’s 2015 Annual Report has been published, the detailed sales figures are as follows.

Gold Philharmonics – 23.5 tonnes

In 2015, the Austrian Mint sold 756,200 troy ounces (23.52 tonnes) of Vienna Philharmonic gold coins, of which 647,100 troy ounces (20.18 tonnes) were in the form of its flagship 1 oz Vienna Philharmonics, with the remainder comprising ½ oz, ¼ oz, 1/10 oz and 1/25 oz gold Philharmonic coins, as well as a handful of the Mint’s very large 20 oz gold Philharmonics. Gold Philharmonic sales in 2015 were 56% higher than comparable sales of 483,700 ozs in 2014, and were also higher than 2013’s figure of 652,600 ozs.

Vienna coins
Sales of the Vienna Mint’s flagship 1 oz gold Philharmonic accounted for the lion’s share of gold coin sales

Philharmonic gold coin sales in 2015 were the third best year on record, just slightly lower than 2008’s total sales of 795,000 ozs, but still well short of 2009’s bumper sales total of 1,036,000 ozs, when that year’s finanical crisis was in full flight.

Aus AU Phil
Source: www.goldchartsrus.com

Gold Bars – 16.3 tonnes

Turning to gold bars, the Mint sold 524,722 troy ounces (16.32 tonnes) of its branded gold bars in 2015, over half of which comprised sales of 1 kg, 500 gram and 250 gram gold bars. The 2015 gold bar sales were nearly 28% higher than 2014 gold bar sales of 410,300 ozs, but slightly less than 2013’s comparable sales of  711,200 ozs.

Vienna bars
The Mint’s larger bars were the most popular in terms of total gold output

In addition to gold Philharmonic coins and gold bars, the Austrian Mint also produces a series of historic re-strikes of original Austrian circulation gold coins in the form of gold ducats, gold guilders and gold crowns. In 2015, sales of these gold re-strike coins, mostly ducats, accounted for 37,700 troy ounces of gold (1.17 tonnes), which was a 128% increase on the previous year’s sales of 16,500 ozs.

Overall, in 2015, the Austrian Mint sold gold coins (Philharmonics and historic coins) and gold bars containing 1,318,700 ozs (41 tonnes) of gold. In 2015, the gold Vienna Philharmonic’s largest markets were Europe followed by Japan and North America, and notably the gold Philharmonic was the best-selling major gold bullion coin in both the European and the Japanese markets.

Aus AU
Source: www.goldchartsrus.com

Looking at the long-term chart above, you can see that total gold sales (by volume) at the Austrian Mint during 2015 were noticeably higher than in 2014 and approached the gold sales figures of 2013, however they were still below the multi-year high sales figures from 2008, 2009 and 2011. Notice also that for the last 8 years there has been a trend of the Austrian Mint’s gold sales following a high one year, lower the next year pattern, possibly due to risk on / risk off sentiment among gold investors depending on how the general financial markets were performing.

Silver Philharmonics – Strong North American sales

As the Austrian Mint does not fabricate silver bars, the Mint’s silver bullion sales are exclusively from the silver coins it produces, specifically the 1 ounce silver Vienna Philharmonic coin. In 2015, the Mint sold 7.3 million silver bullion coins containing 227 tonnes of silver. The largest markets for the Mint’s silver coin sales in 2015 were North America, followed by Europe. Silver sales in 2015 were also notable in that it was the first time that the Mint’s silver coins sales in the North American market surpassed those in Europe. Looking at a long-term chart of Austrian Mint silver sales, you can see that 2015 was a year of recovery following relatively low sales in 2014, which was partially due to an increase in VAT on silver sales in Germany in 2014.

Aus AG
Source: www.goldshartsrus.com

The Mint’s silver coin range also includes historic re-strikes of a Maria Theresa Taler coin in uncirculated and proof editions. These coins contain 23.39 grams of pure silver (approximately 0.2 tonnes). These coin sales are classified separately from silver bullion coin sales and their sales are quite minimal. In 2015, sales of these Taler coins reached 9,777 pieces, slightly down on 2014’s sales of 11,470 pieces.

Gold Bullion Sales Drove Total Revenues

In terms of Austrian Mint revenues, gold bullion coins (gold Philharmonics) generated revenues of  €788.9 million in 2015, up 70% on 2014’s €464.2 million. Gold Philharmonics were also 48.5% of total Mint revenues in 2015. Gold bar revenues of €547.3 million were 40% higher than in 2014, and accounted for another 34% of all Mint revenues. Silver coin sales in 2015 reached €111.3 million, 58% higher than in 2014. Adding revenues from gold coin re-strikes of €40.4 million, the total revenues from gold and silver coin products reached €1.37 billion, which was 84.7% of total Mint revenues for 2015.

Aus rev
Gold coin and gold bar revenues account for over 80% of  the Mint’s total revenues

In terms of revenues, annual gold sales at the Austrian Mint are far higher than its silver sales. In volume terms, the Austrian Mint also produces more gold products than its counterparts but far less silver products than its counterparts. So the Austrian Mint could be said to be a gold specialist.

For example, in 2015, and just looking at bullion coin sales, the US Mint sold gold bullion coins (American Eagles and American Buffalos) containing 31.8 tonnes of gold, but silver bullion coins (predominantly American Eagles) containing 1,495 tonnes of silver. Likewise, in 2015, the Royal Canadian Mint sold gold bullion coins (gold Maple Leafs) containing 29.6 tonnes of gold, and silver bullion coins (silver Maple Leafs) containing 1067 tonnes of silver.

Based on 2015 volumes sold of 227 tonnes of silver coins and 24.69 tonnes of gold coins, the Austrian Mint had a silver coin sales to gold coin sales ratio of only 9.19, whereas comparable ratios for the US Mint and Royal Canadian Mint were 47 and 36, respectively.

Non-bullion revenue at the Austrian Mint is generated by activities such as producing Euro circulation coins, and producing semi-finished products and medals. Non-bullion revenues accounted for €248 million or approximately 15% of total Mint revenues during 2015. Interestingly though, although the Mint does not report the geographic origin of its revenues on a segmented basis, it does report the share of revenue derived in Austria vs derived outside Austria. For 2015, €1.258 billion in revenue was generated in Austria vs €360.6 million internationally, meaning that international markets contributed only 22.3% of Mint revenues.

Therefore, the domestic Austrian market is still the Mint’s primary market in terms of bullion sales. In one way this is not surprising because the Austrian population has a very strong appetite for gold coin and gold bar products, especially gold products from the Austrian Mint in Vienna. The Mint’s gold coins and bars are sold widely throughout Austria in banks such as Bank Austria, the Raiffeisen banks, the Steiermärkische Sparkasse savings banks and through the Erste Bank und Sparkassen group, as well as through the retail branches of gold bullion wholesalers such as Schoeller Muenzhande, which is a fully owned subsidiary of the Austrian Mint. See BullionStar Gold University’s profile of the Austrian Gold Market for more details on the vast network of Austrian bank and wholesalers that sell physical gold coins and bars.

For further information on the sales patterns of the world’s largest precious metals mints, please see BullionStar blog “Bullion coin sales boost revenues of world’s largest Mints“.

Central Banks and Governments and their gold coin holdings

Within the world of central bank and government gold reserves, there is often an assumption that these gold holdings consist entirely of gold bullion bars. While this is true in some cases, it is not the fully story because many central banks and governments, such as the US, France, Italy, Switzerland, the UK and Venezuela, all hold an element of gold bullion coins as part of their official monetary gold reserves.

These gold coin holdings are a legitimate part of gold reserves since under International Monetary Fund (IMF) definitions, “monetary gold consists of gold coins, ingots, and bars”. In central banking parlance, monetary gold is simply gold that is held by a central bank or government as a reserve asset. Other central bank reserve assets include foreign exchange holdings and holdings of IMF Special Drawing rights.

Elsewhere in IMF definitions, it is stated that “monetary gold is generally construed to be at least 995/1000 pure. Many government and central bank gold coin holdings consist of previously circulated gold coinage. Since gold coins often had  – and still have – a purity of less than 99.5% gold due to the addition of other metals for added durability, this ‘generally construed’ leeway in the IMF definition is undoubtedly a practical consideration that allows gold coins to be classified as monetary gold.

Central banks and governments hold gold for the same reasons that private citizens hold gold. Gold is real money with no counterparty risk, gold is a store of value, and gold is a safe haven asset. In general, central banks and governments are as happy holding bullion in gold bar form as in gold coin form. This is because physical gold is physical gold, and a gold coin and a gold bar will both provide their holders with the same benefits and protections. Only the physical form differs. In practice, the types and quantities of gold coins held by central banks and governments are extensive and varied as a quick tour d’horizon reveals.


Starting with the largest official sector gold holders, 3 of the top 5 gold holding countries have substantial gold coin holdings in their claimed reserves. The Banque de France, the guardian of France’s gold reserves, holds 2435.4 tonnes of gold consisting of a massive 100 tonnes of gold coins, and 2,335 tonnes of gold bars. Of these gold coins, 45% are French gold coins (probably Napoleans) and 55% are foreign gold coins, some of which are from the US. In the past, the Banque de France had melted part of its gold coin holdings into gold bars without considering their potential numismatic value. But after finding some US 20 dollar gold coins were worth USD 20,000 a piece, the Bank’s current policy is to scrutinise every coin.

Banca d’Italia stores approximately half of Italy’s 2451.8 tonnes of gold under its headquarters in Rome, with most of the other half stored at the Federal Reserve in New York. Of the 1199.4 tonnes of Italian gold in Rome, Banca d’Italia states that it holds 4.1 tonnes of gold coins, in the form of 871,713 coins. This would give each gold coin an average gold content of 0.151 troy ounces. This hoard most likely includes historic gold Italian 10 Lira and 20 Lira coins.

The US Treasury, the official holder of the US gold reserves, claims to hold gold coins containing 73,829.5 fine ounces of gold (2.3 tonnes) in the custody of the Federal Reserve Bank of New York. While a small subset of these coins weighing 377.4 ounces is on display in New York, the remaining coins, containing 73,451 fine ounces of gold, are held in The New York Fed’s vault compartment K in 384 bags weighing a gross 80,855.70 ounces. These coins are all either 0.9 fine or 0.9167 fine gold. For details see page 132 here. These US Treasury held gold coins at the Fed are in addition to the 2,783,218.6 (86.5 tonnes) of gold coins that the US Treasury claims to hold within the US Mint’s working stock.

Venezuela’s gold holdings, which have practically all been sold off or swapped for foreign exchange recently, also contain gold coin holdings in the form of historic gold US Eagles, as well as gold US Liberty and ‘Indian Head’ coins (see page 17 here). Notably, the Venezuelan central bank says that these coins would have a numismatic premium valuation depending on their scarcity, design and condition. Given the ongoing and deteriorating economic situation in Venezeula, expect these gold coins to be either sold on the market or else melted down and shipped out of the country, probably to Switzerland.

Speaking of Switzerland, the Swiss National Bank (SNB) in its publications, says that its “gold holdings are mainly in the form of gold bars, with the remainder in gold coins“. The SNB doesn’t elaborate on what type of gold coins it holds, and when asked recently, in the spirit of central bank secrecy, it not surprisingly declined to elaborate. Most likely this Swiss hoard includes historic Swiss Franc gold coins, and even old Latin Monetary Union gold coins.

The United Kingdom, through HM Treasury’s Exchange Equalisation Account (EEA), claims to hold 310.3 tonnes of gold in its reserves, all of which is held in custody at the Bank of England. The EEA 2014/2015 accounts states that “The gold bars and gold coin in the reserves were stored physically at the Bank’s premises“. As to what type of gold coins the UK holds, HM Treasury didn’t repond to a recent query, but undoubtedly, the Treasury holds gold Sovereigns as HM Treasury archives reveal.

Among other central banks, Romania holds 14% of its monetary gold in the form of gold coins, amounting to approximately 14.43 tonnes. The Central Bank of Peru includes 552,191 troy ounces (17.7 tonnes) of gold coins in its monetary gold holdings. These coins are described as “commemorative coins” and are held domestically “in the vault of the Central Bank”. Interesting the Peruvians apply a small valuation provision for “for cost of converting gold coins to high purity or ‘good delivery’ gold bars” for potential use on the wholesale gold market. The Central Bank of Ireland is custodian for Ireland’s circa 6 tonnes of gold, 5.7 tonnes of which is supposedly stored in bar form at the Bank of England in London, while approximately 10,000 ozs are in gold coin form stored at the Central Bank’s currency centre facility in Dublin.

Even Canada made headlines with its gold coin holdings recently when the Bank of Canada sold off the last of that country’s eventually tiny gold holdings which had been exclusively in the form of gold coins since the early 2000s. These gold coins were King George $5 and $10 Canadian coins, the best examples of which were sold to collectors with the rest melted down into gold bars by the Royal Canadian Mint and sold on the wholesale gold market, yet again highlighting gold’s high liquidity.

Central banks will always downplay the existence of gold on their balance sheets since gold competes against national fiat paper currencies. However, the actual course of action of central banks and governments in holding vast amounts of gold bars, as well as substantial quantities of gold coins, demonstrates that central banks and sovereigns continue to view gold as a strategic reserve asset and as the ultimate money. Luckily, private individuals too can replicate the holdings of these giants by also acquiring and accumulating gold bars and gold coins for the same reasons as sovereign entities and monetary authorities do. Doing as central banks do, not as they say, is certainly a better strategy than blind faith in today’s distorting and reckless centrally planned monetary policies.