Tag Archives: New York

Is the COMEX Rigged?

The COMEX gold futures market and the London OTC gold market have a joint monopoly on setting the international gold price. This is because these two markets generate the largest ‘gold’ trading volumes and have the highest ‘liquidity’. However, this price setting dominance is despite either of these two markets actually trading physical gold bars. Both markets merely trade different forms of derivatives of gold bars.

Overall, the COMEX (which is owned by the CME Group) is even more dominant that the London market in setting the international price of gold. This is a feat which financial academics ascribe to COMEX being a centralized electronic platform offering low transaction costs, ease of leverage, and “the ability to avoid dealing with the underlying asset” (i.e. COMEX allows its participants to avoid dealing with gold bars). Because of these traits, say the academics, COMEX has a ‘disproportionately large role in [gold] price discovery”.

Over 95% of COMEX gold futures trading is now conducted on CME’s electronic trading platform Globex, with most of the remainder done on CME’s electronic Clearport, where futures trades executed in the OTC market can be settled by CME. Next to nothing in gold futures is traded any more via pit-based open outcry.

The rise of the machine
Open Outcry: A distant memory for gold futures trading on COMEX

The existence of gold price manipulation in the London and COMEX gold markets is well documented, it is hard to refute, and it has presented itself in many forms over the recent past. Examples include:

  • Bullion bank gold traders in the late 2000s colluding in chat rooms to manipulate the gold price as documented in current consolidated class action law suits going through New York courts
  • Barclays Bank manipulating the London Gold Fixing price in 2012 so as to prevent triggering option related pay-outs to Barclays clients
  • Recent CFTC (US Commodities regulator) prosecutions of futures traders on the CME for ‘spoofing’ gold futures orders
  • Flash crashes in gold futures prices which have no underlying explanation to, or connection to, events and developments in any physical gold markets

This last point, ‘flash crashes’ in gold futures prices, is particularly relevant for COMEX. Many readers will recall reading about one or more of these COMEX gold futures price ‘flash crashes‘ during which large quantities of gold futures are shorted in a concentrated interval of time (e.g. within 10 or 20 seconds) which causes the gold price to completely collapse in free fall fashion over that very short period of time.

For example, on 26 June this year, the COMEX gold price free fell by nearly 1.5% within a 15 second interval, amid a huge spike in trading volume to more than 18,000 August gold futures (56 tonnes of gold) during the 1-minute period around the crash event.

On January 6, 2014, the COMEX gold price fell by over $30 in a few seconds, from $1245 to $1215 on huge volume, forcing the CME to introduce a temporary trading halt.

On April 12, 2013, aggressive selling of gold futures contracts representing over 13.4 million ounces (more than 400 tonnes of gold) hit COMEX gold futures in two waves during the London morning trading session sending the gold futures price down by more than 5%. The following Monday, April 15, 2013 the COMEX gold price rapidly fell by another 10%.

Whether these flash crashes are the result of trading errors, futures market illiquidity, computerized trading patterns or deliberately engineered moves is open to debate. Engineered price takedowns, where an entity initiates an order with the intention of moving the futures gold price in a downward direction, are distinctly possible.

However, concentrated gold futures shorting over tiny time intervals doesn’t have to be in the form of one large trade or a series of relatively large trades. All a shorting tactic of this type has to do is to either trigger the price to move down through certain thresholds which then triggers stop-loss orders, or to trigger and induce trading reactions from trading algorithms that monitor gold futures prices. Once sentiment is damaged through rapid downward price movements, the result can affect gold futures trading sentiment for the rest of the day and indeed over subsequent days.

But beyond the possible or probable individual acts of price manipulation on the COMEX, it is important to realize that the very structure and mechanics of the COMEX create a system in which gold futures trades can be executed in large volumes in a virtual vacuum which has no connection to the physical gold bullion market, no connection to gold bar and gold coin wholesalers and retailers, and which doesn’t even have any connection to the vaulted gold residing within the COMEX approved vaulting  facilities (aka COMEX warehouses aka COMEX vaults).

These underlying mechanics of COMEX, which are discussed below, allow the generation of massive gold futures trading volumes and open interest, huge leverage and large non-spot month position limits, a high concentration of speculative trading by a small number of banks, and a lack of transparency into the gold ‘delivery’ process. And at the foundation of the system, there are very small physical gold holdings in the COMEX approved vaults.

COMEX 100 oz gold futures, USD Price, Volume, and Open Interest: 8 months-to-date. Source: www.GoldChartsRUs.com

The Mechanics

COMEX gold futures contracts are derivatives on gold. Importantly, a COMEX gold futures contract comes into existence any time two parties agree to create that contract. This means that COMEX gold futures contracts can continue to be created as long for as there are interested buyers (longs) and sellers (shorts) willing to bring these gold futures contracts into existence.

Therefore, there is no hard upper bound or supply limit on the amount of gold futures contracts that can be created on COMEX. This is very similar to the unit of trading of gold in the London market, i.e. unallocated gold, which is also a derivative that can be created in unlimited quantities. In both cases there is no direct connection to real physical allocated and segregated gold bars.

Technically, the value of any futures contract is derived from the value of its underlying asset, and in this case the underlying asset, nominally anyway, is physical gold. But perversely in the global gold market, the value of the gold futures is not being derived from the value of the underlying asset (physical gold). Instead, the value of the world’s physical gold is now being consistently and continually derived via this out-of-control and unhinged gold futures trading.

Contractually, COMEX 100 ounce gold futures contracts (COMEX code GC) are futures contracts that offer a physically deliverable option, i.e. to deliver/receive 100 ounces of minimum 995 fine gold (in either 100-ounce gold bars or 1 kilo gold bars format) on a specific future date.

However, the vast majority of COMEX 100 ounce gold futures are never delivered, they are offset (closed out) and cash-settled, or else they are rolled over. Only a tiny fraction of these gold futures contracts are ever ‘delivered’. Again, this is similar to unallocated gold in the London market, which is a cash-settled gold derivative.

COMEX is also a speculative market, where leverage (due to the use of trading margin) is used to create outsized trading volumes, and where initial position limits for individual traders are far larger than the quantity of underlying gold being stored in the COMEX approved vaults.

These factors combine to create what is in effect a Las Vegas type casino. This casino encourages vast speculative trading of futures which will never be delivered, and vast shorting (selling) claims on large quantities of gold which a) the shorter does not possess, b) are not even stored in the COMEX system, and c) are many multiples of annual gold supply). Conversely, the buyers are going long on claims on gold which will a) will never be delivered and b) which nearly none of the trading counterparties even wants to have delivered. The players in this casino have no interest in secure gold storage or allocated gold bars or bar brands or bar serial numbers. After all, as the academics put it, the COMEX provides “the ability to avoid dealing with the underlying asset”.

Even when COMEX gold futures for used for hedging purposes, much of this hedging is by bullion bank traders so as to hedge unallocated London gold using COMEX futures, i.e. hedging cash-settled paper bets with cash-settled paper bets. And both sets of instruments structurally have nothing to do with the real physical gold market.

Even back in December 1974, when COMEX gold futures were about to be launched (and which coincided with a lifting of the ban on US private ownership of gold), a group of major gold dealers in London including 3 of the 5 primary London gold dealers, i.e. Samuel Montagu & Co, Mocatta & Goldsmid, and Sharps Pixley & Co, told the US State department that they believed that this new gold COMEX futures market would dwarf the physical gold market i.e. “would be of significant proportion, and physical trading would be miniscule by comparison“.

These dealers expected that “large volume futures dealing would create …. a highly volatile market” whose “volatile price movements would diminish the initial demand for physical gold” that the US Government feared from the lifting of the gold ownership ban.

In hindsight, it was perceptive and prophetic that these major participants of the then fully allocated gold market in London in 1974 saw that the introduction of gold futures would create what we are seeing now, i.e. huge trading volumes, high price volatility, and a market (COMEX) which has an adverse effect on pricing in the physical gold market.

Trading Volume Metrics

Two revealing trading metrics for COMEX gold futures are trading volumes and the “Open Interest” on gold futures contracts. “Open Interest” simply means the number of gold futures contracts that are outstanding at any given time that have not been closed or delivered.

For 2016, COMEX gold futures trading generated a trading volume of 57.5 million contracts, representing 178,850 tonnes of gold. This is nearly as much gold as has ever been mined in the history of the world, i.e. which is estimated to be 190,000 tonnes. This COMEX trading volume in 2016 was also a whopping 37% higher than in 2015. In 2016, while 57.5 million gold futures contracts traded, only 71,380 COMEX gold contracts were ‘delivered’. This means that only 0.12% of COMEX gold contracts that traded in 2016 were ‘delivered’.

Delivered in this context means that the delivery option on the contract was exercised and a warrant representing 100 oz of gold on that contract changed hands, i.e. title documents to gold were shunted around a COMEX/vault recording system, mostly between bank holders. Delivered does not mean gold was withdrawn from a COMEX approved vault and delivered to an external location. The concept of gold vault withdrawal numbers, which is a bread and butter metric for the physical Shanghai Gold Exchange (SGE), is totally alien to the COMEX and its trading participants.

Number of gold ounces delivered on COMEX in 2017: 1.23 million ounces = 38 tonnes. Source: www.GoldChartsRUs.com

For the first six months of 2017, trading volumes in the main COMEX gold futures contract (GC) reached 32.7 million contracts, representing 101,710 tonnes of gold. This was 12% up on the same period in 2016. When annualized, this suggests than in 2017, COMEX is on course to trade more than 200,000 tonnes of gold, which will be more than all the gold ever mined throughout history.

In the first half of 2017, only 12,320 gold futures contracts (representing 38 tonnes) were delivered on COMEX. This means that from January to June 2017, only 0.037% of the COMEX gold contracts traded in that six month period were ‘delivered’, or just 1 in every 2650 contracts traded.

Open Interest

Beyond the trends and snapshots that trading volumes provide, COMEX Open Interest shows how much real physical gold would be needed if all longs who hold gold futures contracts decided to exercise every contract into the 100 ounces of physical gold that each contract supposedly allows for.

For example, currently there are 480,000 GC gold futures contracts outstanding on the COMEX, each of which represents 100 ounces of gold. This means that buyers of the contracts are long 480,000 contracts, and sellers of those same contracts are short 480,000 contracts. With each contract worth 100 ounces of gold, this is an open interest of 48 million ounces (1500 tonnes) of gold, which is about half a year’s global gold mining output.

Currently 46% of this open interest is in the front-month August 2017 contract (nearly 750 tonnes), with another 40% in the December 2017 contract. Together the August and December contracts represent over 85% of the current open interest. During 2017, open interest has fluctuated roughly between 400,000 and 500,000 contracts at any given time.

Registered Gold Inventory and Eligible

However, there are only currently 22 tonnes of ‘Registered gold’ in the COMEX approved vaults in New York, which is equivalent to about 700,000 ounces. What this means is that there are only 22 tonnes of gold currently in the vaults that the vault operators previously attached warrants to as part of the COMEX futures delivery process. This 22 tonnes of gold, if it was held in Good Delivery gold bar format, would only occupy one small corner of one of the COMEX’s 8 approved gold vaults when stacked 6 pallets high across 3 stacks, and another 4 pallets in an additional stack. That’s how small the COMEX registered gold inventories are.

The amount of Registered gold backing COMEX futures gold trading is also at a 1-year low. For example, in August 2016 there were 75 tonnes of Registered gold in the COMEX vaults. Now there’s only 30% of that amount.

COMEX Registered gold inventories: 700,000 ounces = 22 tonnes. Source www.GoldChartsRUs.com

There is also no independent auditing of the gold that the COMEX reports on its registered and eligible gold inventory reports. So there is no way of knowing if the COMEX report is accurate. For example, HSBC claims to have 165 tonnes of eligible gold and a measly 1.5 tonnes of registered gold stored at its COMEX approved vault. This vault is located in the lower levels of 1 West 39th Street in Manhattan (the old Republic National Bank of New York vault). However, I heard from a former New York Fed senior executive that HSBC don’t keep a lot of gold in this Manhattan vault since they moved a lot of it to Delaware after 9/11 for security reasons. If this is true, then the question becomes, on the COMEX report, does the total for HSBC represent the amount they have in the midtown Manhattan location, or the total in midtown and Delaware (assuming they have gold stored in Delaware).

COMEX approved vaults also report another category of gold known as ‘Eligible’ gold. This ‘Eligible’ gold is unrelated to COMEX gold futures trading and could be owned by anyone, for example owned by mints, refineries, jewellery companies, investment funds, banks or individuals, who would just happen to be storing this gold in the New York vaults that the COMEX also uses, such as the Brinks vaults.

In other words, this ‘eligible’ gold is merely innocent bystander gold that just happens to be stored in the COMEX approved vaults in the form of 100-ounce gold bars or 1 kilo gold bars. At the moment, there are 243 tonnes of this eligible gold in the vaults. But this gold is not involved in COMEX gold futures trading. Some of this gold is probably owned by banks that engage in COMEX gold futures trading because there are sometimes movements of gold from the eligible category to the registered category, but still, as long as it’s in the eligible category, this gold does not have any COMEX related warrants attached to it.

With an Open Interest of 1500 tonnes of gold on COMEX, and with registered gold in the New York vaults totalling only 22 tonnes, this means that there are currently 68 “Owners per Ounce” of registered gold. The holders of allocated gold bars stored in a secure vault, such as BullionStar’s secure vault in Singapore no not face this 68 owners per ounce problem, as each gold bar is owned by one person and one person only.

Since the beginning of 2017, this COMEX “owners per ounce of registered gold” metric has risen sharply, more than doubling from under 30 owners per ounce to the current ratio of 68 owners per ounce. This is because registered gold inventories have fallen sharply over this time.

Even adding into the equation all the eligible gold in the New York vaults, which is a calculation that doesn’t really mean much given the independent nature of eligible gold, there are still 5.7 “owners per ounce” of the combined COMEX “eligible and registered gold” total.

The physical gold foundations to the entire COMEX gold futures trading process are therefore very tiny in comparison to COMEX trading volumes and open interest. And all the while, gold futures trading volumes continue to rise, owners per registered ounce of gold continues to rise, and the amount of physical gold backing these contracts on COMEX continues to shrink.

The Dominant Players

The latest Commitment of Traders (COT) report produced by the US Commodity Futures Trading Commission (CFTC), for 11 July, includes market concentration data for the percentage of contracts held by the largest holders. This COT report currently shows that “4 or Less Traders” are short 35% of the COMEX GC gold futures open interest, while “8 or Less Traders” are short a combined 51% of the open interest. Note that the “4 or Less Traders” are a subset of the “8 or Less Traders”.

The CFTC also publishes a Bank Participation Report (BPR) showing metrics for banks involved in gold futures trading. The latest BPR for 11 July shows that 5 US banks are short 78063 contracts (16.4% of the total open interest), and 29 non-US banks are short another 67,373 contracts (14.2% of open interest). In total, these 34 banks were short 145,000 contracts or 30% of the open interest. The same banks were long 40,688 contracts, so were net short 105,000 contracts.

CFTC Bank Participation Report (BPR) of COMEX (and ICE) gold futures positions. Source www.GoldChartsRUs.com

Neither the COT report nor the BPR report reveal the identity of the ‘traders’ or the ‘banks’ that hold these concentrated large positions because the bank friendly CFTC choses not to do so, but even without their identities being revealed, it’s clear that a small number of entities are dominating trading of the COMEX gold futures contracts.

When is a Delivery not a Delivery?

The COMEX delivery report is known as the “Issues and Stops Report”. This report ostensibly shows the number of contracts that were ‘delivered’ on the COMEX each month, but in reality just shows a series of numbers representing the quantity of title warrants (to gold bars) that were shunted around each month between a small handful of players.

The COMEX does not publish any gold bar weight lists of registered or eligible gold inventories held in the COMEX approved vaults. It is therefore impossible to check to what extent the same gold bars or some of the same gold bars are moving back and forth between a few parties over time. On an annual basis, each COMEX approved vault must conduct a precious metal inventory audit on behalf of the COMEX and file this audit with the COMEX within 30 days of completing it. However again, the CME Group does not publish these inventory audits, which only adds to the existing opacity of the system. Is the registered gold in the COMEX vaults even specifically insured? Who knows, because the COMEX does not divulge such details.

Some of the bank institutions which are prominent on the COMEX gold delivery reports are also some of the same institutions which operate the COMEX approved vaults, e.g. HSBC, JP Morgan and Scotia, and these same names are undoubtedly some of the names underlying the CFTC’s Bank Participation Report given that they are always prominent on the COMEX delivery reports. By the way, these same banks essentially run the LBMA in London and run the unallocated gold clearing system, LPMCL, in the London Gold Market.

As regards, the COMEX’s assignment of delivery for gold futures contracts, this is also out of the hands of a contract holder looking for delivery. When a contract is presented for delivery, it is the Exchange (COMEX) which assigns the delivery to a specific warehouse. Not the contract holder. The contract holder (long) has no say in choosing which New York warehouse that contract will be assigned to, no choice of which bar brand he/she will receive, and no choice even of whether the assigned gold will be in the form of a 100 ounce bar of three 1 kilogram gold bars. But even to the long holder seeking delivery, delivery just means gaining an electronic warehouse warrant issued in the long holder’s name or broker’s name (title to the warrant).

To take real delivery of gold bars (withdrawing gold from one of the New York vaults) that would arise from a COMEX ‘delivery’ is a laborious and discouraging extra step. Armed with a copy of an electronic receipt, the procedure involves the receipt holder directly contacting the warehouse in question and telling them you want physical delivery. How they would react to such as phone call is not clear. My guess is that it would be like visiting the mailroom in a large company, the reaction being ‘Who are you? No one ever comes down here‘.

After navigating the withdrawal negotiations with the vault in question,  the pickup and transport of the gold bars is then organized using one of the list of secure transport alternatives that approved warehouse will allow.

COMEX – Not Designed for Physical Bullion

The COMmodity EXchange (COMEX) is a derivatives exchange that is not designed for buying physical gold, storing or delivering that gold, or even selling physical gold. The COMEX primarily facilitates speculation and hedging, with the delivery option just existing as a little -used side option.

Flash crashes continue to occur but neither the CME nor the CFTC ever publishes explanations for the causes of these flash crashes.

It looks certain that in 2017, COMEX will again smash its gold futures trade gold futures representing more gold than has ever been mined in human history, i.e. more than 200,000 tonnes equivalent.

So far in 2017, only 1 in every 2650 gold futures contracts traded on the COMEX has resulted in delivery i.e. less than 0.038% of the contracts go to delivery. The rest, 99.962% of contracts are cash-settled and closed-out / rolled.

The open interest in COMEX gold futures is currently 1500 tonnes, yet there are only 22 tonnes of Registered gold in the COMEX vault inventories. This means that there are 68 owners per ounce of registered gold.

There is continually a high concentration of short futures positions held by a small number of banks on COMEX. The CFTC doesn’t name these banks. When contract deliveries occur on COMEX, it is not a delivery in the sense of a gold bar movement but is merely a transfer in title of a warrant attached to a bar.

Withdrawal of a gold bar or bars out of the COMEX vaulting network to be really delivered to another location is not straightforward.

Physical Bullion

With the London Gold Market trading unlimited quantities of unallocated gold which the bullion banks create out of thin air, and with COMEX trading gold futures which are also created out of thin air, the disconnect between the world of unlimited paper gold and the world of limited physical gold is becoming ever more stark.

On one side lies paper claims on gold which come into and out of existence through cash-settled market mechanisms. On the other is real physical gold that is segregated, allocated and unencumbered, with full title held by the gold holder. Paper gold ownership is fleeting, speculative and prone to counterparty and conversion risks. Real gold is tangible, has inherent value, has no counterparty risk, and can be securely stored.

When real gold is ‘delivered’ to a gold buyer, it actually is delivered to the buyer to wherever they want it delivered, unlike COMEX deliveries where an electronic warrant is merely updated. When real gold is held in a secure vault, such as BullionStar’s vault in Singapore, the gold is fully-insured and the gold holder has full audit and control.

Unlike the COMEX and the London OTC gold market, the traditional gold buying markets of Asia and the Middle East are markets know the real value of physical gold as a form of money and a form of saving. In the physical gold market, especially in Asia, gold buyers demand high purity gold (9999s purity) in convenient bar sizes such as 1 kilogram and 100 grams, and not the 100 ounce bar size traditionally made for COMEX delivery.

Physical gold buyers want gold bars from trusted and well-known sources, and also want choice and variety for example a cast bar from the German Heraeus refinery, or a highly designed minted bar from the Swiss refinery PAMP. Kilobars and 100 gram gold bars also have the lowest premiums of any bars on the retail market since many refineries compete to supply this segment and the demand is widespread and international. Most kilobars and 100 gram bars have their own unique serial numbers which facilitates tracking and auditing.

As COMEX pursues its record-breaking attempt  in 2017 to trade gold futures representing more than 200,000 tonnes of gold, the disconnect between COMEX and the real world is becoming all too clear. COMEX flash crashes will continue as long as the CME and CFTC let them continue. And many people will continue to believe that these flash crashes were deliberately orchestrated. But at the heart of the contradiction between paper gold and real gold is not whether such and such a flash crash was deliberate. The heart of the contradiction is that the very structure of the COMEX system is so detached from the reality of physical gold market that it ideally suits deliberate flash crash attempts to rig the gold price.

BullionStar will be exhibiting at the FreedomFest event in Las Vegas, which this year runs from July 19 to 22 at the Paris resort in Las Vegas. For those attending FreedomFest please drop by our stand and say hello (Booth number 321) and to chat about precious metals. BullionStar CEO Torgny Persson will also be speaking at FreedomFest at 2:30pm on Friday July 21, on why today’s gold price is not reflecting what’s happening in the world and not reflecting what’s happening in the physical gold market.

Germany’s Gold remains a Mystery as Mainstream Media cheer leads

On 9 February 2017, the Deutsche Bundesbank issued an update on its extremely long-drawn-out gold repatriation program, an update in which it claimed to have transferred 111 tonnes of gold from the Federal Reserve Bank of New York to Germany during 2016, while also transferring an additional 105 tonnes of gold from the Banque de France in Paris to Germany during the same time-period.

Following these assumed gold bar movements, the Bundesbank now claims to have achieved its early 2013 goal of repatriating 300 tonnes of gold from New York to Frankfurt, but after 4 years it is still 91 tonnes short of its planned transfer of 374 tonnes of gold from Paris to Frankfurt. In essence, over an entire 4-year period (i.e. 208 weeks), the Bundesbank has only been able to transfer 583 tonnes of gold back from New York and Paris to Germany. And the Bundesbank still claims to have 1236 tonnes of gold remaining in storage with the New York Fed.

Predictably, instead of prompting the mainstream financial media into asking why these supposed gold bar movements have taken so long, the Bundesbank press release threw the mainstream media into a frenzy of immediately back-slapping the Bundesbank while regurgitating its press release with articles such as “Germany brings its gold stash home sooner than planned” from Reuters , “Germany Gets Its Gold Back Faster With Job Seen Done in 2017” from Bloomberg, and “Germans Sent Gold Away to Keep It From the Soviets. Now Much of It Is Back” from the New York Times.

Furthermore, if the mainstream financial media had bothered looking at Federal Reserve “Table 3.13 – Selected Foreign Official Assets Held at Federal Reserve Banks” under ‘Earmarked Gold’ (line item 4), they would have seen that the foreign custody gold figure that the Fed reports has not changed since September 2016, and that the Fed’s foreign custody gold figure had dropped by 113 tonnes between March 2016 and September 2016, meaning that the Bundesbank’s 111 tonne gold transfer from the US to Germany had been completed by September 2016, i.e. at least 4 months before the Bundesbank reported it.

table frb
Selected Foreign Official Assets Held at Federal Reserve Banks – ‘Earmarked Gold’, 2016. CLICK TO ENLARGE

100 tonnes of gold per day Air-Lifted

All gold withdrawals from the Fed’s “earmarked gold” reporting category in 2016 occurred between March and September 2016, with activity each month throughout that period except in May. As to why there were gold withdrawals from the Fed of 113.45 tonnes when the Bundesbank only reported transferring back 111 tonnes is not clear. Was an additional amount withdrawn from the Fed vault by another foreign central bank or did the Bundesbank conduct further melting down of its US Assay office gold bars and lose 2+ tonnes (1.7%) of fine ounce content that was overstated in its Federal Reserve holdings? Or perhaps this amount was lost when weighing old US Assay Office ‘melts’ (batches of 18-22 bars) which had never been properly weighed before.

Whatever the case, we will never know because the Fed does not divulge the identities of its central bank gold custody customers, nor does the Bundesbank divulge simple details such as gold bar serial numbers on its so-called gold bar list (more of which below).

Simple common sense would have alerted the mainstream media robots to the fact that it is not normal for international gold movements to take 4 years to complete, and that there is something absolutely not right with Germany’s foreign held gold taking so long to transport from New York and Paris. Paris is just a 1 hour flight from Frankfurt and 6 hours by road, and New York is less than 9 hours flying time to Frankfurt.

Other simple questions which the mainstream financial media have failed to ask or have failed to think of include why does the Bundesbank need to keep any gold at all stored at the Federal Reserve in New York, let alone 1236 tonnes, when the New York Fed vault is not even an international gold trading center. And is this gold left in New York is under any liens, claims, encumbrances, loans or swaps?

In contrast to the Bundesbank’s laughable repatriation program duration, take for example, the Banco Central do Venezuela, which was able to transfer 160 tonnes of gold from Europe to Venezuela’s capital, Caracas, over a 2 month period from 25 November 2011 to 30 January 2012. See “Venezuela’s Gold Reserves – Part 2: From Repatriation to Reactivation” for details.

That’s 80 tonnes per month, which would equate to a 4 month transfer window for 300 tonnes of the Bundesbank’s gold stored in New York, not 4 years. Furthermore, why is the mainstream media not asking the Bundesbank why it takes more than 4 years to transfer 374 tonnes of gold from Paris to Frankfurt?

More damning to the contemporary Bundesbank, the same Americans (Federal Reserve) were able to fly over 800 tonnes of gold from the US to England exactly 50 year ago, in November and December 1967, to prop up their share of the London Gold Pool gold holdings at the Bank of England. This gold was flown into RAF Mildenhall in Suffolk over 9 days in batches of around 100 tonnes each day using US air force cargo carriers, and then this gold was ferried by police escorted convoys down to the City of London.

The first 4 of these US air force flights were on Tuesday 28 November 1967, Wednesday 29 November, Friday 1 December, and Sunday 3 December, with the Americans flying in 100 tonnes of gold each day to RAF Mildenhall over those 4 days. That’s 400 tonnes of gold flown from the US to Europe in just 6 days. See screenshot below.

100 tonnes per day
The Federal Reserve is able to organise massive and rapid gold movements by air when it wants to

These 4 flights in late November and early December 1967 were followed by 5 more flights on Tuesday 19 December, Thursday 21 December, Thursday 28 December , Friday 29 December, and Sunday 31 December 1967. These 5 flights transported another 445 tonnes of gold bars (14,317,458 fine ounces) from the US to the Bank of England vaults (see screenshot below). That’s another 445 tonnes of gold moved from the US to London in just 13 days.

5 flights
Federal Reserve had 445 tonnes of gold flown from the US to London in just 13 days in December 1967

Overall, the November and December 1967 gold airlifts transported nearly 850 tonnes of gold from the US to Europe in just 1 month.

There were also further massive gold airlifts from the US to the Bank of England in the summer of 1968 which ironically the Federal Reserve needed to do so as to pay back physical gold swaps which the Bundesbank had made available to the Americans at the Bank of England during the last days of the London Gold Pool in March 1968.

These rapid and massive physical gold movements over international borders in 1967 and 1968 show how laughable the Bundesbank’s current gold repatriation program actually is, and how servile the mainstream financial media are in not even questioning the timeframe of the Bundesbank’s repatriation operations.

RAF Mildenhall police escort
POLICE ESCORTS for Gold Run from RAF MILDENHALL to BANK OF ENGLAND, December 1967. Source here

Updated “So-Called” Bar List

Following its press release on 9 February, the Bundesbank then published an updated version of its so-called gold bar list on 23 February, specifying its gold holdings as of 31 December 2016. A so-called gold bar list, because the format of the Bundesbank’s gold bar list does not follow any accepted industry standard format and does not contain basic details such as bar serial number and bar refiner name that are crucial to any normal gold bar weight list. The updated Bundesbank bar list was also released in a very low-key way, and its publication does not seem to have been picked up by any of the mainstream financial media. The updated Bundesbank ‘list’ can be viewed here in a file that the Bundesbank had actually created on 14 February 2017.

DB 2016
Bundesbank gold bar holdings as per 31 December 2016

To reiterate, a proper gold bar weight list, as per the definition of the London Bullion Market Association (LBMA) in its Good Delivery Rules for Gold and Silver Bars, contains the following details:

  • Serial Number of bar
  • Bar Refiner Brand
  • Gross weight (troy ounces)
  • Assay (Fineness)
  • Fine Weight (troy ounces)

For example, here is a recent gold bar weight list from the iShares Gold Trust (IAU). For each bar held in the iShares Gold Trust, the weight list lists:

  • bar brand (refiner name)
  • bar serial number
  • shape (400 oz)
  • Assay (fineness)
  • Gross ounces
  • Fine ounces
  • Vault (example JP Morgan London)

The Bundesbank claims that all of its gold bars are good delivery bars, so it and its gold custodians (Bank of England, Banque de France and Federal Reserve Bank of New York) have all of this information stored on their respective gold bar accounting systems, including real bar serial numbers and refiner names. They have to store this information since any bars entering or leaving LBMA network gold vaults need to be accompanied by proper weight lists, including serial number and bar refiner brand.

Compare a proper weight list with the sparse and incomplete what the Bundesbank includes in its gold bar list:

  • Inventory Number (internal sequence numbers or incomplete bar numbers)
  • Gross Weight
  • Fineness
  • Fine Weight
Bundesbank 'list' format
Bundesbank gold bar ‘list’ format – No serial numbers, No bar refiner names

For Germany’s bars listed as held by the Bundesbank, Bank of England and Banque de France, these inventory numbers are merely “internally assigned inventory numbers”, and ludicrously in the case of the Bank of England and Banque de France gold vaults, they only allow other central banks to publish partial internal inventory numbers (the last three digits).

The secrecy with which the Bank of England, Banque de France and other central banks treat real gold bar serial numbers and other identifiers is most likely due to their paranoia that publication of such serial numbers would undermine their ability to operate with secrecy in the gold lending and gold swap market where bar identities might pop up in the gold holdings of commercial operators such as gold-backed Exchange Traded Funds (ETFs).

Numbers listed against Bundesbank bars held at the Federal Reserve Bank of New York do supposedly show a refiner number, or a melt number, but without the refiner name and year of manufacture of these bars being divulged by the Bundesbank, there is no way to verify and cross-check these bar numbers.

Note that this new Bundesbank gold bar list is the third such list that it has published, and it is in the same format as the previous two versions, both of which are also not real gold bar weight lists since they lack refiner serial numbers and refiner names.

For the purposes of this article, let’s refer to a “Bundesbank bar list” as an “incomplete partial weight list”. The Bundesbank had actually signalled the publication of its updated list at the bottom of its 9 February press release, where it stated:

“On 23 February, the Bundesbank will publish an updated list of its gold bars on its website. This list contains the bar, melt or inventory numbers, the gross and fine weight as well as the fineness of the gold.”

3 Bundesbank gold bar lists

To recap, the Bundesbank had already published 2 incomplete partial weight lists. The first of these was published on 7 October 2015 and showed holdings as of 31 December 2014. The file can be accessed here, or at the bottom of the page here. The Bundesbank actually created this file on 5 October 2015 and saved it with a file name of 2015_10_07_gold.pdf.

DB 2014
Cover page of Bundesbank’s 2014 incomplete partial gold bar list

The publication of this first bar list was elegantly and deftly dissected and critiqued by Peter Boehringer, of the German campaign “Repatriate our Gold”, in his October 2015 article “Guest Post: 47 years after 1968, Bundesbank STILL fails to deliver a gold bar number list”.

The Bundesbank’s second incomplete partial weight list was created on 4 February 2016 and listed holdings as of 31 December 2015, and was published sometime after 4 February 2016. Confusingly, the incomplete partial weight list as of 31 December 2015 file was uploaded to the same web page and with the same file name as the 31 December 2014 file (i.e. it was uploaded with the filename  2015_10_07_gold.pdf and it over-wrote the first list). This second incomplete partial weight list can be accessed here.

DB 2015
Cover page of Bundesbank’s 2015 incomplete partial gold bar list

Why no lists prior to December 2014?

Given that the Bundesbank has now demonstrated its ability to generate files itemising its gold holdings, even with limited bar details, the fact that the Bundesbank only began publishing its gold holdings’ lists in October 2015 should immediately raise suspicion as to why it did not publish such bars lists as of the end of 31 December 2012 (prior to the repatriation beginning), and as of 31 December 2013.

A casual observer would deduct that the Bundesbank does not want anyone to see an itemised list of its gold holdings on these dates in 2012 and 2013, and the casual observer would probably be correct in deducing such a conclusion. For its was during 2013 and 2014 that the Bundesbank melted down and recast 55 tonnes of the gold bars that it had held in New York. Five tonnes of its gold was melted down and recast in 2013 and a whopping 50 tonnes was melted down and recast in 2014. Recall that in January 2014, the Bundesbank stated that during 2013:

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.’

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.”

And again in January 2015, the Bundesbank revealed that: during 2014 it:

“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.”

For more details of these statements, and follow-up questions to the Bundesbank, please see “The Keys to the Gold Vaults at the New York Fed – Part 3: ‘Coin Bars’, ‘Melts’ and the Bundesbank“.

If the Bundesbank had published weight lists as of the end of years 2012 and 2013, then details such as bar gross weight, fineness (gold purity), and bar fine weight would have to have been divulged. By not publishing earlier bars lists, no one outside the Bundesbank – Federal Reserve nexus will ever be aware of the weights and purities of these 55 tonnes of gold bars that were melted down and recast. The Bundesbank obviously has or had the details of these smelted bars, since it commissioned and monitored the smelting process. But as Peter Boeringher stated in his October 2015 article “it appears the bar lists for these transferred bars were lost or destroyed.”

What secrets did these bars hold? One distinct possibility was that they were low-grade coin bars, that had been produced from melted gold coin. In this case they would have been bars of 0.90 or .9167 gold purities or similar. Low grade coin bars began appearing at the NY Fed vault in Manhattan in 1968 and most likely came from the US Treasury’s gold holdings at  Fort Knox, Kentucky which consist of about 80% low-grade coin bars. It would not look good for the NY Fed if such low grade bars appeared on a foreign central bank’s gold bar list, and would invariably raise questions as to which US vaults this gold was sourced from.

Perhaps the bars that the Bundesbank melted were Prussian Mint bars from the Nazi era which the Bundesbank would be averse to holding in Germany for political reasons? Or maybe they were problematic US Assay office bars which had a lower fine ounce content than was stated on the actual bar, an issue that dogged another portion of the Bundesbank’s gold stocks in London in 1968. Or perhaps they were gold bars with some other embarrassing provenance which the Bundesbank and Federal Reserve needed to mask the true origin of. Without the Bundesbank ever clarifying this issue, we will never know.

Comparing the 3 Lists

What can we glean from comparing the 3 lists to each other? The only variable on which to compare the lists are gross weight, fineness, and fine weight, and the bar and melt counts per location.

In theory, the lists from December 2014, December 2015 and December 2016 should be identical assuming that the total amount of gold bars has not changed between versions.

If the lists are not identical, then it could suggest a number of things including:

  1. gold bars that were previously held in Melts have now been individually weighed and itemized on the more recent list. This would most likely be for bars that were transferred to Frankfurt, but could also apply to bars which remained in the other storage locations
  2. further instances of gold bars remelted / recast while being transferred from New York or Paris to Frankfurt that the Bundesbank has kept quiet about
  3. gold bars still held in Paris or New York (or London) that have been being recast and upgraded before being moved. This would apply more to Paris going forward
  4. sales of gold bars to ‘fund’ the German official gold coin program.
  5. gold lending / swap / repo transactions

Since the lists do state melt number, if there are less any melt numbers listed in more recent lists compared to older lists, then it means that the Bundesbank or its agents have weighed and itemised the individual bars in various melts (groups of 18-24 bars). For example, if the entries for 20 melts had disappeared from a more recent version of a list, then there should be about 400 extra individual bars of the newer list.

Using some quick eyeballing, the file dated 31 December 2014 has 2307 pages including introduction. The file dated 31 December 2015 has 2401 pages including introduction, i.e. the latter file has 94 extra pages. There are approximately 44 pages of melts in the 2014 file listed from page 2263 to the last page 2307. There are approximately 40 pages of melts in the 2015 file listed from page 2361 to the last page 2401. From a rough count, there are about 85 rows per page. This would mean about 340 melts were weighed and converted into itemised rows of single bars during 2015. Not all melts have full sets of bars, but assuming they did, that would be about 20 bars per melt, which would be about 20*340 = 6800 bars which would appear in individual rows in the 2015 list if the melts were “broken out”, which is about 80 pages, and is fairly near explaining the reason for the extra 94 pages in the 2025 file.

If you look at the number of gold bars listed in the press releases (current version and archived version), you will see that there were in total 270,326 bars at the end of 2014 and 270,058 bars at the end of 2015, so there were 258 less bars at the end of 2015.

As of the end of 2015, there were 34,808 bars in London vs 35,066 bars at the end of 2014. i.e. There were 258 bars less in London (about 3 tonnes). So the London drop explains the total drop. This could be gold used for a gold coin program.

This is just some quick eyeballing. The next step is to do an automated comparison of the 3 lists side by side by comparing the variables gross weight, fineness and fine weight so see which bar details may have changed over the 2 year period, and to look at what might have changed. This matching and calculation exercise will probably be undertaken by a gold bar database expert in the near future, so watch this space for further details.


COMEX and ICE Gold Vault Reports both Overstate Eligible Gold Inventory


In the world of gold market reportage, much is written about gold futures prices, with the vast majority of reporting concentrating on the CME’s COMEX contracts. Indeed, when it comes to COMEX gold, a veritable cottage industry of websites and commentators makes its bread and butter commentating on COMEX gold price gyrations and the scraps of news connected to the COMEX. The reason for the commentators’ COMEX fixation is admittedly because that’s where the trading volume is. But such fixation tends to obscure the fact that there is another set of gold futures contracts on ‘The Street’, namely the Intercontinental Exchange (ICE) gold futures contracts that trade on the ICE Futures US platform.

These ICE gold futures see little trading volume. Nonetheless, they have a setup and infrastructure rivaling that of COMEX gold futures, for example, in the reporting of the gold inventories from the vault providers that have been approved and licensed by ICE for delivery of gold against its gold futures contracts.

At the end of each trading day, both CME and ICE publish reports showing warehouse inventories of gold in Exchange licensed facilities/depositories which meet the requirements for delivery against the Exchanges’ gold futures contracts. These inventories are reported in two categories, Eligible gold and Registered gold. Many people will be familiar with the COMEX version of the report. A lot less people appear to know about the ICE version of the report. For all intents and purposes they are similar reports with identical formats.

Most importantly, however, both reports are technically incorrect for the approved vaults that they have in common because neither Exchange report takes into account the Registered gold reported by the other Exchange. Therefore, the non-registered gold in each of the vaults in common is being overstated, in a small way for COMEX, and in a big way for ICE. And since COMEX and ICE have many approved vaults in common, technically this is a problem.

The Background

Before looking at the issues surrounding the accuracy of the reports, here is some background about CME and ICE which explains how both Exchanges ended up offering gold futures contracts using vaults in New York. The Commodity Exchange (COMEX) launched gold futures on 31 December 1974, the date on which the prohibition on private ownership of gold in the US was lifted. In 1994, COMEX became a subsidiary of the New York Mercantile Exchange (NYMEX).

In 2001, Euronext acquired the London International Financial Futures and Options Exchange (LIFFE) to form the Euronext.LIFFE futures exchange. In April 2007, NYSE and Euronext merged to form NYSE Euronext. Following the merger with NYSE, this merged futures exchange was renamed NYSE Liffe US.

In July 2007, Chicago Mercantile Exchange (CME) merged with the Chicago Board of Trade (CBOT) and CME and CBOT both became subsidiaries of ‘CME Group Inc’. CBOT had traded a 100 oz gold futures contract from 2004 and a ‘CBOT mini-sized’ gold futures contract (33.2 ozs) from 2001. During 2007, NYSE Euronext had also been attempting to acquire CBOT at the same time as CME.

In August 2008, the CME Group acquired NYMEX (as well as COMEX), and NYMEX (including COMEX) became a fully-owned subsidiary of holding company CME Group Inc. Just prior to acquiring NYMEX/COMEX and its precious metals products, the CME sold the CBOT products to NYSE Euronext in March 2008. This included the CBOT 100 oz and mini gold futures contracts, and the CBOT options on gold futures. NYSE Euronext then added these gold contract products to its NYSE Liffe US platform.

In 2013, ICE acquired NYSE Liffe. In mid 2014, ICE transferred the NYSE Liffe US precious metals contracts to its ICE Futures US platformICE then spun off Euronext in 2014. ICE Futures US had been formerly known as the New York Board of Trade (NYBOT). ICE had acquired NYBOT in January 2007 and renamed it as ICE Futures US in September 2007.

Both COMEX and ICE Futures US are “Designated Contract Markets” (DCMs), and both are regulated by the Commodity Futures Trading Commission (CFTC). Any precious metals vault that wants to act as an approved vault for either COMEX or ICE, or both, has had to go through the COMEX / ICE approval process, and the CFTC has to be kept in the loop on these approvals also.

The Vault Providers

For its gold futures contracts, COMEX has approved the facilities of 8 vault providers in and around New York City and the surrounding area including Delaware. These vaults are run by Brink’s, Delaware Depository, HSBC, International Depository Service  (IDS) Delaware, JP Morgan Chase, Malca-Amit, ‘Manfra, Tordella & Brookes’ (MTB), and The Bank of Nova Scotia (Scotia). Their vault addresses are:

  • Brinks Inc:  652 Kent Ave. Brooklyn, NY and 580 Fifth Avenue, New York, NY 10036
  • Delaware Depository: 3601 North Market St and 4200 Governor Printz Blvd, Wilmington, DE
  • HSBC Bank USA: 1 West 39th Street, SC 2 Level, New York, NY
  • International Depository Services (IDS) of Delaware: 406 West Basin Road, New Castle, DE
  • JP Morgan Chase NA: 1 Chase Manhattan Plaza, New York, NY
  • Malca-Amit USA LLC, New York, NY (same building as MTB)
  • Manfra, Tordella & Brookes (MTB): 50 West 47th Street, New York, NY
  • Scotia Mocatta: 23059 International Airport Center Blvd., Building C, Suite 120, Jamaica, NY

Malca-Amit and IDS of Delaware were the most recent vault providers to be approved as COMEX vault facilities in December 2015/January 2016.

ICE has approved the facilities of 9 vault providers in and around New York City and the surrounding area including Delaware and also Bridgewater in Massachusetts. A lot of the ICE vaults in New York and the surrounding region were approved when its gold futures were part of NYSE Liffe. The ICE approved vaults are run by Brink’s, Coins N’ Things (CNT), Delaware Depository, HSBC, IDS Delaware, JP Morgan Chase, MTB, Loomis, and Scotia. From these lists you can see that Malca-Amit is unique to COMEX, and that CNT and Loomis are unique to ICE. The addresses of CNT and Loomis are as follows:

  • CNT Depository in Massachusetts: 722 Bedford St, Bridgewater, MA 02324
  • Loomis International (US) Inc: 130 Sheridan Blvd, Inwood, NY 11096

There are therefore 10 vault providers overall: Brink’s, CNT, Delaware Depository, HSBC, IDS Delaware, JP Morgan, Loomis, Malca-Amit, MTB, and Scotia. Three of the vaults are run by security transport and storage operators (Brink’s, Malca, and Loomis), three are owned by banks (HSBC, JP Morgan and Scotia), three are parts of US precious metals wholesaler groups (MTB, CNT and Dillon Gage’s IDS of Delaware), and one Delaware Depository is a privately held precious metals custody company.

Importantly, there are 7 vault provider facilities common to both COMEX and ICE. These 7 common vault providers are Brink’s, Delaware Depository, HSBC, IDS Delaware, JP Morgan, MTB, and Scotia.

The Inventory Reports

Each afternoon New York time, CME publishes a COMEX ‘Metal Depository Statistics’ report for the previous trading day’s gold inventory activity, which details gold inventory positions (in troy ounces) as well as changes in those positions within its approved vault facilities at Brink’s, Delaware Depository, HSBC, IDS Delaware, JP Morgan, Malca-Amit, MTB and Scotia. The COMEX report is published as an Excel file called Gold_Stocks and its uploaded as the same filename to the same CME Group public directory each day. Therefore it gets overwritten each day: https://www.cmegroup.com/delivery_reports/Gold_Stocks.xls.

Below are screenshots of this COMEX report for activity date Friday 16 December 2016 (end of week), which were reported on Monday 19 December 2016. For each depository, the report lists prior total of gold reported by that depository, the activity for that day (gold received or withdrawn) and the resulting updated total for that day. The report also breaks down the total of each depository into ‘Registered’, and ‘Eligible’ gold categories.

Eligible gold is all the gold residing in a reporting facility / vault  which is acceptable by the Exchange for delivery against its gold futures contracts and for which a warrant (see below) has not been issued, i.e. the bars are of acceptable size, gold purity and bar brand. In practice, this just applies to 100 oz and 1 kilo gold bars. This ‘eligible gold’ could be gold owned by anyone, and it does not necessarily have any connection to the gold futures traders on that Exchange.

For example, 400 oz gold bars in a COMEX or ICE approved vault would not be eligible gold. Neither would 100 oz bars or kilo bars arriving in a vault if  the bars had been outside the chain of custody and had not yet been assayed.

Registered gold is eligible gold (acceptable gold) for which a vault has issued a warehouse receipt (warrant). These warrants are documents of title issued by the vault in satisfaction of delivery of a gold futures contract, i.e. the vault receipts are delivered in settlement of the futures contract. This is analogous to set-aside or earmarked gold.

For the COMEX 100 oz gold futures contract (GC), physical delivery can be either through 1 unit of a 100 troy ounce gold bar, or 3 units of 1 kilo bars, therefore eligible gold on the CME report would include 100 troy ounces bars of gold, minimum 995 fineness, CME approved brand, and 1 kilo gold bars, CME approved brand. The CME E-Mini gold futures contract (QO) is exclusively cash settled and has no bearing on the licensed vault report. CME E-micro gold futures (MGC) can indirectly settle against the CME 100 oz GC contract through ‘Accumulated Certificates of Exchange’ (ACEs) which represent a 10% claim on a GC (100 oz) warrant. Therefore, the only gold bars reported included on the CME Metal Depository Statistics reports are 100 oz and 1 kilo gold bars.




COMEX Warehouse Inventory Report – Gold. Click to Enlarge

Each afternoon New York time, ICE publishes a “Metal Vault Statistics” report as an Excel file which is uploaded to an ICE public web directory. The report lists the previous trading day’s gold inventory activity, and like the CME report, shows gold inventory positions and changes in those positions (receipts and withdrawals) in troy ounces within its approved vault facilities. The ICE report also breaks down the total of each depository into ‘Registered’ and ‘Eligible’ gold.

The ICE licensed vault reports are saved as individually dated reports. The ICE report dated 19 December 2016 for activity on 16 December 2016, can be seen at https://www.theice.com/publicdocs/futures_us_reports/precious_metals/Precious_Metals_Vault_Stocks_Dec_19_2016.xls.

Two gold futures contracts trade on ICE Futures US, a 100 oz gold futures contract (ZG), and a Mini gold futures contract (YG). YG which has a contract size of 32.15 troy ounces (1 kilo). Both of these ICE gold contracts can be physically settled. The gold reported on the ICE Metal Vault Statistics report therefore comprises 100 oz and 1 kilo gold bars that are ICE approved brands. In practice, CME and ICE approved brands are the same brands.




ICE Warehouse Inventory Report – Gold. Click to Enlarge

The Rules

The data required to be conveyed to CME each day by the approved depositories is covered in NYMEX Rulebook Chapter 7, section 703.A.7 which states that:

“on a daily basis, the facility shall provide, in an Exchange-approved format, the following information regarding its stocks:

  • a. The total quantity of registered metal stored at the facility.
  • b. The total quantity of eligible metal stored at the facility.
  • c. The quantity of eligible metal and registered metal received and shipped from the facility.”

The ICE Futures US documentation on gold futures does not appear to specifically cover the data that its approved vaults are required to send to ICE each day. Neither does it appear to be covered in the old NYSE Liffe Rulebook from 2014. In practice, since ICE generate a report for each trading day which is very similar to the CME version of the report, then it’s realistic to assume that the vaults send the same type of data to ICE. But as you will see below, the vaults seem to just send each Exchange a ‘number’ specifying the registered amount of gold connected to warrants related to the Exchange, and then another ‘number’ for acceptable gold that is not registered to warrants connected to that Exchange.

The Comparisons

What is immediately obvious when looking at the CME and ICE reports side by side is:

  • a) they are both reporting the same total amounts of gold at each of the approved facilities (vaults) that they have in common, and also reporting the same receipts and withdraws to and from each vault. This would be as expected.
  • b) CME and ICE are reporting different amounts of ‘Registered’ gold at each facility because they only report on the gold Registered connected to their respective Exchange contracts…
  • c)… which means that CME and ICE are also reporting different amounts of ‘eligible’ gold at each approved facility that they have in common.

In other words, because neither Exchange takes into account the ‘Registered’ gold at the other Exchange, each of CME and ICE is overstating the amount of Eligible gold at each of the vaults that they both report on.

Brink’s Example

Look at the below Brinks vault line items as an example. For activity date Friday 16 December 2016, CME states that at the end of the day there were 588,468.428 troy ounces of gold Registered, leaving 223,946.744 ounces in Eligible, and 812,415.172 ounces in Total. ICE also states the same Total amount of 812,415.195 ounces (probably differs by 0.023 ozs due to rounded balances carried forward), but from ICE’s perspective, its report lists that there were 321.51 ounces (10 kilo bars) registered in this Brink’s vault, so therefore ICE states that there are 812,093.685 ounces of eligible gold in the Brinks vaults. However, CME has 588,468.428 troy ounces of gold ‘earmarked’ or Registered against the total amount of reported 100 oz and 1 kilo gold bars in the Brink’s facility. In practice, if the situation ever arose, the Brink’s vault could issue warrants against ICE gold futures of more than 223,635.234 ozs, because this is the maximum amount of eligible gold in the vault which is neither registered with the COMEX exchange or registered with the ICE exchange.


CME Brinks gold – Report date: 19 December 2016, Activity date: 16 December 2016

ICE Brinks gold – Report date: 19 December 2016, Activity date: 16 December 2016

Therefore in this example, both the CME and ICE reports are not fully correct, but the ICE report is far ‘more’ incorrect than the CME report because the ICE report substantially understates the true amount of Eligible (non-registered) gold in the Brink’s vault. This trend is evident across most ‘Eligible’ numbers for the vaults in the ICE report. Since the trading volume in ICE gold futures is very low overall, the number of ICE gold futures contracts that have ultimately generated warrants is also very low.

Although the relatively tiny amounts of ‘Registered’ ounces listed on the ICE report won’t really affect the overall accuracy of the COMEX reporting, a more correct approach to reflect reality would be for the vault providers to combine the Registered numbers from the two Exchanges, and subtract this combined amount from the reported Total at each facility so as to derive an accurate and real Eligible amount for each vault facility.

MTB Example

But what about a scenario in which very little non-registered gold is actually left in a vault right now due to a high Registered amount having been generated from COMEX activity? In such a situation, the ICE report will overestimate the amount of Eligible gold in a big way and a reader of that report would be oblivious of this fact. This is the case for the Manfra, Tordella & Brookes (MTB) vault data on the ICE report.

According to the CME report, as of Friday 16 December, there were 104,507.221 ozs of gold in the MTB vault in the form of acceptable 100 oz or 1 kilo bars, with 99,698.357 ozs of this gold registered against warrants for COMEX, and only 4,808.864 ozs not Registered (i.e. Eligible to be Registered).

CME MTB gold – Report date: 19 December 2016, Activity date: 16 December 2016

The ICE report for the same date and same vault states that there are the same amount of Total ounces in the vault i.e. 104,507.217 ounces (0.004 oz delta). However, the ICE report states that 104,153.567 ozs are Eligible to be registered, since from ICE’s perspective, only 353.65 ozs (11 kilo bars) are actually Registered. But this ICE Eligible figure is misleading since there are a combined 100,052.007 ozs (99,698.357 ozs + 353.65 ozs) Registered between the 2 Exchanges, and only another 4,455.214 ozs of Eligible gold in total in the vault.

ICE MTB gold – Report date: 19 December 2016, Activity date: 16 December 2016

IDS Delaware Example

The reporting for International Depository Services (IDS) of Delaware is probably the most eye-opening example within the entire set of vault providers, because when looking at the 2 reports side by side, it becomes clear that there is no ‘Eligible’ (non-Registered) gold in the entire vault. CME states that 675.15 ozs (21 kilo bars) are Registered and that 514.4 ozs (16 kilo bars) are Eligible, giving a total of 1,189.55 ozs (37 kilo bars), but ICE states that 514.4 ozs (16 kilo bars) are Registered and thinks that 675.15 ozs (21 kilo bars) are Eligible. But in reality, between the two Exchanges, the entire 1,189.55 ozs (37 kilo bars) is Registered and there are zero ozs Eligible to be Registered. CME thinks whatever is not Registered is Eligible, and ICE thinks likewise. But all 37 kilo bars are Registered by the combined CME and ICE. IDS therefore sums up very well the dilemma created by the Exchanges not taking into account the warrants held against each other’s futures contracts.

ICE IDS gold – Report date: 19 December 2016, Activity date: 16 December 2016


ICE IDS gold – Report date: 19 December 2016, Activity date: 16 December 2016

Delaware Depository Example

Based on a report comparison, Delaware Depository (DD) is unusual in that there are different ‘Total’ amounts reported by each of CME and ICE. CME states that there are 110,336.484 ozs of acceptable gold in the DD vault, whereas ICE states that there are 112,008.284 ozs. This difference is 1,671.80 ozs which is equivalent to 52 kilo bars. So, for some unexplained reason, the vault has provided different total figures to CME and ICE.

CME Delaware Dep gold – Report date: 19 December 2016, Activity date: 16 December 2016


ICE Delaware Dep gold – Report date: 19 December 2016, Activity date: 16 December 2016

The above comparison exercise can be performed for the other 3 vaults that both CME and ICE have in common, namely the 3 bank vaults of HSBC, JP Morgan and Scotia. These 3 vaults  hold the largest quantities of metal in the entire series of New York area licensed vaults. The ICE contracts have very tiny registered amounts in these vaults, but the Eligible amounts listed on the ICE report for these vaults should technically take account of the Registered amounts listed on the CME report for these same 3 vaults.

The licensed vault that is unique to CME, i.e. the vault of Malca-Amit, surprisingly only reports holding 1060.983 ozs of gold (33 kilo bars), with all 33 bars reported as Registered. This is surprising since given that Malca operates a vault in the recently built International Gem Tower on West 47th Street, one would expect that Malca would be holding far more than just 33 gold kilo bars which would only take up a tiny amount of shelf space.

The two vaults that are unique to ICE, namely CMT and Loomis, also report holding only small amounts of acceptable gold. CNT has 9966.154 ozs (310 kilo bars), 90% of which is Registered, while Loomis reports holding just 7064.07 ozs, all of which is non-registered. 


In gold futures physical settlement process, it’s the responsibility of the exchanges (COMEX and ICE) to assign the delivery (of a warrant) to a specific vault (the vault which is ‘stopped’ and whose warehouse receipt represents the gold delivered). Presumably, the settlement staff at both CME and ICE both know about each other’s registered amounts at the approved vaults, and obviously the vaults do since they track the warrants. But then, if this is so, why not indicate this on the respective reports?

The CME and ICE reports both have disclaimers attached as footnotes:

CME states:

“The information in this report is taken from sources believed to be reliable; however, the Commodity Exchange, Inc. disclaims all liability whatsoever with regard to its accuracy or completeness. This report is produced for information purposes only.”

ICE states:

“The Exchange has made every attempt to provide accurate and complete data. The information contained in this report is compiled for you convenience and is furnished for informational purpose only without responsibility for accuracy.”

The exact definition of ‘Eligible’, taken from the COMEX Rulebook, is as follows:

“Eligible metal shall mean all such metal that is acceptable for delivery against the applicable metal futures contract for which a warrant has not been issued

However, in the case of ICE, its report is vastly overstating figures for Eligible gold at the vaults in which COMEX is reporting large registered amounts. In these cases, a warrant has been issued against the metal, it’s just not for ICE contracts, but for the contracts of its competitor, the COMEX. Surely, at a minimum, these footnote disclaimers of the ICE and CME vault inventory reports should begin to mention this oversight?

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.


Guest Post: Hanging by a Thread – “Very skeptical” judge – former FBI/SEC official eyes London gold and silver fix lawsuits

Written by Allan Flynn, specialist researcher in aspects of gold and silver. 

Five months have lapsed without decision, since London gold and silver benchmark-rigging class action lawsuits received a cool response in a Manhattan court. Transcripts from April hearings show, in the absence of direct evidence, the claims dissected by a “very skeptical” judge, and criticized by defendants for lack of facts suggesting collusion, among other things.

Judge Valerie E. Caproni, former white-collar defense attorney, SEC Regional Director and controversial FBI General Counsel, presided over oral arguments for motions-to-dismiss totaling 9 hours on April 18 and 20.

Its “based entirely on statistics with no other,” the judge said, pouring cold water on plaintiff’s claims of bank collusion in gold benchmark rigging. Defense attorney scoffed as much at the silver hearing. “There is not a single fact… that shows an agreement between my client and the other alleged conspirators to fix the fix.”

Seven banks are being sued in separate gold and silver class action lawsuits currently before the US. District Court, Southern District of New York. The plaintiffs: gold and silver bullion traders, and traders of various associated financial instruments, allege banks conspired in secret closed meetings, to rig the London PM Gold Fix, and Silver Fix benchmarks during the period from 2001 to 2013.

If the motions to dismiss are allowed, the complaints will be thrown out. Plaintiffs on the other hand, are hoping to crack open the door to “discovery,” where they get to access confidential bank communications and records. Turning the tables earlier in April Deutsche Bank surprised by promising to provide such evidence ratting out its former fellow defendants. “No. I cannot consider it at all,” the judge said, stonewalling plaintiffs’ arguments mentioning the move. The German mega-bank settled claims a week prior to the hearing but is yet to hand over records.


Alleged proof of downward price manipulation is revealed by averaged charts showing “Anomalous” price drops from 2001 to 2013 in the London Silver Fix and PM Gold Fix. In sympathy, even as the gold price quadrupled from around $300 to $1200 through the period, something counter-intuitive happened. Plaintiffs’ claim during London hours between the AM and PM fixes, the average price declined for each of the 13 years, bar one being flat in 2013. More pronounced effects were seen in silver.

“Those were compelling charts,” the judge responded to a presentation of evidence during the silver hearing. “I mean, seriously, they truly show that something happened.”

Image courtesy of Commodity Exchange, Inc., Gold Futures and Options Trading Litigation, Dkt No. 14-MD-2548 (VEC)

Defendants argue rather than collusion, the price drops show normal “parallel conduct.” Loads of precious metals producers all needing to sell, and a bunch of savvy bankers hoping to buy low. Plaintiffs say the banks have a near-perfect record betting on the fix outcome. Well of course, they trade on “the best information in the world about supply and demand,” the banks’ attorneys retorted.


Inclusion of a non-fixing bank UBS, in the lawsuit, is described by defendants as “unfair,” and just to “suck in” a Swiss regulator’s findings. If the Court is to be believed, the FINMA report may be all the cases have going for them. Of its 19 pages, the dominating subject is foreign exchange misconduct, with only a few lines about precious metals. Tip-toeing around the topic of collusion, the report describes a process of “cooperation” between UBS and others in precious metals trading. It says the bank shared sensitive client trade information such as “client names”, “stop loss orders,” and “flow information on large or imminent orders” with “third parties.”

Sharing of client trade information by banks, including UBS, in currency trading, the UK Financial Conduct Authority (FCA) reported in 2014, was for the purpose of collusion. Such communication enabled different banks to plan trading strategies, and “attempt to manipulate fix rates and trigger client “stop loss” orders (which are designed to limit the losses a client could face if exposed to adverse currency rate movements).”

Strong similarities exist between the methods and tools used by currency traders to rig benchmarks, and those used by precious metals traders. Referring to the detailed description of UBS offences including collusion in currency benchmarks, the FINMA report said, “the conduct and techniques inadmissible from a regulatory perspective, were also applied at least in part to PM spot trading.”

Thurgood Marshall United States Courthouse, inset Judge Valerie E. Caproni

Hanging by a Thread

One “misconduct” the report emphasized in precious metals trading was UBS’ manipulation of the silver benchmark in the banks proprietary trading. “A substantial element of the conspicuous conduct in PM trading was the repeated front running (especially in the back book) of silver fix orders of one client.” According to the FCA, front running is a kind of insider trading.

“transaction for a “person’s own benefit, on the basis of and ahead of an order (including an order relating to a bid) which he is to carry out with or for another (in respect of which information concerning the order is inside information), which takes advantage of the anticipated impact of the order on the market or auction clearing price.”

Commenting on the brevity of plaintiffs’ evidence in silver, and the FINMA findings, Judge Caproni pointed out, “your hanging your hat pretty heavily on one line in that report.”

Attorney for defendants found the report favorably vague:

“Your Honor, I apologize. I must say he has made a misstatement three times. The FINMA settlement, Section 3.2.3 talks about UBS conduct with respect to silver. There’s not a not a word or hint about coordination with any other bank. It is between UBS and one of its customers or maybe more than one but no collusion.”

The judge responded, “We have the FINMA report. I knew that wasn’t exactly what it said.”

Confusion about the Swiss findings wasn’t helped by the events of the day. The conference call in German, reported FINMA boss Mark Branson alluding to perhaps more than the report dare, in, “clear attempts to manipulate precious metals benchmarks.” FINMA declined a request to supply a transcript or recording of the conference call, with a spokesperson responding, “We do not publish a transcript, and besides we have nothing to add to the report.”

A couple of things may help explain the regulators haziness, and thus the challenges for sensitive cases as these. Switzerland is a country long associated with gold and banking. In 1970 Zurich was home to the worlds largest gold market. Most of the worlds’ gold is imported to Switzerland for refining. Consider then this impressive feat: An official inquiry is conducted of Switzerland’s largest bank caught up in a scandal involving “precious metals.” Offenses were identified in its Zurich office. The agency reports “serious misconduct” in precious metals trading including sharing of secret client trade orders with “third parties.” The agency head rallies against manipulation of “precious metals benchmarks.” Action against 11 bank personnel, including industry bans of between one and five years, were brought against two managers and four traders for, “serious breaches of regulation in foreign exchange and precious metals trading.” But yet, the word “gold” is absent from the entire report and announcements.

Secondly, FINMA’s 2015 Annual Report describes the sanctions against four now-former UBS traders. It may concern some, that justice is left to financial market regulators when:

“Four further enhancement actions against UBS foreign exchange traders were discontinued in August 2015. Since there were indications that their behavior had contributed to serious breaches of regulatory provisions, FINMA issued reprimands without taking further action against these individuals.”

The Puzzle

If the cases proceed, US commodity futures markets may also come under scrutiny. The Court spotted a not-so-obvious paradox concerning allegations the banks suppress gold prices. “Why would they drive the price down when they are sitting on I don’t know how much bullion? They are driving down the price of their own asset,” Judge Caproni posed.

Plaintiffs claim the banks hold a majority of short gold and silver futures on the US-based Chicago Mercantile Futures Exchange, paper instruments tied to the value of London silver and gold, which increase in value as the bullion prices fall. The banks argue that it’s impossible to tell from mandatory government filings, which banks prosper during the declines, and to what extent. The judge agrees, and defendants are pleased. “I’m very skeptical they have a well-pleaded factual allegation of what the banks’…COMEX position is,” the judge said.

“Mr Feldberg: Then your Honor has said that much better than I ever could.”

Where direct evidence of collusion isn’t available, antitrust law allows the pleading of additional circumstantial evidence that lends plausibility to allegations. Other circumstantial evidence, or “plus-factors,“ listed by gold plaintiffs, namely problematic antitrust facts arising out of the very clubby arrangement of the fix meetings themselves, failed to impress particularly.

“The Court: But weren’t all of your plus factors just the natural – they are just a function of the fix?..I thought every plus factor you pointed to was just that’s the nature of the fix.”

Last Stand

The unconvinced magistrate was likely close to a decision, before four weeks back when the banks had one last throw at dismissal. The court in the silver case was asked to apply a recent ruling where warehouse aluminum price manipulation was deemed not to have impacted end users of aluminum. Any decision on this in silver will likely impact the gold case also.

The question of standing, or which plaintiff’s are close enough to the alleged activity to have suffered injury, was well discussed back in April. For example the Court put to defense: “I’m not saying the two guys at a swap meet from Ohio would be a particularly compelling class representative, but why wouldn’t they have standing?” Plaintiffs seemed to have convinced that the issue could be decided later, if it gets to that. Judge Caproni just wasn’t sure firstly if all the statistics, and facts complained were plausible enough to infer collusion, reminding frustrated gold plaintiffs where the balance lies.

“Unfortunately for you I’m the one who has to make the decision here.

Mr Brocket: Again, with the greatest respect, I am trying to resurrect this here but, look. Every fact alone doesn’t prove collusion.

The Court: I agree.”

A courtroom in the Thurgood Marshall Courthouse NYC

Decisions regarding motions to dismiss in the London gold and silver benchmark-rigging class actions against banks, initially expected around the end of August, could come any day sooner or later according to someone familiar with the cases.


The above article was first published at Allan Flynn’s website here.

Allan Flynn is a specialist researcher in aspects of gold and silver. He is currently investigating for future publication on the same topic and works in property and commercial architecture when he needs to eat. He holds shares in precious metals producers and banks.

Is there any gold bullion stored at the US Mint in Denver?

Anyone with even a passing interest in US official gold reserves will probably recall that the US Treasury claims to hold its gold (8,133.5 tonnes) over four locations in continental United States, namely at three US Mint facilities in Fort Knox (Kentucky), West Point (upstate New York), Denver (Colorado), and at the New York Fed (Manhattan, New York City).

The claimed gold holding locations and summary quantities held appear in a never-changing monthly Treasury report titled “Status Report of U.S. Government Gold Reserve”.

This report states that 4,583 tonnes of US Treasury gold are stored in the US Mint’s bullion depository in Fort Knox, 1,682 tonnes at the West Point bullion storage facility, and 1,364 tonnes in the US Mint facility in Denver, for a total of 7,628 tonnes of gold. The US Treasury further claims that 418 additional tonnes of its official gold reserves are held at the Federal Reserve Bank vault in New York. An additional 87 tonnes, a working stock figure (which never changes), comprises the balance.

While Fort Knox and the NY Fed vaults regularly take the limelight in terms of volume of media coverage, and to a lesser extent the West Point vaults do so also, there is very little if anything devoted to coverage of the US Treasury gold supposedly held in Denver. It is therefore of interest that none other than the US Mint on its own website recently ceased claiming that it stores gold bullion at its Denver facility.

On August 11, 2014, the US Mint’s Denver web page contained the following statement:

“Today, the United States Mint at Denver manufactures all denominations of circulating coins, coin dies, the Denver “D” portion of the annual uncirculated coin sets and commemorative coins authorized by the U. S. Congress. It also stores gold and silver bullion.

Denver Aug 2014
US Mint – Denver page on website August 2014

Less than a month later, on September 8, 2014, the above paragraph had been subtly changed to the following, and the words ‘gold and’ had been removed:

“Today, the United States Mint at Denver manufactures all denominations of circulating coins, coin dies, the Denver “D” portion of the annual uncirculated coin sets and commemorative coins authorized by the U. S. Congress. It also stores silver bullion.

Denver Sept 2014
US Mint – Denver page on website September 2014

The amended wording remains on the Mint’s present day Denver web page i.e. with just the “It also stores silver bullion” sentence.

Denver Aug 2016
US Mint – Denver page on website August 2016

At the very least this change in wording between August and September 2014 is very unusual. Why would the Mint have authorized and made such a wording change and deleted the reference to gold bullion? I asked the US Mint to clarify but the query went unanswered:

Given that the Denver Mint does not produce any gold or silver coins, the Mint does not have a need to store either gold or silver bullion working stock in Denver, so the above wording cannot be referring to metal being stored for fabrication supplies. The only commemorative coin produced in Denver is an uncirculated clad half dollar made of copper and nickel.  While the above change of wording on the US Mint’s website could have an entirely different explanation, it does raise the possibility that there isn’t any US Treasury gold bullion stored in Denver. This possibility would also subscribe to a view that has been expressed for quite some time now by well-known gold author and commentator James Rickards. Since at least 2010, and probably prior to that, Rickards seems to think that the US gold reserves are nearly exclusively stored at West Point and Fort Knox. Some tweets of his illustrate the point:   

This view, that the US gold is kept at West Point and Fort Knox, actually makes quite a lot of practical sense and is entirely logical. It also makes Denver look like the odd man out.

The US Mint facilities at Fort Knox and West Point are located adjacent to US military installations, namely the US Army base, Fort Knox, and the US Military Academy, West Point. The Fort Knox bullion depository, which opened in 1936, was actually built on land that was previously part of the Fort Knox military base, and that had been deeded to the Treasury Department. The West Point bullion facility, which opened two years later in 1938, was built on land formerly occupied by the West Point military facility, and that had also been deeded to the Treasury Department.

Having large quantities of gold stored in facilities next door to US military facilities is a natural security advantage for protection and also as a deterrent against any would be gold heists. In contrast, the US Mint facility in Denver is located on a city block at 320 West Colfax Avenue, between Delaware St and Cherokee St. It’s near a court-house and a police station but no sign of any US military facilities in the immediate vicinity.

Denver 3D
US Mint Denver facility
Denver 3D2
US Mint Denver rear view

The US Mint in Denver is also the odd one out (of the three) in that it offers public tours of the facility, something unheard of at Fort Knox and West Point. Arguably, the NYFed offers a gold vault tour, but out of US Mint facilities that the Treasury claims to store gold at, Denver is the only one with a public tour. The supposed location of the gold vaults in Denver is also a complete mystery with no photos or images of any vaults or contents of vaults (as far as I can see) ever on the web. A review of the Denver Mint tour (here) mentions supposed gold storage in the lower decks of the building but this seems to be merely supposition as it is inferring that 3 gold bars on display in Denver came from the building’s vaults. However, they did not. These three gold bars actually came from West Point, as CoinWeek stated in May 2012:

“Denver Mint plant manager David Croft pointed out that the three bars were shipped in from the U.S. Mint’s working gold supply at West Point and did not come from the gold that is in deep storage in Denver.

Which begs the question, why? The US Mint would probably answer, so as not to ‘break the seals’ on the Denver vault doors, but this shipping of 3 gold bars from upstate New York to Denver would seem completely unnecessary if Denver was storing  a couple of tonnes of gold, let alone 1,362 tonnes. The more accurate answer may be that the US gold, if it even exists to the extent to which the US Treasury claims, is held adjacent to US military bases at West Point and Fort Knox. 

Deutsche Bank agrees to settle with Plaintiffs in London Silver Fixing litigation

In a surprising development, a group of plaintiffs in an antitrust litigation case against Deutsche Bank, HSBC Bank plc, the Bank of Nova Scotia, and UBS AG, have just announced that Deutsche Bank is in the process of negotiating the formal terms of a settlement agreement with the plaintiffs. Deutsche Bank, HSBC and Scotia are the only members of the London Silver Market Fixing Limited, a private company that had operated the London Silver Fixing auctions until mid August 2014, after which time that auction was superseded by the LBMA Silver Price auction.

The case (# 1:14-md-02573-VEC) is being overseen as a class action suit by federal judge Valerie E Caproni in the US District Court for the Southern District of New York. A large number of different plaintiffs had taken similar actions and the cases were consolidated into one class action suit. The plaintiffs allege in the suit that Deutsche Bank, HSBC and Scotia colluded to fix the price of silver futures by publishing false silver prices, so that they, as members of London Silver Market Fixing Company would benefit (from the price movements).

The full 1 page letter from the plaintiffs legal representatives Lowey Dannenberg, Cohan & Hart can be read here -> Deutsche letter to Caproni – 13 April 2016 – London Silver Fixing – Lowey Dannenberg Cohen Hart.

In a shocking development for the remaining defendants and the entire future of the current LBMA Silver Price auction, owned by the LBMA, administered in London by Thomson Reuters and calculated by the CME Group,  the letter states that:

“In addition to valuable monetary consideration, Deutsche Bank has also agreed to provide cooperation to plaintiffs, including the production of instant messages, and other electronic communications, as part of the settlement. In Plaintiff’s estimation, the cooperation to be provided by Deutsche Bank will substantially assist Plaintiffs in the prosecution of their claims against the non-settling defendants.

The plaintiffs include Modern Settlings LLC (of New York and Florida), American Precious Metals Ltd, Steven E Summer, Christopher Depaoli, Kevin Maher, Jerry Barrett, Rebeccca Barrett, KPFF Investment Inc, Don Tran, and Laurence Hughes.

The defendants include Deutsche Bank AG and various other Deutsche Bank entities, HSBC Bank Plc, HSBC Bank USA NA, HSBC Holdings Plc, and various other HSBC entities, The Bank of Nova Scotia, and various other Scotia entities, and finally The London Silver Market Fixing Ltd.

Coming on the heels of the unresolved and unexplained fiasco that is the LBMA Silver Price auction and the broken promises by the London Bullion Market Association (LBMA) about greater auction transparency and wider participation in the new Silver auction (see BullionStar blog “The LBMA Silver Price – Broken Promises on Wider Participation and Central Clearing“) it seems difficult to envisage that the LBMA Silver Price can survive in its current form, with its current participants, of which 2 of the remaining 5 participants are HSBC and Scotia. It will also be interesting to see what the Financial Conduct Authority (FCA) will say about this development with Deutsche Bank, especially in light of the fact that HSBC and Scotia are now participating in a ‘Regulated Benchmark’ (the LBMA Silver Price), where price manipulation can be criminally prosecuted.

London Silver Market Fixing Limited

The directors of the London Silver Market Fixing Limited company in the months before it ceased doing the London Silver Fixing auctions, were Simon Weeks of Scotia, Matthew Keen of Deutsche Bank, and David Rose of HSBC, with alternate directors of David Wilkinson of Scotia, James Vorley of Deutsche Bank and Peter Drabwell of HSBC. Since the above list was drawn up, UK Companies House filings show that, for London Silver Market Fixing Limited, David Rose ceased to be a director on 5 January 2016, David Wilkinson ceased to be a director on 16 October 2015, James Vorley ceased to be a director on 27 May 2014, and Matthew Keen ceased to be a director on 18 February 2014. According to those filings, it means that Simon Weeks of Scotia and Peter Drabwell of HSBC are still directors of the company that is a defendant in the above New York class action suite.

Surprisingly to some, Simon Weeks of Scotia is listed on the website of LBMA Silver Price administrator Thomson Reuters as still being a member of the LBMA Silver Price Oversight Committee. See list here. Furthermore, the same Simon Weeks is still listed as being a member of the LBMA Gold Price Oversight Committee, chaired by ICE Benchmark Administration. See list here.

Some of the above directors names will also be familiar to readers as directors of the London Gold Market Fixing Limited company, as profiled in the ZeroHedge article “From Rothschild To Koch Industries: Meet The People Who “Fix” The Price Of 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.