346 tonnes of gold at the BIS

[Ben]

Re: 346 tonnes of gold at the BIS

I'm more thinking that they slowly unload in a way that depresses the price, but doesn't crash it. Yes, it's quite small relative to deficits, but it seems like governments today in Europe are after every billion, and you can't count on them to be rational in choosing where to make savings.
Of course they could crash it, and then they can't sell any more gold to cut the deficit, but then so what? It's terrible for us, but not so bad for them.
I think investment demand in 09 was only around 0.5 tonnes, so even a small selling of 10-20% by Europe could depress things for a while.

[big67]

Re: 346 tonnes of gold at the BIS

Looks like commercial banks did the swap...

http://jessescrossroadscafe.blogspot.com/2010/07/bis-and-gold-swaps-curiouser-and.html

[GRG55]

Re: 346 tonnes of gold at the BIS

Looks like commercial banks did the swap...

http://jessescrossroadscafe.blogspot.com/2010/07/bis-and-gold-swaps-curiouser-and.html

What a surprise...

[charliebrown]

Re: 346 tonnes of gold at the BIS

The tonage numbers seem off ...
At http://usdebtclock.org/gold-precious-metals.html
Just Germany has roughly 120M oz of gold which is 3700 Tons of gold.
120M oz of gold is worth 120B USD. if gold is at $1000 per oz.

Adding up the rest of the numbers on the sight gives us 380M oz or 11,000 tons.
at $1200 USD comes up to 450B dollars.
So the total dollar amount of 436B is about right, the tonnage if off.
Unless by tons you mean Kilo-tons.

Don't want to nit pick, but I have 8000 ton number of the US commited to memory, then when I
saw the 10 tons in europe, something didn't add up.

Maybe china can arrange to swap half of its U.S T's for all the gold in europe?? . Europe can't sell all its gold without crashing the market, and china can't sell its T's without crashing the market either, seems like a good trade

[big67]

Re: 346 tonnes of gold at the BIS

To me the real question is why the BIS is willing to take this risk on its balance sheet.

While swapping with a Central Bank provides a guarantee, swapping with a commercial bank means that if the price of gold goes up, the commercial bank buys it back risk free and wins, if the price of gold goes down, the commercial bank leaves the gold to the BIS, the BIS takes an haircut and the commercial bank wins either...

...so I am really puzzled by the BIS move.

Who is going to pay if the BIS takes a 50 to 100 Billion $ haircut on the swap?