With BIS intervention rising sharply in October, gold price stalled

Section:

By Robert Lambourne
Friday, November 9, 2018

After falling in August and September, intervention in the gold market by the Bank for International Settlements via gold swaps increased substantially in October, according to the bank's monthly statement of account, published this week:

https://www.bis.org/banking/balsheet/statofacc181031.pdf

The bank's August and September statements are here:

https://www.bis.org/banking/balsheet/statofacc180831.pdf

https://www.bis.org/banking/balsheet/statofacc180930.pdf

Perhaps not coincidentally, the gold price rose in August and September as the BIS reduced its intervention in the market and then stalled and leveled out in October as the bank greatly increased its intervention again.

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The monthly statements of the BIS give only summary information on the bank's use of gold swaps and other gold-related derivatives. The information in the statements is not sufficient to calculate a precise amount of gold-related derivatives, including swaps. But, after subtracting the gold reported owned by the BIS itself, the bank's total estimated gold exposure as of October 31 was around 372 tonnes -- 134 tonnes, or 56 percent, greater than the approximately 238 tonnes as of September 30.

As of August 31 the bank's total estimated gold exposure was around 370 tonnes and around 485 tonnes as of July 31.

When it comes to its activities in the gold market, the BIS provides little information on what it is doing, why, and for whom:

http://www.gata.org/node/17793

But the bank continues to trade actively in gold swaps to source gold to its member central banks and other financial entities, as evidenced by the increase in October.

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Robert Lambourne is a retired business executive in the United Kingdom who consults with GATA about the involvement of the Bank for International Settlements in the gold market.

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