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Robert Lambourne: BIS gold swaps and derivatives at highest point since February
By Robert Lambourne
Tuesday, December 17, 2019
In the past two months the Bank for International Settlements, which represents most central banks in the world, has nearly doubled its gold swaps and derivatives position, the bank's October and November statements of account show:
https://www.bis.org/banking/balsheet/statofacc191031.pdf
https://www.bis.org/banking/balsheet/statofacc191130.pdf
The BIS uses gold swaps and other gold derivatives to gain access to gold held by commercial banks. As of November 30 the bank's swaps and derivatives, estimated at 250 tonnes, were at their highest level since February. But the recent levels are still much reduced compared compared to those of the second half of 2018.
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There is not enough information in the BIS' monthly reports to calculate the exact amount of swaps, but based on the information in the bank's statement for November, its month-end gold swaps of about 250 tonnes compare with 186 tonnes at October 31, 128 tonnes at September 30, 162 tonnes at August 31, 95 tonnes at July 31, 126 tonnes at June 30, 78 tonnes at May 31, 88 tonnes at April 30, 175 tonnes at March 31, 303 tonnes at February 28, 247 tonnes at January 31, 275 tonnes at December 31, 2018, and 308 tonnes in November, 372 tonnes in October, 238 tonnes in September, and 370 tonnes in August 2018.
More background on the bank's medium-term history of using gold swaps is available here:
http://www.gata.org/node/18825
On February 3 this year GATA published comments from a former gold industry executive describing the activities of the BIS in gold swaps in earlier decades:
http://www.gata.org/node/18828
The former executive wrote: "Effectively this process created a supply of 'paper gold' -- sometimes but not always marked to market -- that had a depressing effect on the gold price."
The BIS refuses to explain its activity in the gold market -- its objectives and underlying parties in interest --
http://www.gata.org/node/17793
-- and mainstream financial news organizations refuse to ask about it.
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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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