BIS gold market intervention increased again in February

Section:

By Robert Lambourne
Tuesday, March 10, 2020

According to its recently published February statement of account, the Bank for International Settlements, which represents most central banks, appears to have increased its position in gold swaps and gold-related derivatives by 6 tonnes over its position at the end of January, bringing it to an estimated 326 tonnes.

The bank's use of gold swaps and derivatives has risen by more than 300 percent since May 2019, when it stood at 78 tonnes.

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The BIS uses gold swaps and other gold derivatives to gain access to gold held by commercial banks.

There is not enough information in the BIS' monthly reports to calculate the exact amount of swaps, but based on the information in its statement for February, the bank's month-end gold swaps were about 326 tonnes, compared to 320 tonnes at January 31, 2020, 313 tonnes at December 31, 2019, 250 tonnes at November 30, 2019, 186 tonnes at October 31, 2019, 128 tonnes at September 30, 2019, 162 tonnes at August 31, 2019, 95 tonnes at July 31, 2019, 126 tonnes at June 30, 2019, 78 tonnes at May 31, 2019, 88 tonnes at April 30, 2019, 175 tonnes at March 31, 2019, 303 tonnes at February 28, 2019, 247 tonnes at January 31, 2019, 275 tonnes at December 31, 2018, and, previously in 2018, 308 tonnes in November, 372 tonnes in October, 238 tonnes in September, and 370 tonnes in August.

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, 2019, 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 financial news organizations don't ask about it or call attention to it, though it seems to signify an intense interest in what some market analysts disparage as a "pet rock.".

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Robert Lambourne, a retired business executive in the United Kingdom, is a GATA consultant.

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