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ECB starts reporting unallocated gold, but is it the whole story?

Section: Daily Dispatches

1:35p ET Monday, March 7, 2016

Dear Friend of GATA and Gold:

Our friend the Dutch economist Jaco Schipper reports an increase in transparency about gold in the monthly reserve asset reports of the European Central Bank.

Since last August, Schipper notes, the ECB's monthly report has been distinguishing the allocated from the unallocated gold in the holdings of its member central banks, with less than 2 percent of the gold now being reported unallocated. That is, almost all the gold of the members of the European Central Bank is reported as being specifically identified as owned by those banks in whatever vaults are storing it, and little of their gold has consisted of mere credits with other institutions:

But the ECB continues to combine gold deposits and gold swaps in a single line in its reserve report and does not identify the counterparties of the swaps and the locations of the swapped gold, putting in question both the central bank's overall gold position and the degree of its secret intervention in the gold market, direct and indirect.

... Dispatch continues below ...


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Indeed, the implication of its monthly report that the ECB is nearly out of the gold market contradicts recent statements by Alexandre Gautier, the director of market operations for the Banque de France, an ECB member, who told meetings of the London Bullion Market Association in 2013 and 2014 that the Banque de France is trading gold for its own account and the accounts of other central banks "nearly on a daily basis" and that central banks lately have been managing their gold reserves "more actively":

Of course the ECB's new accounting was implemented subsequent to Gautier's statements, so the practices of the ECB and its members may have changed since Gautier spoke. Certainly the ECB's greater transparency is an improvement. But as long as the central bank combines gold deposits and gold swaps in a line item, failing to distinguish them, any funny business is possible. And surely the ECB knows a lot more about central bank intervention in the gold market than it is telling.

After all, the interview done by Kitco News last October with Peter Mooslechner, executive director of Austria's central bank, another ECB member bank, in which he acknowledged that Asian central banks were both acquiring gold and "using their reserves in trading in the market and intervening into the market," confirmed that central banks know very well what each other is doing surreptitiously in the gold market and why:

That is, all major central banks are party to gold market manipulation. They're just not telling the whole story to the rest of us, lest the world financial system start enjoying free markets and risk becoming more democratic.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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