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Robert Lambourne: BIS gold swaps fall sharply in February, hinting at price reset
By Robert Lambourne
Sunday, March 10, 2024
Gold swaps undertaken by the Bank for International Settlements appear to have fallen sharply in February, according to the bank's monthly statement of account published last week:
https://www.bis.org/banking/balsheet/statofacc240229.pdf
The new statement allows an estimate of 68 tonnes of gold swaps at month's end, a 49-tonne reduction from January, when the estimated swaps were 117 tonnes.
Hence it appears that February was a much busier month than January for BIS intervention in gold.
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The table below sets out the historical level of monthly gold swaps estimated since August 2018.
As is evident from the table, the BIS monthly statements are proof that there is still a considerable level of gold being traded via these swaps. To repeat the point long made in these reports for GATA, it seems that these swaps are undertaken by the BIS for one or more of their central bank customers, with the swapped gold being accounted for as being held in a BIS-registered sight account at a central bank.
Given what is happening in the gold market more generally, it appears reasonable to assume that the Federal Reserve is the BIS' customer for these gold transactions.The evidence strongly suggests that the source of this gold is bullion banks and the likelihood is that this gold comes from gold registered as being held by gold exchange-traded funds.
If the normal pattern of disclosures from the BIS is followed this year, then it is possible that the bank's March statement of account will not be published for about the next 12 weeks, a substantial delay. Hence if, as regularly speculated recently, there are shortages of gold affecting the Fed that might force it to reset the gold price, this period presents a good opportunity for a reset to occur.
The main reason for this conclusion is that given its relationship with the BIS, the Fed is highly unlikely to default on these swaps regardless of the severity of gold shortages. Hence, reducing the level of swaps even more substantially before a reset seems to be a highly plausible course of action, since a reset could be arranged more easily amid reduced scrutiny of BIS intervention.
A more detailed report on the use of gold swaps was published recently to cover transactions in December 2023:
https://www.gata.org/node/23016
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Swaps estimated by GATA from BIS monthly statements of account
Month ….. Swaps
& year … in tonnes
Feb-24 .... /68
Jan-24 ..... /117
Dec-23.... /121
Nov-23 .... /100
Oct-23 .... /68
Sep-23 .... /96
Aug-23 .... /129
Jul-23 .... /103
Jun-23.... /87
May-23 .... /188
Apr-23 .... /135
Mar-23 .... /77
Feb-23 ... /136
Jan-23 ... /103
Dec-22 ... /0
Nov-22 ... /105
Oct-22 ..... /7
Sep-22 ...../57
Aug -22 ..... /75
Jul-22 ..... /56
Jun-22 ..... /202
May-22 ..... /270
Apr-22 ..... /315
Mar-22 .... /358
Feb-22 .... /472
Jan-22 ..... /501
Dec-21.... /414
Nov-21.... /451
Oct-21.... /414
Sep-21 .... /438
Aug-21 .... /464
Jul-21 .... /502
Jun-21 ..../471
May-21 ..../517
Apr-21 .... /472
Mar-21.... /490
Feb-21 ...../552
Jan-21 .... /523
Dec-20 .... /545
Nov-20 .... /520
Oct-20 .... /519
Sep-20...../ 520
Aug-20...../ 484
Jul-20 ..... / 474
Jun-20 .... / 391
May-20 .... / 412
Apr-20 .... / 328
Mar-20 .... / 326
Feb-20 .... / 326
Jan-20 .... / 320
Dec-19 .... / 313
Nov-19 .... / 250
Oct-19 .... / 186
Sep-19 .... / 128
Aug-19 .... / 162
Jul-19 ..... / 95
Jun-19 .... / 126
May-19 .... / 78
Apr-19 ..... / 88
Mar-19 .... / 175
Feb-19 .... / 303
Jan-19 .... / 247
Dec-18 .... / 275
Nov-18 .... / 308
Oct-18 .... / 372
Sep-18 .... / 238
Aug-18 .... / 370
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Robert Lambourne is a retired business executive in the United Kingdom who consults for GATA about the involvement of the Bank for International Settlements in the gold market.
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