You are here
What is Bank of England doing in the gold market, and why? Press again fails to ask
9:36a ET Sunday, February 9, 2025
Dear Friend of GATA and Gold:
Imagine that you had more than an hour to question the governor of the Bank of England and several of his top assistants in the middle of great turmoil in the London gold market. Would you be prepared with a few critical and even inconvenient questions?
Such an opportunity presented itself on Thursday as bank officials held a press conference to announce the latest decision of the bank's Monetary Policy Committee about interest rates. Many journalists from major financial news organizations were in the auditorium but only one, a reporter from Central Banking magazine, asked a question about gold, and only about how much gold lately had left the bank's vault. She was told that gold bars vaulted at the bank were down about 2% since last year and that the bank's storage clients were facing substantial delays in getting hold of their metal because it's heavy and moving it is cumbersome.
... Dispatch continues below ...
... ADVERTISEMENT ...
Guanajuato Silver Is Reactivating Silver and Gold Mines in Mexico
Guanajuato Silver is a precious metals producer reactivating past-producing silver and gold mines in central Mexico. The company produces silver and gold concentrates from the El Cubo Mines Complex, Valenciana Mines Complex, and the San Ignacio mine. All three mines are located within the state of Guanajuato, which has a 480-year mining history.
Additionally, the company produces silver, gold, lead, and zinc concentrates from the Topia mine in northwestern Durango state.
With four operating mines and three processing facilities, Guanajuato Silver is one of the fastest growing silver producers in Mexico.
For more information, please visit:
The entire press conference was video-recorded by the Bank of England and posted on YouTube here. The question about the departing gold bars is asked at the 31:34 mark.
No one asked about exactly what the Bank of England has been doing lately and traditionally in the gold market, particularly with gold leasing, though recent news reports, including this one from Bloomberg News, have noted that the bank is a center of gold leasing:
https://finance.yahoo.com/
"Some central banks," the Bloomberg report said, "look to earn a return by lending out their gold when rates do rise. Since they predominantly hold their gold at the Bank of England, that means the bullion in its vault is often a key source of liquidity in moments of market tightness.
"'The bottleneck was created by an onslaught of bullion banks looking to borrow gold from central banks at the Bank of England, and the fact that the Bank of England is not a commercial vault and is not prepared to handle this, thus creating queues,' said Robert Gottlieb, a former precious metals trader and managing director at JPMorgan Chase."
But there long has been another purpose to gold leasing by central banks, a purpose acknowledged by the chairman of the U.S. Federal Reserve, Alan Greenspan, in testimony to Congress in 1998:
https://www.federalreserve.
Greenspan was urging Congress not to try regulating financial derivatives, and he argued that such regulation was particularly unnecessary in regard to gold, because central banks could make sure that no one but themselves could ever corner the gold market.
Greenspan said: "Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over the counter, where central banks stand ready to lease gold in increasing quantities should the price rise."
That is, gold leasing is a mechanism of price control available to central banks, and central banks are, or were, well equipped to use it to control the gold market.
Several times over the years GATA has asked the Bank of England for an explanation of its involvement in gold leasing. We would like to know, among other things:
-- What are the bank's policy objectives with gold leasing?
-- Why does the bank co-mingle in its vault its own gold reserves and the gold reserves of other central banks with the gold of commercial banks, if not to create a much bigger stock of gold for intervention in the gold market through leasing and swapping of gold?
-- How active are the Bank of England, its client central banks, and its client bullion banks -- nominally non-government banks -- in gold leasing at any particular time?
-- Why shouldn't the public and all market participants have access to the details of such interventions, since they affect market prices?
In 2011, through a supporter in the United Kingdom, GATA asked for an accounting of the UK's gold reserves that distinguished between the government's unencumbered reserves and government gold reserves that were loaned or swapped:
https://www.gata.org/node/
A spokeswoman for the bank replied that such information was potentially "market-sensitive" and "if we were to reveal how much gold has been swapped or is on loan on any given day ... then that would allow enquirers to find out what gold transactions have been taking place. Release of this potentially market-sensitive information day by day could be detrimental to the government's financial interests."
The spokeswoman added that the bank "owes a duty of confidentiality" to its "private customers."
At least "market-sensitive" was an admission that what the bank was doing in the gold market was influencing prices.
In 2021 GATA asked the bank if it had leased gold in the last 12 months. A bank spokeswoman acknowledged GATA's inquiry but replied only: "I am afraid that there is no further information that can be provided":
https://www.gata.org/node/21025
That governments and especially their treasuries and central banks sometimes obscure, conceal, deceive, and even lie to cheat people and defeat democracy isn't exactly news. That financial journalists refuse to pursue evidence of this cheating, even when they have easy opportunities, is why governments, their treasuries, and central banks keep getting away with it.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
* * *
GATA is grateful to these companies for their recent support:
Apollo Silver Corp.
Barksdale Resources
Dolly Varden Silver Corp.
Dryden Gold Corp.
Group Eleven Resources
Guanajuato Silver
IBK Capital Corp.
Independent Trading Group
Mining Discovery
Power Nickel
Silver North
Strike Point Gold
The National Investor
The Prospector
Western Alaska Minerals
* * *
Support GATA by purchasing
Stuart Englert's "Rigged"
"Rigged" is a concise explanation of government's currency market rigging policy and extensively credits GATA's work exposing it. Ten percent of sales proceeds are contributed to GATA. Buy a copy for $14.99 through Amazon:
* * *
Help keep GATA going:
GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:
To contribute to GATA, please visit:
Donations of $250 will entitle the donor to a 1-ounce silver round commemorating GATA's work:
https://www.gata.org/sites/default/files/GATA-silver-round-front.png
