How do you say rehypothecation in Australian? 

After months of persistence, our friend Greg from AUSBullion has received written confirmation from the Reserve Bank of Australia that the bank holds all but 80 kg of Australia’s gold reserves at the Bank of England.  Out of 80 tons of physical gold, less than 0.1% is held in Australia!

The Central Bank defends London’s storage/rehypothecation of Aussie gold, stating: London is a major global gold trading market and the Bank of England provides a secure and cost-effective storage location for central banks and market participants. The Reserve Bank has processes in place to ensure that the gold reserves are maintained appropriately. It is not considered necessary from management, security or operational  perspectives to relocate the gold bars to a facility in Australia.

The Bank of Australia’s admission that nearly all of Australia’s gold reserves are on deposit at the BOE is below:

 

From AUSBullion‘s Blog:

 

As at end-June 2011 the Reserve Bank of Australia held 80 tonnes of gold in London Good Delivery bars. The Reserve Bank holds 99.9 per cent of its gold reserves in the United Kingdom at the Bank of England. The remaining 0.1 per cent is held at the Reserve Bank’s Head Office in Sydney.
London is a major global gold trading market and the Bank of England provides a secure and cost-effective storage location for central banks and market participants. The Reserve Bank has processes in place to ensure that the gold reserves are maintained appropriately. It is not considered necessary from management, security or operational  perspectives to relocate the gold bars to a facility in Australia.
The Reserve Bank has reviewed its approach to releasing details about its management of the physical reserves of gold and decided to release the above information.
Please note that we answered your previous questions as a routine public enquiry.  The FOI Act concerns itself with the release of documents, rather than answering questions, so a request must seek documents to be valid.
Regards

Chris Collins | Manager | Media & Public Relations Office
RESERVE BANK OF AUSTRALIA | 65 Martin Place, Sydney NSW 2000
p: +61 2 9551 9830 | f: +61 2 9551 8033 | w: www.rba.gov.au

    • The problem is because Australia has been insulated to a degree from the GFC by China, most people aren’t even aware there is any sort of global financial crisis. I should know, I live here. Sales of SUV’s are through the roof but the housing market has slowed. The head of the RBA is hoping to re-inflate the housing bubble to take the place of the resources boom. What a total moron. By the way, the self-proclaimed genius, former Treasurer Peter Costello sold off most of the gold in the late 1990s at the bottom of the market. I would think that gold and silver ownership in Australia would probably be even lower per capita than in the US/Europe.

    • “The head of the RBA is hoping to re-inflate the housing bubble to take the place of the resources boom. What a total moron.”

      Agreed, Les.  That experiment has already been tried here in the US and it is a miserable failure.  What these financial morons do not grasp is that economics has real rules and even laws.  It is also reactive, so when Govs and Central Banks try to distort the market into doing what they want done, the market reacts to un-do what they have tried.  It’s a lot like trying to hold a beach ball underwater.  You can do it briefly but it WILL surge to the surface at some point and usually sooner rather than later.  The US housing market was badly over-bought by people speculating and flipping homes for quick and easy unearned profits.  This caused home prices to shoot up rapidly and well out of proportion to the actual fair market value of homes in particular areas, such as in Florida, Las Vegas, Southern California, etc.  This was a true bubble and like all bubbles before it, a reduction in internal pressure was needed… some of the extra air in the bubble HAD to come out.  Keynesians and other idiots saw this as deflation, which it was, but it was also a badly needed but temporary fix for an over-heated market in some locations.  As the air came out of the housing bubble, Bernanke and others tried their best to re-inflate it.  Not only was this unwise, it was next to impossible, and the market asserted its sense of true value regardless of Fed actions.  I suspect that something similar will happen in the Australian home market, as they seem to be trying the same “fix” that has already failed here.
       

  1. Thanks Doc for posting the story I broke yesterday. Unfortunately UglyDog speaks the truth, almost no Aussies will get enraged about this story, as most own no gold other than jewellery they wont care where or even if the RBA has any gold. When it come to the RBA all most Aussies care about is whether the bank is going to manipulate interest rates up or down.

    The RBA’s gold scales are a museum piece for a reason.

     

  2. It’s too bad the Australians seem to be afflicted with the American disease.  “We don’t about our gold;  just give us our free stuff and have the bankers lie to us, we trust the gummint”
    This does not apply to all Australians, or all Americans. It just  seems so prevalent.  Where’s Crocodile Dundee when you need him.

  3. As an Australian, the majority of my friends and aquaintances are focused on entertainment in one form or another. Those who have an interest in politics, are generally conerned with special interests and obtaining short term budget allocations for unemployment, disabilities, medical entitlements etc, which are of course in their interest.

    Its a lonely road being a big picture, PM investor in Australia.

    • “Its a lonely road being a big picture, PM investor in Australia.”

      Following “the high road” usually is because so many seek the much easier low road instead.  If the world economy drops into the crapper, however, all of us who stack PMs will be FAR better off than those who do not.  Their daily “entertainment” will then consist of begging for something to eat. 

  4. I have 13 grams of gold (assayed around 80%) I panned out of the creek down the road a few years ago. It took just under 90 hours of hard work, several broken shovels, and a lot of mosquito bites to pan it, but it is mine… all mine. Maybe one day I will let you see it. I did learn a few things; Off repellent is useless, steel handle shovels are a great improvement over wooden ones, and I should move to the Coast where I won’t be tempted to do it again. There really is a gold bug that bites humans and causes a fever.

    • ” There really is a gold bug that bites humans and causes a fever.”

      Indeed there is… and a silver bug as well.  While there is no cure, frequent purchases of these metals DOES reduce the symptoms for a while. 

  5. “London is a major global gold trading market and the Bank of England provides a secure and cost-effective storage location for central banks and market participants.”

    Indeed.  But then, so are Singapore and Honk Kong and they are MUCH closer to Australia than is London.

    As in the US, gold storage in foreign vaults has long out-lived its usefulness.  As Australians feared a Japanese invasion in the 1940s or as European countries feared Nazi invasions, storing their national gold hoards in a more secure location WAS a wise idea.  Those days are long gone, though, and the sincerity of those holding the gold of others has come into question.  Germany seems to have about 1500 tons of gold in the vaults of the NY Fed… at least, that is what their gold receipts show.  How then is it so difficult to return part of this gold to its lawful owner upon their request or even simply view their holdings?  Clearly, these un-audited central banks have been playing fast and loose with other people’s money for so long that they have come to believe that it is, in fact, their own money. If there is any of this gold remaining in US or UK vaults, it will not be returned during any imaginable monetary collapse situation.  Banksters do indeed have sticky fingers… VERY sticky fingers… and once they hold the wealth of others in their claw-like hands, LOOK OUT!
     

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