As of December 31 the bank’s swaps and derivatives were at their highest level since February 2019…
Since May 2019 the Bank for International Settlements, which represents most central banks, has increased its use of gold swaps and other gold-related derivatives from an estimated 78 tonnes to an estimated 313 tonnes as of December 2019.
The bank’s total gold swaps and derivatives stood at 250 tonnes in November 2019.
The BIS uses gold swaps and other gold derivatives to gain access to gold held by commercial banks. As of December 31 the bank’s swaps and derivatives were at their highest level since February 2019. But the recent levels are still reduced compared to several months in the second half of 2018.
There is not enough information in the BIS’ monthly reports to calculate the exact amount of swaps, but based on the information in the bank’s statement for December, posted today —https://www.bis.org/banking/balsheet/statofacc191231.pdf
— its month-end gold swaps of about 313 tonnes compare with 250 tonnes at November 30, 2019, 186 tonnes at October 31, 128 tonnes at September 30, 162 tonnes at August 31, 95 tonnes at July 31, 126 tonnes at June 30, 78 tonnes at May 31, 88 tonnes at April 30, 175 tonnes at March 31, 303 tonnes at February 28, 247 tonnes at January 31, 275 tonnes at December 31, 2018, and 308 tonnes in November, 372 tonnes in October, 238 tonnes in September, and 370 tonnes in August 2018.
More background on the bank’s medium-term history of using gold swaps is available here:
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:
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 —
— and mainstream financial news organizations refuse to ask about it.
Robert Lambourne is a retired business executive in the United Kingdom who consults with GATA about the involvement of the Bank for International Settlements in the gold market.
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