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Scunnered

Telegraph: Secret Gold Swap Has Spooked The Market

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OK, I know it's about gold, but it looks as if there might be wider ramifications than usual.

Secret gold swap has spooked the market

It takes a lot to spook the solid old gold market. But when it emerged last week that one or more banks had lent 380 tonnes of gold to the Bank of International Settlements in return for foreign currencies, there was widespread surprise and confusion.

The news that a mystery bank has just pawned the family jewels gave traders a jolt – nervous about the sudden transfer of almost 20pc of the world's annual gold production and the possibility of a sell-off.

In a tiny footnote in its annual report, the bank disclosed its unusually large holding of gold, compared with nothing the year before. The disclosure was a large factor in the correction of the gold price this week, which fell below $1,200 for the first time in more than a month.

...

At first it looked like the BIS was swapping gold with a troubled central bank. After all, the institution is the central bankers' bank and its purpose to conduct transactions with national monetary authorities.

Central banks in the troubled southern zone of Europe were considered the most likely perpetrators.

According to the World Gold Council, central banks in Greece, Spain and Portugal held 112.2, 281.6 and 382.5 tons of gold respectively in June – leading analysts to point fingers at Portugal, or a combination of the three.

But Edel Tully, an analyst from UBS, noted that eurozone central banks would be severely limited with what they could do with the influx of extra cash – unable to transfer it straight to governments or make use of the primary bond markets.

She then listed the only other potential monetary authorities with enough gold as the US, China, Switzerland, Japan, Russia, India and Taiwan – and the International Monetary Fund.

This led to musings that the counterparty was the IMF, making sense because the lender of last resort is historically prone to cash shortages and has been quietly selling off gold in the first half of the year.

[continues...]

Wikipedia says the UK's only got 310 tonnes, so presumably it wasn't us.

Edited by Scunnered

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This is mad.

This led to musings that the counterparty was the IMF, making sense because the lender of last resort is historically prone to cash shortages and has been quietly selling off gold in the first half of the year.

What, so the IMF is bust?

The other mad thought I had was that BIS are gonna short the gold market - it's going well so far...

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This exactly the reason why gold will drop in a deflationary environment. People need cash to pay for things. You can't buy a loaf of bread with a gold nugget. I would be out of gold.

Edited by soldintime

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I'm led to believe that at the start of the WW2 the majority of Britains gold reserves where shipped to Fort Knox for save keeping never to be returned. Can anybody find out how many tons where shipped?

I can see that the us gold reserves nearly doubled from 10k tons to 20k tons plus by the end of the war.

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This exactly the reason why gold will drop in a deflationary environment. People need cash to pay for things. You can't be a loaf of bread with a gold nugget. I would be out of gold.

Deflation???

Try devaluation!

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This exactly the reason why gold will drop in a deflationary environment. People need cash to pay for things. You can't be a loaf of bread with a gold nugget. I would be out of gold.

I will sell you a loaf of bread for gold any time. Better in the period of economic instability of course.

More to that, I did sell (and buy) goods for gold when people did not have enough currency of the country I lived in at the time to buy stuff. And no, it was not a deflation there. If anything, inflation rate was in 1000%s/pa.

But there is no need to take my word for it, wait for currency collapse (and we are heading towards it) and you can see for yourself.

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No! Not if you were hungry you wouldn't.

Clearly not, but then he wouldn't sell one for cash, either.

Plus a lot of what people think of as "cash" would disappear -- you can't buy bread with a deposit in a bust, unrescued bank.

Gold is not a particular victim of deflation, any more than bread is. Cash (the real folding stuff or equivalent instruments) would be king, but it would still be better to hold gold than bread; gold doesn't go mouldy or stale B)

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I would be out of gold.

Ah, observe the intriguing behaviour of the lesser spotted fool. A species destined for extinction......perhaps you would prefer these.....

http://cgi.ebay.co.uk/1913-Chinese-Reorg-100-Gold-Loan-Bond-HSBC-/170472569854?cmd=ViewItem&pt=UK_Coins_Share_Certificates_Bonds_LE&hash=item27b0f4fbfe

Edited by endgame

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I will sell you a loaf of bread for gold any time. Better in the period of economic instability of course.

More to that, I did sell (and buy) goods for gold when people did not have enough currency of the country I lived in at the time to buy stuff. And no, it was not a deflation there. If anything, inflation rate was in 1000%s/pa.

But there is no need to take my word for it, wait for currency collapse (and we are heading towards it) and you can see for yourself.

It would be hard work fixing a price for goods and services. If I know you will provide bread in return for gold than I will sell diesel fuel for gold and use that

to buy bread and you then pay the arms dealer in gold and he comes to me to buy diesel etc.

The pricing would be complex as every area would have it's own market forces and stock levels. Peoples average income would also be variable.

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Gold investors must always remember central banks hold 40 years of the worlds gold supply and can dump them on the market. It is unlikely that would happen, because it would be like slitting their own throats.

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I'm led to believe that at the start of the WW2 the majority of Britains gold reserves where shipped to Fort Knox for save keeping never to be returned. Can anybody find out how many tons where shipped?

I can see that the us gold reserves nearly doubled from 10k tons to 20k tons plus by the end of the war.

That I didn't know, but I've read somewhere that they 'look after' germanys gold, I suspect they'll never see that again!

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I'm led to believe that at the start of the WW2 the majority of Britains gold reserves where shipped to Fort Knox for save keeping never to be returned. Can anybody find out how many tons where shipped?

I can see that the us gold reserves nearly doubled from 10k tons to 20k tons plus by the end of the war.

I think the New York Federal Reserve looks after most of the central banks' gold.

That's in safe hands then.

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1198.80 -12.60 -1.04%

Wobbling very slightly below 1200 again.

Anyone's guess if the crash is coming soon or if gold has more upside potential due to inflationary forces--if any really exist.

Its getting harder to call anything much these days.

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Anyone's guess if the crash is coming soon or if gold has more upside potential due to inflationary forces--if any really exist.

Its getting harder to call anything much these days.

Now you are admitting the truth and living upto your username!

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Now you are admitting the truth and living upto your username!

What is "truth" (to paraphrase Pontius Pilate)?

Markets change so often with so many factors working together that "truth"exits but for a fleeting moment. If there is an objective truth is that the market always wins and it is cyclical in nature.

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  • 150 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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