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On Wednesday Finland gave in to public
pressure and revealed where she stores her gold reserves. The statement
followed a press release by the Bank of Sweden on similar lines released on
Monday.
The totals (in tonnes)
for these two Scandinavian countries are as follows:
|
Location
|
Sweden
|
Finland
|
|
Bank of England
|
61.4
|
25.0
|
|
Swedish Riksbank
|
15.1
|
9.8
|
|
New York Fed
|
13.2
|
8.8
|
|
Swiss National Bank
|
2.8
|
3.4
|
|
Bank of Finland
|
-
|
2.0
|
|
Bank of Canada
|
33.2
|
-
|
|
Total
|
125.7
|
49.0
|
So far, so good. But then the Head of
Communications for the Bank of Finland added some more information in Finnish
in
a blog run on the Bank's website. It is not available in English, so I
asked her for a translation, but I am still waiting.
Instead, a Finnish reader of my own
blog and a Finnish journalist who has been following this topic have
independently given me an English translation of a highly relevant and
interesting paragraph, three from the end. This is the journalist's:
"Maximum half of the gold has
been within investment activity over the years. Gold has been invested among
other things in deposits similar to money market deposits and using gold
interest rate swaps. Gold investment activity is common for central banks.
The risks associated with gold investments are controlled using limits,
investment diversification and limitations concerning duration."
And my reader's translation:
"Throughout these years no more
than half of the gold has been invested. Gold has been invested in for
example deposits similar to money market deposits and gold interest rate swap
agreements. Gold investment activities are common for central banks. Risks
related to gold investments are controlled with limits, decentralising
investments and limits regarding run times."
Half Finland's gold is stored at the
Bank of England, and "no more than half" is "invested".
If any "investment" is to take place it would be in London. It is
not immediately clear what is meant by invested, but presumably this is a result
of translation of what has happened from English into Finnish plus
explanation for a non-specialist readership. However if it has been invested,
then by definition it is no longer in the possession of the Bank of Finland,
and will most probably have been sold into the market in return for a promise
to redeliver at a later date. This follows the Austrian National Bank's
admission to a parliamentary committee a year ago that it had earned EUR300m
by leasing its gold through London.
The evidence is mounting that Western
central banks through the Bank of England have been feeding monetary gold
into the market through leasing operations. Indeed, the Finnish blog says as
much: "Gold investment activities are common for central banks".
This explains in part how the
voracious appetite for gold by China, India and South-East Asia is being
satisfied, without the gold price rising to reflect this demand. It is also
consistent with my disclosure earlier this year of the discrepancy of up to
1,300 tonnes between the gold in custody as
recorded in the Bank of England's Annual Report, dated 28th February 2013 and
the amount recorded on the virtual tour on the Bank's website the following
June.
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