Euro Area CB's Sold about 180 Tons of Gold in 2005

Wednesday, June 22, 2005

The 12 central banks (CB's) of the Eurozone have sold roughly 180 tons of gold since January 1 with a value of 2.104 billion Euros. Only in the last 3 weeks reported, gold with a Euro-value of 432 million Euros has been sold. This despite a contradicting statement discussed in the post "ECB sold gold despite saying otherwise earlier." Altogether the net value position of "gold and gold receivables" (see note at the end) has seen a decline of 3.52 billion Euros since January 2 which is the result of the gold sales and a revaluation of the gold assets on the back of dollar that rose more than 12 percent since the beginning of the year. Is gold that bad in the eyes of the Eurozone CB's that they chose to avoid a paper-profit of some 15 billion Euros which would have come by simply doing nothing?
As the ECB reports only the number, but not the location of central banks who sold gold in their weekly financial statements, I tried to dig out this information from the statements of the national central banks themselves.
Adhering to the old rule "follow the money" I went to the Banca d'Italia's website as I thought a country with huge imbalances might be tempted to take advantage of a gold price close to its 2005-high of 443 dollars an ounce. My research into the transactions of a unified Europe stops here: The statistical part is in Italian only. A link promising useful information yields the same result: Italian only.
In Portugal, where the budget deficit is approaching 7 percent of GDP, there is a working English version of the website of the Banco do Portugal, alas they only provide you with quarterly net changes of the BdP's reserve positions - latest data from March. Gold is not given an extra line in the table. But they tell you the number of consumed bednights in Portugal's hotels. Yes, I know I'm being cynic. I just can't help it.
So much about transparency in a united Europe where every law regarding roadsigns, the labeling of Parma ham or whatever else has to be translated into every member language at an annual cost of 1 billion Euros.
Central banks are a very special elite, The Prudent Investors growls. For a confirmation of this I browsed Hungary's central bank website. Don't inflict that pain on yourself when trying to find current useful information in a broadly understood language.
A further note on gold: Those central banks who are so nice to report on their gold holdings will only give a combined position of gold and gold receivables. The first item is the real stuff while the second is gold they have a claim on. How was that stuff about counter-party risk?
UPDATE: The Russian news agency Interfax reported today the following:
A total of 37 commercial banks had ordered 150 tonnes of gold from Russian producers by the middle of June, a source at the Gokhran or precious metals and gemstones repository told Interfax.
Last year, 51 banks ordered 194.5 tonnes of gold.
Banks do not always buy as much gold as they order, though. Russia only produced 180.5 tonnes of gold last year. Production grew 3.7% year- on-year to 41.2 tonnes in January-May this year and could total 183 tonnes in 2005 as a whole, the Russian Gold Producers' Union has said.


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