Thursday

Western Central Banks Leasing Gold into the Market to Keep it Down

The Chinese announce their monthly gold production, so we know how much gold is produced; we just don’t get export and import data. The only data we get is that Hong Kong exports well over 1,000 tons into China. That makes it highly unlikely that China would be exporting at the same time it is importing. It’s hard to imagine that somebody isn’t supplying that market. In my mind, that someone is central banks.
I think Western central banks lease gold into the market to keep the price down. We can’t tell what they lease, because on their own balance sheets they have one line called gold and gold receivables. Of course, gold receivables is the least they put out, so they can pretend they own it. But, in fact, the gold is gone. We get no transparency whatsoever as to what part of that line is real metal and what part of it is leased gold.

Central banks think they should be totally nontransparent. As you may be aware, there has been no audit of the gold held by the U.S. Department of the Treasury since 1954. There are no physical data supplied by any central banks as to what their current positions are.

Earlier this year, Germany requested the 330 tons that it had leased to the U.S. Department of the Treasury be redelivered to Germany. At first the U.S. declined to deliver, and then it agreed to deliver the gold over seven years. There is no logistical problem with delivering gold. So why is it that when a country says it wants its gold back, which would represent approximately 4% of all the gold theoretically the U.S. has, that it takes seven years to deliver it? It begs the question.

- Eric Sprott via: