Where are the country’s gold reserves stored?

Where are the country’s gold reserves stored?

This question is answered by the “Kathimerini” newspaper in one of its articles, according to which, the reserves are stored in safe depots in Greece and abroad.

More particularly, approximately 50% of the reserves are stored in a treasury of the Bank of Greece and the rest 50%, at the Bank of England, at the Federal Reserve Bank of New York in the U.S.A. and in Switzerland.

In more detail they are divided as follows: 29% in the U.S.A., 20% in the United Kingdom, 4% in Switzerland and 47% in Greece, securing thus the coverage of national needs in possible exceptional circumstances while the storage of part of the country’s gold abroad consists an international practice for almost all of the Central Banks. Therefore, this is not an original practice.

“According to the most recent data of the Bank of Greece, the current needs in gold of Greece are about 149.1 tons and their value amounts to 5,261.8 million Euros. As is ascertained by executives of the supervisory authority, in the last years there has been no change in the quantity of gold, with the exception of a small fluctuation due to transactions with the public regarding the trade of gold sovereigns”, as is mentioned in the article.

Another interesting detail, as is pointed out, is the fact that, according to the balance sheet items of the Bank of Greece, “the amount of gold that has been transferred to the European Central Bank, after the country’s accession to the Eurozone and the participation of the Bank of Greece to the Eurosystem, is very small compared to the total gold reserves”.

A similar transfer has been performed by every country that participates to the Eurozone. The decision of the Bank of Greece in 2003 to sell 20 tons of gold of its reserves was part of the more efficient management of its portfolio, a policy that was pursued by most of the European Central Banks. This liquidation just led to a differentiation of the portfolio of the Bank of Greece and regarded part of the quantity of gold that has been collected by the currency markets”.

It is also interesting that, since 2000, the Bank of Greece has converted its reserves into gold bars that follow international standards, in order to make their management easier.

Of course, as it is remarked in “Kathimerini”, “the stories about our country’s gold reserves are many. The most famous, however, is the one that has to do with February 1941, when the management of the Bank of Greece has managed, in a reckless action, to load the valuable reserves it had on vessels of the Hellenic Navy, in order to transport them secretly to its branch of Heraklion, Crete. A few days before the entry of the German troops into Athens, in April 1941, the governor of the Bank of Greece Kyriakos Varvaresos and deputy governor Georgios Mantzavinos abandoned, along with the political leadership, the capital of Greece, going to Crete. Subsequently, the management and the gold were transferred to Cairo and short afterwards the transfer of the gold reserves to Pretoria was deemed appropriate. Thus, the mortgage for the future reconstitution of the drachma was registered. Finally, after a “stopover” in London, the gold reserves returned to Greece after the war”.

 

Published: HuffPost Greece 05/03/2017  Source:  Kathimerini
 

 

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CHINA BREAKS 6 YEAR SILENCE ON GOLD RESERVES

China ended years of speculation about its official gold holdings by revealing an almost 60 percent jump in its reserves since 2009.

The country’s central bank said its gold reserves were 1,658 tonnes (53.31 million fine troy ounces) as of the end of June. In April 2009, reserves were 1,054 tonnes.

The purchases show how China is seeking to diversify its reserves away from the US dollar at a time when the price of gold has fallen to near its lowest price since 2010.

But that task has been complicated by the rapid growth in China’s foreign exchange reserves, which are the world’s largest at over $3 trillion.

 

At a value of $60.9 billion based on today’s prices China’s gold reserves only make up 1.6 per cent of its total foreign exchange holdings. The world average was just under 10 per cent at the end of 2014, according to Reuters GFMS.

China has been reducing its foreign exchange reserves this year, reporting $3.69tn at the end of June, down from $3.84tn in January.

“Gold has special risk-return characteristic, and at specific times is not a bad investment,” the People’s Bank of China said on its website.

“But the capacity of the gold market is small compared with China’s foreign exchange reserves, if foreign exchange reserves were used to buy large amounts of gold in a short amount of time, it will easily affect the market.

The 604 tonnes increase did not exceed analyst estimates and the price of gold was unmoved on the news.

“If you like gold the fact they bought it it’s a good thing but it’s not bullish in terms of the scale,” said Leon Westgate, an analyst at ICBC Standard Bank.

Still, the data means China has now overtaken Russia as the sixth largest holder of gold in the world, after the US, Germany, the International Monetary Fund, Italy and France, according to the World Gold Council. The US has gold reserves of 8,133 tonnes.

China does not regularly release data on its gold reserves. Before China’s last announcement in 2009, there were only two other announcements of changes to its gold reserves over the past 15 years, according to UBS.

It is possible the gold announcement is a “one-off transparency gesture” as the IMF concludes talks this year about inclusion of its currency in its Special Drawing Rights (SDR), the IMF created currency, UBS said.

China is actively seeking the IMF’s endorsement of the renminbi as an official reserve currency, a designation that requires a currency to be “freely usable”.

Gold rose to a historical peak of $1,921.17 a troy ounce in 2011 before falling sharply to trade at $1,136 today.

“Gold is the same as other commodities and financial assets, the global gold price rises and goes down,” the PBoC said.

“Based on our analysis on gold’s value and price changes, and on the premise of not creating disturbances in the market, we steadily accumulated gold reserves through a number of international and domestic channels.”

China’s purchases were made via assorted domestic refineries, production stockpiles and through trading on domestic and international exchanges, it said.

http://www.cnbc.com/ ( from the FINANCIAL TIMES)

photo by Getty Images

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