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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As markets rally, should you still hold gold?

Trump’s election victory has tempered demand for the yellow metal

A desire to hold “real assets” in turbulent times has massively boosted the popularity of gold-backed exchange traded funds (ETFs). But following the biggest political upset of the year — Donald Trump’s US presidential victory — gold prices have gone into reverse.

After a brief rally following last week’s election result, gold ended the week down 5.2 per cent at $1,234.50 a troy ounce as the dollar rallied, and investors ditched traditional haven assets. In contrast, gold rose by $100 a troy ounce in the two weeks following the Brexit vote in June.

That was a disappointment for investors in the yellow metal, who have ploughed a record $64.5bn into gold-backed ETFs this year, according to the World Gold Council. In the third quarter, 78 per cent of the inflows were into European-based products according to their data.

The direction of future gold prices greatly depends on whether that investor flow stabilises — and, if not, whether demand from India and China, the two largest consumers, could help support the price.

Gold is still up 16 per cent this year in dollar terms, and 36 per cent measured in pounds. That compares with a return of about 12 per cent for the FTSE 100 index (with dividends reinvested) and about 4.68 per cent for the FTSE All-World Index.

Global markets avoided the feared “Trump slump”, with equities rallying on hopes the president-elect would boost spending and growth in the US economy. But gold could still benefit from his plans to boost infrastructure, according to analysts.

“Mr Trump’s policies could result in bigger public deficits, this could mean higher inflation and be supportive of gold,” says Jim Steel, an analyst at HSBC in New York.

Political uncertainty is also not going away. Investors in Europe are now turning their attention to elections next year in Germany and France, according to Alistair Hewitt, head of market intelligence at the World Gold Council.

“In Europe, we’ve got a very active political calendar next year and investors are thinking about the implications of that,” he said.

Still, the outlook for gold is likely to be heavily determined by the central banks — especially the Federal Reserve.
ECB policymakers are widely expected to extend their quantitative easing scheme by six months in December. The possibility of a US rate rise in the same month — which markets had been discounting before the election — now looks a distinct possibility. If the Fed goes ahead with a second increase, this could hit gold prices (rates rising will mean a stronger dollar and that is usually associated with falling commodity prices).

Another concern is that actual physical demand for gold in the form of jewellery and gold bars remains weak in the two largest consuming nations of India and China. Consumer gold demand fell by 22 per cent in China in the third quarter and 28 per cent in India, according to the World Gold Council.

Still, the two countries are likely to buy if the price of gold continues to dip, according to Mr Hewitt. A fifth of consumers in China and a third India are waiting for a further price dip according to their surveys, he says.

“If the price does dip there are plenty of consumers in the two large markets who will dive in,” he says.

Gold demand in China could also pick up ahead of the week long New Year holiday next January, when most Chinese return home with gifts. A property downturn in the country could also shift money to gold, according to analysts at Goldman Sachs.

James Butterfill, head of research at ETF Securities in London, remains convinced that ETF demand is relatively stable. The company has seen $4.3bn of inflows into gold products this year, with only about $110,000 going into products betting that the gold price will fall, he says.

That is different to gold’s last rally between 2007 and 2012, when there were strong investment flows into products that benefit if the gold price declines, he says.

“Investors are buying and holding on to gold,” he says. “The contrarian in you could see this as a great contrarian trade but it is driven by a lack of faith in monetary policy and political uncertainty.”

source:www.ft.com

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2016 already best year ever for world’s largest gold ETF

After suffering through three years of a declining gold price and investors liquidating positions built up during the metal’s bull run, this year the fund’s assets under management have swelled by $18.5 billion year to date.

GLD dwarfs other physically-backed exchange traded gold products holding 48.8% of the global total as of today at 950 tonnes or 30.5m ounces worth $40.3 billion. GLD’s holdings have shot up by 308 tonnes this year to the highest since July 2013.

The rise in assets under management in 2016 is a better performance than the banner years of 2009 and 2010 when investors caught in the global financial crisis and spooked by quantitative easing piled into GLD.

Stripping out the appreciation in the gold price, 2016 inflows into GLD is over $10 billion also surpassing 2009’s tally. Investors actually pulled money out of GLD in 2011 although assets under management grew as a result of the peaking gold price.

2016 already best year ever for world's largest gold ETF

 

Number one for a day (or two)

Gold ETFs were credited for a big portion of gold’s uninterrupted 12-year bull run, because ETFs make it so easy to invest in the yellow metal. (And to cash out as gold’s 2013 annus horribilis so clearly showed.)

While launched a full 18 months after the first physically backed gold ETF was created in Australia, GLD quickly dominated the market.

On August 22, 2011 when gold was hitting record highs above $1,900 GLD became the largest ETF in the world briefly surpassing the venerable SPDR S&P 500 trustGLD was listed on 18 November 2004 and enjoyed a pretty good first day. Investors bought just over 8 tonnes or 260,000 ounces of gold affording the fund a net asset value of $115 million.

A mere two days later it would cross the $1 billion mark and by the time Thanksgiving arrived the following week gold bugs had snapped up more than 100 tonnes. The 1,000 tonne market would be crossed in February 2009.

On August 22, 2011 when gold was hitting record highs above $1,900 an ounce GLD became the largest ETF in the world briefly surpassing the venerable SPDR S&P 500 trust (assets today $174 billion) at a net asset value of $77.5 billion.

Gold holdings in the trust would peak more than a year later in December 2012 at 1,353 tonnes or 43.5 million ounces. Global ETFs hit a record 2,632 tonnes or 93 million ounces of gold at the time.

All of that came crashing down in 2013 as the gold price plummeted and investors pulled 552 tonnes from the fund. The extent of the panic was evident by the fact that GLD had only 17 days of inflows during the entire year.

Nevertheless, those who got in on the GLD ground floor are still enjoying returns 135%. If you put your money into the S&P 500 in November 2004 you’d be worth 77% more today.

source: mining.com

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Gold and the environment

Gold nanoparticles could be the solution to a number of pressing environmental concerns.

Catalytic converters

Since the explosion of car ownership in the United States led to concerns about air pollution, catalytic converters have been deployed to reduce the impact of motor vehicles on the environment. Gold can act as a catalyst (a material that accelerates chemical reactions without being consumed in the process) effective in reducing hazardous vehicular emissions.

Including gold alongside the platinum and palladium (metals that are more typically used) in catalytic converters can reduce the cost of the devices. With World Gold Council support, a new gold-containing catalytic convertor technology was introduced to the market in 2011. We continue to work with market-leading manufacturers to accelerate the uptake of this important technology.

Read more about how gold catalytic converter technology works.

Renewable energy

Global concerns about fossil fuels’ contribution to climate change have prompted a search for viable alternative energy sources. In addition, gold is becoming an increasingly important component in the development of alternatives to fossil fuels. Gold nanoparticles are being used to improve the efficiency of solar cells, and gold-based materials are showing promise in the search for new, more effective fuel cell catalysts.

 

Clean groundwater

Groundwater contamination is a common problem around the world in industrialised areas. One of the most efficient and cost-effective ways to manage such pollution is to use specially-designed chemical catalysts, which help to break down contaminants into their component parts. Researchers from Rice University, Stanford University and DuPont Chemicals are using this approach to tackle chlorinated compounds, pollutants which result from a range of industrial activities.

The research, led by Professor Michael Wong at Rice, has developed a gold and palladium catalyst which removes chlorinated compounds from water in laboratory conditions. With World Gold Council support a pilot plant was installed at a polluted site in Kentucky in 2014, and the catalyst was successfully trialed.

source: www.gold.org

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Gold demand just had its strongest-ever first quarter

This year’s first quarter is one for the history books. Not only did gold appreciate at its fastest pace in 30 years, but demand for the yellow metal was the strongest it’s ever been on record.

Let me repeat that: the strongest it has ever been.

Demand surged 21 percent from the same period a year ago, according to the latest World Gold Council (WGC) report. Most of this demand was driven by investment, with net inflows into gold ETFs reaching 363.7 tonnes, a seven-year high.

Meanwhile, demand for bars and coins shot up 55 percent year-over-year, from 11.8 tonnes to 18.3 tonnes. Appetite for American Eagle coins jumped 68 percent.

source:miningcom, Frank Holmes – U.S. Global Investors

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The global experiment with negative interest rates is fantastic news for gold

The longer the world’s central banks continue to experiment with negative interest rates, the better the outlook for gold, according to Britain’s biggest bank, HSBC.

In the bank’s daily update on the state of the precious-metals industry, HSBC points to a recent report published by the Bank of International Settlements, often known as the central bank for central banks.

The BIS’ report said predicting what would happen if negative rates were to fall even further, and become more widespread, was particularly difficult, and that uncertainty, HSBC says, is great news for investors in gold.

Here’s James Steel, HSBC’s chief precious-metals analyst (emphasis ours):

How does this play out for gold? Positively we think. The imposition of negative rates is a sign of distress, which is gold-bullish. Furthermore, the uncertainty surrounding the long run impact of negative rates as outlined in the BIS report is also supportive of gold. The BIS report seems to say that negative rates have brought uncertainty, especially as regards their impact on financial intermediaries, but have not delivered hoped for gains for households and businesses. This is to gold’s benefit.

The price of gold has rallied massively in 2016, gaining nearly 19% in value since the start of the year. It is trading at just less than $1,275 an ounce, its highest level since early last year. Here’s how that looks:

gold 2016Investing.com

Much of gold’s rally is due to the huge volatility in financial markets earlier this year. Investors traditionally pour money into gold during times of trouble, something that was particularly true in January and February. At one point in February, investors were buying gold at levels not seen since the time of the financial crisis.

source: http://uk.businessinsider.com,  Will Martin ,Mar. 8, 2016,

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Gold hits seven-week high on global cues, miners soar

Gold has begun 2016 on a winning streak, hitting a seven-week high in early trading Wednesday as it builds on gains from earlier in the week, triggered mainly by escalating geo-political tensions in the Middle East and North Korea’s nuclear test.

February Comex gold was last up $10.20 at $1,088.7 an ounce. Earlier, the contract hit $1,089.20, the highest since December 4.

Positive outlooks for the metal are now popping up again. Swiss bank UBS, for one, headlined its technical outlook for 2016 as follows: “The 7-Year Cycle in Equities Is Rolling Over . . . Buy Gold!,” and it adds:

“Gold has been trading in a cyclical bear market since 2011.

In 2016, we expect gold and gold mines moving into an eight-year cycle bottom as the basis for the next multi-year bull market.

Initially, we see gold profiting as a safe haven and as of 2017, gold could profit from the US dollar moving in a major top and starting a bear market.”

(Via Bloomberg)
Global research firm Capital Economics is on the same page. In its official 2016 outlook report, released Tuesday, the firm’s commodities economist, Julian Jessop, said he expects prices to hit $1,250 by the end of the year as more demand from emerging markets and building inflation concerns in developed economies provide support.

Investors seem to be following quite closely these reports, as most gold producers saw their shares soar Wednesday morning.

Barrick Gold (TSX, NYSE:ABX), the world’s largest bullion miner, was up 4.11% in Toronto to $11.14 at 10:42 am ET.

Shares in another Canadian producer, Goldcorp (TSX:G), (NYSE:GG), which is the world’s most valuable listed gold mining company, were trading 4.32% higher to $16.90 in Toronto. And Kinross Gold’s (TSX:K) stock was up 2.32% to $2.65

In New York, Newmont Mining (NYSE:NEM) was up 1.85% to $1876 and AngloGold Ashanti’s (NYSE:AU) had gained 2.17% to $7.52 by 11:00 am ET.

Still, some seem unsure of whether this gold’s mini-revival can be sustained. INTL FCStone looks for gold to fall below $1,000 an ounce during “another difficult year for the bulls” in 2016, possibly hitting $950, although the firm also sees a high above $1,200.

Citi, in turn, says it expects bullion prices to keep falling in 2016, though in a non-dramatic way: $1,030 in the first quarter, dropping over subsequent quarters to $1,000, $980 and $960.

source: www.mining.com/Cecilia Jamasmie | January 6, 2016

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