Mittwoch,05.Oktober 2022

Gold price down, this major bank stocked up

Gold bought cheaply? The Bank for International Settlements‘ gold holdings are believed to have increased by about 14 tons in November.

Gold, BIS
Real gold or just claims on paper? One doesn’t know. In reports on their gold holdings, central banks tend to obscure things (Image collage: Goldreporter)

Central bank of central banks

The Bank for International Settlements (BIS) in Switzerland is considered the central bank of central banks. It is also one of the largest institutional players in the international gold market. Its operations are likely to have a not inconsiderable influence on the price of gold. Once a month, the BIS publishes an accounting report, the contents of which are somewhat cumbersome to convert to generally understandable figures. This is because the data are reported in the IMF currency, Special Drawing Rights (SDRs). And there are two different gold positions.

The BIS gold

The value of gold holdings in the balance sheet item „gold and gold loans“ („gold and gold loans“) under „Assets“ is put at the equivalent of $59.31 billion as of November 30, 2020. This corresponded to 1,046.70 tons at the time of accounting. While the gold price slumped by almost 9 percent in November, this inventory increased by 11.13 tons, according to our calculations. Within a year, the BIS has actually increased these holdings by almost 295 tonnes (see chart below). The gold position listed under „gold deposits“ rose by 3.23 tonnes to 418.89 tonnes last November.

Gold, Bis, gold price

Paper gold or bars?

Whether and which positions are real gold bars or „paper gold“ (futures, forwards, options, swaps) is not clear from the BIS figures – as usual in central bank circles. But we suspect that the item „gold deposits“ is a core reserve of the BIS, which probably consists at least to a large extent of actual physical metal. This is because this amount of gold changes much less from month to month. The larger gold position is subject to large changes. It is likely to be part of the bank’s active trading portfolio or even to contain precious metal held or traded on behalf of others. Read more: Gold price: What influence does the BIS have?

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