The Bank for International Settlements‘ gold positions have declined by USD 6.86 billion over the past two months. That was equivalent to 134 tonnes of gold. Has the BIS influenced the price of gold?
The Bank for International Settlements (BIS) in Basel is considered the central bank of central banks. It is also one of the most important players on the international gold market. Once a month, the supranational financial institution submits an statement of account report. This also includes the bank’s „gold holdings“. This includes in particular the position „Gold and gold loans“ which can be found in the report under „Assets“. In general, all items are shown in the IMF exchange rate currency SDR (Special Drawing Rights). Therefore, a conversion into US dollars and a valuation of the figures with the gold price at the time of accounting are required in order to derive weight values in the gold holdings.
At the end of April 2019, the BIS reported „gold and gold loans“ of the equivalent of 23.71 billion US dollars. According to our calculations, this corresponded to 575.27 tonnes of gold. Since February, this position has shrunk by 173.45 tonnes. Gold deposits“ most recently included $15.85 billion worth of gold, which translates into 384.65 tonnes of gold. These stocks have increased by 38.93 tonnes since February. The bottom line is that the BIS has sold $6.86 billion worth of gold during this period, the equivalent of 134.52 tonnes of the precious metal.
Whether this is paper gold (derivatives) or real physical gold cannot be inferred from the figures. The lack of an important distinction between these two forms of gold holding is typical of the lack of transparency of gold transactions at central bank level.
Does the Bank for International Settlements influence the price of gold? All the major players operating in this market do. And a look at the chart above shows that the change in gold holdings in the BIS books is positively correlated with the gold price. What is striking is the fact that the portfolio changes follow the price movements again and again (but not always). In other words: first the gold price falls, one month later the BIS announces a decline in its gold positions. But this also applies to the opposite direction!
One can only speculate about everything else, such as whether the BIS is actively intervening in the gold market. It should be noted, however, that while the BIS has sold considerable quantities of gold since the end of February, the gold price fell by 2.3 percent, or 33 US dollars, to $ 1,285 an ounce by the end of April.
Translated with www.DeepL.com/Translator (c) Goldreporter