Chart usGOLD   Chart usSILVER  
 
Food for thought
Who controls the past controls the future. Who controls the present controls the past
1984  
Search for :
LATEST NEWS  :
MINING STOCKS  :
Subscribe
Write Us
Add to Google
Search on Ebay :
PRECIOUS METALS (US $)
Gold 1228.4313.64
Silver 17.830.11
Platinum 1334.209.90
Palladium 808.5010.75
WORLD MARKETS
DOWJONES 17173-99
NASDAQ 4528-52
NIKKEI 16206-115
ASX 541648
CAC 40 4357-85
DAX 9612-137
HUI 202-6
XAU 84-2
CURRENCIES (€)
AUS $ 1.4502
CAN $ 1.4190
US $ 1.2890
GBP (£) 0.7860
Sw Fr 1.2069
YEN 139.9040
CURRENCIES ($)
AUS $ 1.1251
CAN $ 1.1009
Euro 0.7758
GBP (£) 0.6099
Sw Fr 0.9363
YEN 108.5340
RATIOS & INDEXES
Gold / Silver68.90
Gold / Oil13.43
Dowjones / Gold13.98
COMMODITIES
Copper 3.050.01
WTI Oil 91.50-0.02
Nat. Gas 3.890.04
Market Indices
Metal Prices
RSS
Precious Metals
Graph Generator
Statistics by Country
Statistics by Metals
Advertise on 24hGold
Projects on Google Earth
In the same category
Where is Greece’s gold?
Published : March 05th, 2012
531 words - Reading time : 1 - 2 minutes
( 6 votes, 3.2/5 ) Print article
 
    Comments    
Tweet

 

 

 

 

Recently there have been reports that if Greece defaults on the new bail-out package, creditors will be entitled to seize her gold. Whether or not this is true, it raises one big question: given the severe financial and economic crisis in Europe, what is the current collective attitude of the eurozone central banks to gold?

 

Bear in mind that these central banks sought to end any monetary role for gold after the Bretton Woods system fell apart in the early 1970s. More recently, as signatories to the three consecutive Central Bank Gold Agreements, they have perhaps seen gold as a source of funds as well. But those were “happier times” for them, when progressively greater central planning and increased regulation went unchallenged by the markets. But now that monetary authorities are facing increasing criticism, the central banks’ strategy towards gold today must logically be completely different: either gold is an asset whose value has to be maximised as collateral, or it has to be held on to as a “last resort” asset. Vested interests have fundamentally altered with the change in circumstances now forced upon eurozone governments.

 

The rise in gold prices to current levels underlines the point. Based on official figures, the eurozone’s share of official gold holdings as a proportion of the total global stock has fallen from 9% when the euro was introduced to only 6% today. Furthermore, an unknown quantity of this gold is held at non-eurozone central banks, particularly the Federal Reserve, Bank of England and the Bank for International Settlements, in sight accounts. With a sight account, the depositing central bank merely has a counterparty claim on its gold deposits, which allows the Fed or BoE for example, to sell, swap or lease the deposited gold as it sees fit: sight accounts are simply a means for a central bank to expand the apparent supply of gold in the same way a commercial bank expands bank credit.

 

The ability to create gold through the sight account system has been fundamental to bullion market liquidity in the major trading centres since the Second World War. Problems will arise when confidence in the system is questioned: for example, how much of Greece’s gold actually exists, and what has happened to any gold Greece transferred to the European Central Bank as its joining fee? This question is suddenly relevant to all central banks, not just the 17 euro-area members. We don’t know if this was in Hugo Chavez’s mind when he demanded the repatriation of Venezuela’s gold, but it may well have been. The subject has also been raised by investigative journalist, Lars Schall, with respect to Germany’s reserves at the New York Fed.

 

As central bankers mull the point over they may well conclude that among all their troubles there is one more that must be avoided at all costs: the possibility of a gold run by the smaller central banks on their larger peers in the major bullion trading centres. It would be a consequence of the deepening crisis involving fiat money and credit, and if this is allowed to occur all confidence in paper money itself would be at risk.

 

Article originally published at Goldmoney.com

 

 

Data and Statistics for these countries : Germany | Greece | Venezuela | All
Gold and Silver Prices for these countries : Germany | Greece | Venezuela | All
Tweet
Rate :Average note :3.2 (6 votes)View Top rated
Previous article by
Alasdair Macleod
All articles by
Alasdair Macleod
Next article by
Alasdair Macleod
Receive by mail the latest articles by this author  
Latest comment posted for this article
Be the first to comment
Add your comment
TOP ARTICLES
Editor's picks
RSS feed24hGold Mobile
Gold Data CenterGold & Silver Converter
Gold coins on eBaySilver coins on eBay
Technical AnalysisFundamental Analysis

Alasdair Macleod

FinanceAndEconomics.org is the website of Alasdair Macleod, who has a background as a stockbroker, banker and economist. Alasdair is available for seminars, speeches and interviews. Please check on Services to get further detalils.
Alasdair Macleod ArchiveWebsiteSubscribe to his services
Most recent articles by Alasdair Macleod
9/21/2014
9/20/2014
9/13/2014
9/12/2014
9/6/2014
All Articles
Comment this article
You must be logged in to comment an article8000 characters max.
 
Sign in
User : Password : Login
Sign In Forgot password?
 
Receive 24hGold's Daily Market Briefing in your inbox. Go here to subscribe or unsubscribe.
Disclaimer