There's no need to keep so much gold in
New York, says the DNB. The cold war's over...
SO the Netherlands' central bank has shuffled its
global gold holdings, moving 122 tonnes from New York to Amsterdam.
That's a big chunk of metal. Why pay the shipping
costs? It makes sense for two reasons.
First, as the DNB says in its news release, this move makes its holdings "more balanced" by
location. Just less than one-third is now held at home, with another third
still in New York...plus 20% still in Canada and roughly the same unchanged
in London.
You can do the same with your own personal gold
reserves using BullionVault.
Only better, and without the transport charges.
Instead of four vaults on two continents, you can
vault market-ready Good Delivery gold in 5 locations across three continents
(London, New York, Singapore, Toronto, Zurich). You'll only pay 1 monthly
storage fee ($4 minimum or 0.01% by value). Selling a little in one vault to
re-buy in another will cost you a maximum 1.0% (half-a-per-cent dealing
commission x 2).
Second, Friday's DNB news heads off popular pressure
to move gold in future. A growing call under the banner "Bring our gold
home!", this has already forced Germany's Bundesbank to look stupid and
weak in requesting very slow shipments to Frankfurt from the New York Federal Reserve. The same pressure has also
helped seal the likely failure of next week's Swiss referendum on SNB
holdings.
Because voters sense that...while adding gold
reserves might be wise...holding them all at home and vowing never to sell
them isn't so smart.
Fact is, only despots and pariahs hold all their
gold reserves at home. (Oh, plus the UK and US Treasury departments. Ha!)
Because keeping all your gold at home makes sense if a government fears
global sanctions...or foreign invasion...or civil war.
Gold, as even ex-Fed chairman Alan Greenspan knows,
is money of the last resort. The ultimate payment, gold money was invented...and has since
returned...in times of mistrust and violence. Because it can be used when soveriegn paper, social credit and
other debt-based tokens are rejected.
Think of Nazi Germany buying food supplies in
WWII...or Great Britain and Russia buying materiel from the United States
when a Nazi victory, and the worthlessness of Sterling and Roubles, looked
all too possible in 1941.
Hoarding all your central-bank gold inside your own
borders...rather than having it ready to use as payment in a global
gold-dealing centre...suggests you expect to need its value at home. Which
isn't a happy outlook for your citizens.
Yes, the DNB must be seen to acknowledge and agree
with popular demand for it to keep a bigger chunk of the Netherlands' gold
reserves at home. But a spokesman quoted by De Telegraaf – which appears to have
broken Friday's news at least an hour ahead of the DNB's announcement – is
surely tempting fate by saying "It is no longer wise
to keep half of our gold in one part of the world." Meaning on a
different continent across 3,000 miles of cold ocean.
"Maybe that was desirable during the Cold War,
but not now."
Well, maybe. For your own personal reserves, you
might like to choose a secure jurisdiction which you can flee to...or from
where you can receive the cash proceeds from selling a little...if exchange
controls block you from buying gold at home, or moving money abroad, in
future.
The 5 locations which BullionVault offers all have a strong,
if imperfect history of defending personal property rights. London, New York
and increasingly Singapore are also world trading centres for gold...places
where Good Delivery gold can be instantly sold for maximum value.
But like the Dutch National Bank, it's also worth
keeping some of your gold at home as well...just in case you do need
"money of the last resort" to escape a collapse in domestic banking
or law and order.
