Mario Draghi Orders Cyprus To Sell Gold To Cover Bailout "Shortfall"

Tyler Durden's picture

Update, and sure enough:  


As a reminder, Panicos holds the now obsolete position of head of the Cyprus Central Bank.

* * *

As was noted two days ago (so certainly not the news catalyst for today's gold sell off as some are trying to make it appear) as part of its bailout expansion by 35%, Cyprus announced, then refuted, then re-admitted, it would need to fund a portion of the incremental €7 billion in cash demands by selling €400 million, or nearly all 13.9 tons, of its central bank gold. Today, we learn that this demand came from none other than the head of the ECB Mario Draghi. Bloomberg reports: "European Central Bank President Mario Draghi said the profits of any gold sales by the Cypriot central bank must be used to cover losses it may sustain from emergency loans to Cypriot commercial banks."

 Of course, to make it seem that the Cyprus central bank is "independent", the "European creditors today left a possible gold sale in the hands of the Cypriot central bank, which manages 13.9 metric tons of the metal, according to the World Gold Council." Naturally, it would not be very politically correct to give the impression that it is none other than the collateral and asset-starved European central bank that is effectively running local monetary policy of its member states, and certainly would not make Cypriots, already devoid of their uninsured bank deposits, happy that the next demand by the ECB for the privilege of staying in the EUR is for them to hand over the only real asset their country has.

More from Bloomberg:

“The decision is going to be taken by the central bank,” Draghi said after a meeting of euro-area finance officials in Dublin. “What’s important, however, is that what is being transferred to the government budget out of the profits made out of the sales of gold should cover first and foremost any potential loss that the central bank might have from its ELA.”


ELA stands for Emergency Liquidity Assistance, a lifeline that can be offered by national central banks in the euro region to commercial banks that can’t get funding.


Asked about a letter he wrote to Cyprus President Nicos Anastasiades, Draghi said the letter is “very, very clear.” He said the government must abide by the central bank’s handling of the gold stock, since it is independent from political control under European rules.


The independence of central banks in the euro area is enshrined in the treaty,” Draghi said. “The ECB will look at developments in Cyprus from this angle.”


Speaking alongside Draghi, Dutch Finance Minister Jeroen Dijsselbloem said selling gold “has always been an option put forward by the Cypriot authorities.”


“But as mentioned in the program documentation, this is a decision to be made independently by the Cypriot central bank,” he said. “And it’s not any demand from the troika or the eurogroup.”

In other words, central banks are independent, except for when the ECB tells them to sell gold to cover losses for loans made by collateralizing already worthless assets, or simply created out of thin air and backed by the full faith and credit of the Euro.

Naturally, for every seller of gold, there is a buyer. The only question now is whether Cyprus' gold will end up in the willing hands of China, Russia or the very ECB telling it to sell the gold, and at very depressed prices at that.

Finally recall that the Fed and BOJ are now injecting about $160 billion in newly created money in the G-7 market every month, and there is no end in sight to said monetarily dilution, a number which is set to rise to at least €200 billion once the BOE joins the fray this summer once Mark Carney finally arrives.

In this context, one wonders: should one side with those who are selling their gold, or those who are buying it, such as Goldman which advised its clients two days ago to sell their gold to Goldman's willing traders...

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
EscapeKey's picture

oh how nice.

i'm sure he deep down only have cypriots' interests at heart.

Say What Again's picture

Right on cue, here comes the ramp-ogasm is ES

Say What Again's picture

<-- Click this button


Brought to you by the Dept of Subliminal Messages Dept.

nope-1004's picture

Impeccable timing.  Smack gold, then issue a dictum that you must sell it.  Theifdom is alive and well, Draghi a banskter pimp.  Fuck you Draghi.  Fuck you Goldman.


FranSix's picture

So we are seeing now, first hand, how the bail-in procedure is working.  Bullion banks are technically insolvent, therefore they will bail-in on certain uninsured accounts, such as safe deposit boxes, Gold ETFs, and Cypriot foreign exchange reserves holding gold.

nope-1004's picture

Hey, when in a pinch, steal gold.  When on camera, lie and tell the world it's a "tradition".  But the pinch here is interesting.  Complete admission that physical gold is sought after by any means.


Pinto Currency's picture


There are serious gold market physical demand "problems" arising.

Between London (LBMA & GLD), Shanghai, and the Comex, physical pull of bullion from these three markets alone is at a pace of 8,500 tonnes p.a.

Not sustainable.

Dr Paul Krugman's picture

You guys have been writing this for years. If it was true then finra and the sec would have done something about it.

Pinto Currency's picture



You may want to check out PBS's "The Untouchables" where Assistant Attorney General Lanny Breuer says that the banks are too big to punish because of the perceived impact on the financial system and also check A.G. Eric Holders subsequent comments along the same lines.

Stay informed so that your comments are constructive.

Rubicon's picture

Maybe its the silver they are after.

Pinto Currency's picture


Re. silver, difficult to tell, Rubicon.

Krug's economic model of price discovery appears to be one where physical demand goes through the roof causing prices to plummet.

This anomally would seem to merit serious investigation by economists.

One model that fits this market behavior profile would be to smash the paper market with sell offers thereby cascading the stop-losses and sending the price south while taking delivery of physical metal.  And yes, that would be market manipulation and, yes, there are people who would acutually do that (and buy-off policiticians and regulators through regulatory capture so that they could get away with it).

HoofHearted's picture

Oh Krugman, you ignorant slut.

The only way the SEC would look at gold or silver is if it was on some midget transsexual porn that they were watching instead of regulating it. Now there's an idea. Make a porno about gold and then maybe the SEC will notice it.

FINRA...what a joke. Have you even looked at their requirements.

And if you even mention Basel 3, we'll have to bitchslap your ass repeatedly. Hell, why not bitchslap Krugman repeatedly anyhow? He surely deserves it.

Divided States of America's picture

Why anyone would dump gold/silver at these levels to buy stocks at all fuckin time highs really amazes me....makes no fuckin sense.

BaBaBouy's picture



WONDERFUL NEW World Of EU High-Finance And Policy!!!


SELL The GOLD (To Our OPeratives)  Or ELSE!!!!!!!!!!!!!!!!

Pinto Currency's picture


That is how desperate the situation has become; and the tide won't be stopped by threats.  Ask Canute.

Here is recent Shanghai Gold Exchange rate of gold physical bullion pull (note this is volume on ONE exchange):

... Maguire:  “Deliveries in Shanghai alone in March were 283 tons.  In the eight trading days of April, we have seen another 117 tons (of gold) delivered.  Today was another 20 tons delivered.  So what we are looking at here is over 400 tons (of gold) in less than a month and a half...


So the price of gold collapses and Cyprus is ordered to sell its gold.

Finally, note that the GLD ETF is not "dumping" gold.  Investors are taking physical delivery by buying GLD shares and taking delivery with the GLD stocks showing a decline thereafter.

redpill's picture

They are stupid, myopic, scared little lemmings that frantically run wherever the squid tells them to.

Ruffcut's picture

Triple anus, his real one, his mouth and the hole he came from.

azzhatter's picture

Dr Krugman, does your mother know you're playing on zerohedge. Fuck You

akak's picture


Ad hominem.

Red herring, Krugpigtroll, as I keep pointing out to you.

You would first have to be a homo (Latin: "man") in order to suffer an ad hominem attack.

As you are only a hobbit, you are incapable of suffering such an attack.

Now please, for the love of God, go buy that mouthwash already!

Cupid Stunt's picture

Right there man.....and the ass rape of these poor fuckers is just the hors d'oeuvres...fuck Bernanke....fuck Draghi......& the rest of these  criminal motherfuckers....

Harlequin001's picture

Evidently they didn't. But then why should they, they aren't here to look after investors interests are they?

LawsofPhysics's picture

I thought gold was a "barbarius relic", why would the ECB want it then?  Welcome back, troll of trolls and king of the walking contradiction.  As you have said and written before, "gold has no value", so why make such a silly demand?  Clearly the ECB isn't reading your work, losers.

Dr Paul Krugman's picture

Draghi did not say he would buy the gold, he merely noted it would by wise for Cyprus to sell. This will raise funds for the island nation.

Pinto Currency's picture

Krug - your friends at the c.b.'s create money by the trillions from nothing.

Why sell any real asset that is a critical insurance policy?

Kirk2NCC1701's picture

Because they will need that Relic for the Barbaric times ahead, when possession will be 10/10's of the Feudal Law.

mjcOH1's picture

"Krug - your friends at the c.b.'s create money by the trillions from nothing.

Why sell any real asset that is a critical insurance policy?

Wow...I'll take this one.

How about because they're begging everyone else in the EU to pay their fucking bills. And on roughly weekly intervals claiming the size of the bailout they're being offered, courtesy of the good taxpayers of the other EU members (cough...Germany) will have to be increased to meet the lifestyle level they would prefer.

How about they choose one:
- keep the gold, get their hand out of the EU's wallet, and fund the Cypriot bank bailout with Cypriot tax dollars and assets
- when soneone else is paying their bills and says it's time to sell the gold....get smart fast and sell the gold before they cut you loose to figure out a solution (or not) without the handouts

Mad Mohel's picture

You can bet your bearded asshole that they will be selling to Draghi affiliated goons. Bet on it motherfucker!

And the double whammy is that his butt buddies get the gold and he gets the cash from the sold gold. Ouch.

TeamDepends's picture

Damn it!!!  Tried to downvote you but it backfired and it won't let us change.  Tyler(s) please, everybody gets a fat finger now and then!

LawsofPhysics's picture

Like you said, "gold has no value".  Have cryprus sell something else, you better call Draghi just to be safe.

debtor of last resort's picture

Draghi was drooling when he said that. And behind the scenes Cyprus will get 15% over spot when selling to one of the big banks, the difference filled up by HSBC drug laundring money. Bunch of creepy fucks.

jbvtme's picture

why would draghi want gold when he could traffic with cyprus for some fresh (and much more valuable) internal human organs, as he does with china and israel?  how many ounces does a kidney fetch these days?

TrumpXVI's picture

Exactly, LofP.

This shit is so transparent, especially to someone like me.  I grew up with a diabolical older sister who played every sick prank in the book on me.  And as her gullible little victim brother, I fell for every damn joke, every damn time.  But she did me an enormous favor.  I grew up to be one of the best trained S.O.B.s on planet Earth.


Badabing's picture

Are you in denial?

Cypress is being forced to sell its real gold while the fake stuff is hammered to a two year low.  

El Oregonian's picture

I don't understand why Cyprus doesn't sell them their GLD paper shares instead. Surely, they would gladly accept their issued asswipe back even after it has been run through the system at least once.

Hulk's picture

and the hammering gold got today insures some entity gets it on the cheap...

FieldingMellish's picture

finra and the sec would have done something about it.


I haven't laughed so much since I read your screed in the NYT today. You should write children's books... oh wait.

PubliusTacitus's picture




Bullshit, dumbass.


The SEC is busy trying to figure out how to fuck up the financial system even more by catching up on their 2-year backlog on Doddering-Fwank rulemakings.


God are you stupid.  I only wish you were the real Krughole. Imbecile.

Bastiat's picture

FINRA and the SEC are tools of the same fascist goons you pimp for-but of course you know that.

DavidC's picture

If that was irony it was hilarious!


Guy Fawkes's picture

Why? Why would they have done something about? When was the last time the SEC ever discovered a problem BEFORE is blew up? When was the last time the SEC charged anyone? 

Central banks do not adhere to GAAP. What do they hold on their books as assets? 

quasimodo's picture

Just go back to rimming MDB already

MeelionDollerBogus's picture

FINRA & SEC have no say over Cyprus, EU or China for gold. Holder is already trying to get a convict, Jeff Skilling of Enron, out of prison. What’s your explanation for that?

NotApplicable's picture

For everyone wondering why the reset hasn't happened yet, well, it's all about shaking out as many weak hands as you can first.

Cuz it's the shakin' that does the final breakin'.

disabledvet's picture

No no. "steal the money first." as a COURTESY "hand over your gold too." and don't forget when your economy collapses either! "we're here to help and stand ready to subsist you!" you really can't make this shit up.

Dr Paul Krugman's picture

Why not sell the gold? It is weighing down their economy like a heavy anchor.