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Belgian Central Bank Says 25 Tons Or 10% of Gold Reserves on Loan

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From GoldCore

Belgian Central Bank Says 25 Tons Or 10% of Gold Reserves on Loan

The Belgian Central Bank said yesterday that about 25 tons of the European nation’s gold reserves have been lent to bullion banks according to Bloomberg.

Nearly 10% or about 25 metric tons of the National Bank of Belgium’s remaining 227.5 tons of gold reserves are currently lent to bullion banks, Director and Treasurer Jean Hilgers told the central bank’s annual meeting in Brussels.

The proportion of gold reserves on loan declined from 84.3 tons on December 31, 2011, and averaged 48.1 tons in 2012 as loans matured and some gold loans were reimbursed early.

Hilgers said that the Belgian central bank sees gold lending decreasing further this year.

The National Bank of Belgium may be nervous regarding their gold loans and may be seeking their repayment early. They will be aware of the great difficulty that the Bundebank is having repatriating their gold reserves and the bizarre fact it will take the Federal Reserve seven years to return the German gold reserves stored in the U.S. to Germany.

Belgium is one of the central banks that sold substantial amounts of their gold reserves during the 1990’s – prior to the advent of the euro. 

Belgium, Argentina, Australia, Canada, the Netherlands and of course the UK were the notable gold sellers of the period. These central banks disposed of gold in a variety of ways, including direct sales to other central banks or through bullion bank intermediaries using spot and forward sales, options, and derivatives.


IMF Belgium Gold in Mill Fin Troy Oz, 1957 to May 2013 – (Bloomberg)

During the 1990’s, Belgium sold some 1,000 tons of gold into the market - more than three quarters of its remaining holdings. The Belgian gold reserves, which had already seen sizeable liquidation in late 1978, fell from 33.7 million ounces on 12/31/88, to just 5.7 million ounces on 03/31/98, or a fall of 83% in less than 10 years (see chart).  

Since the start of 1996, when gold prices trended downward, some of the sharpest falls in prices coincided with central bank announcements of sales. 

All except the UK announced their gold sales only after completion of their gold sales programmes.

This is in marked contrast to the Bank of England’s very public gold auctions and Gordon Brown announcing the sale of the UK gold reserves prior to the auctions thereby depressing the gold price and pushing it to multi year lows.

The Gold Anti-Trust Action Committee (GATA) allege that the gold sales were not simply about foreign exchange diversification, rather they were designed to manipulate gold prices lower and reduce public confidence in gold as a store of value so that there would be increased trust in the dollar, the coming euro and other fiat currencies.

The National Bank of Belgium sold gold on five occasions since 1989. Belgium announced on March 22, 1989, that it had sold 127 tons of gold. On June 17, 1992, it announced it had sold 202 tons of gold.

On April 24, 1995, it said it had sold 175 tons in order to increase its foreign exchange holdings. 

Belgium announced another sale of 203 tons of gold on March 27, 1996, stating that the sale had reduced the share of gold in total reserves to a level which would facilitate the participation of the National Bank of Belgium in the process of European unification and which, corresponded to the proportion of gold in the total reserves of the Member States of the European Union.

Further sales of 299 tons of gold were announced on March 18, 1998 just prior to the introduction of the euro and the monetary union. The bank said at the time that the capital gain from the gold sales was used to repay government debt in foreign currencies.


Cross Currency Table – (Bloomberg)

Separately, the Shanghai Futures Exchange (SHFE) is set to start gold and silver futures after-hour trading in 2 months according to Bloomberg. 

Bloomberg quoted Yang Maijun, chairman of the exchange who said that at a meeting overnight. The SHFE is considering allowing foreign investors to trade rubber and base metal products and will make efforts to develop new products according to Yang.

NEWS

Gold falls as stocks hold firm; physical demand stays strong - Reuters

Gold prices seesaw as dollar rises – MarketWatch

Gold Drops With Silver as Dollar Strengthens Before U.S. Data - Bloomberg

Gold Coin Shortage In India – The India Times

 

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Tue, 05/28/2013 - 08:45 | 3603122 Chuck Norris
Chuck Norris's picture

Must be a typo.  Shouldn't it be 100%?

Tue, 05/28/2013 - 08:48 | 3603132 GetZeeGold
GetZeeGold's picture

 

 

Probably haven't conducted a thorough inventory yet.

Tue, 05/28/2013 - 09:25 | 3603238 kliguy38
kliguy38's picture

The Belgi's have no Gold....their gold is held in London and NY Vaults........its all leased multiples of 10......so relax...there's no story here except if you are a sovereign and you think you know if your gold is leased or not then I suggest you take Germany's course and just try to get it back inside your own borders......FAT CHANCE

Tue, 05/28/2013 - 09:47 | 3603314 bank guy in Brussels
bank guy in Brussels's picture

Private holdings of gold by Belgians are enormous

Part of how we stayed rich despite the two World Wars with most (1st) or all (2nd) of our territory being occupied ... the gold was buried and dug up again ... and our families still hold it and pass it on ... there is little concern for gold 'price movements'

In general we do not talk about our gold ... but there is lots here, really no one knows how much

Quite true that the Belgian Central Bank has played the gold selling - gold leasing game along with other European central banks ... it is pretty much the 'go along to get along' philosophy with Belgian government toward its neighbours

---

Interesting to consider how small a metric tonne of gold really is

On ZeroHedge yesterday there was talk about the 1-tonne coin minted in Australia, the largest gold coin in the world

The size of that gold coin, the 'Kangaroo', is almost 80 centimetres wide, and just over 12 centimetres deep ... or about 31 inches x 5 inches ... and that is a TONNE of gold

Tue, 05/28/2013 - 09:59 | 3603365 Stackers
Stackers's picture

Can I "borrow" some ?

Tue, 05/28/2013 - 10:35 | 3603484 Divine Wind
Divine Wind's picture

 

 

Shhhhhhh.

The next time Belgium is invaded it the marauding hoards will come with metal detectors !

 

Tue, 05/28/2013 - 08:45 | 3603123 THX 1178
THX 1178's picture

On loan= Sold in hopes that it'll be there when they want to print money to buy it back.

Tue, 05/28/2013 - 08:55 | 3603164 Gringo Viejo
Gringo Viejo's picture

I believe "loan" is a euphemism for "gone and ain't comin' back."

Tue, 05/28/2013 - 10:33 | 3603477 TeMpTeK
TeMpTeK's picture

10% on loan..... To the US at $35 an ounce.....pfffft.

Tue, 05/28/2013 - 08:48 | 3603133 Weisbrot
Weisbrot's picture

 

What is loaning gold reserves?

why borrow gold?

why lend gold?

Tue, 05/28/2013 - 08:56 | 3603166 Diogenes
Diogenes's picture

Borrow gold at a certain interest rate, sell gold, use money to speculate, later pay back loan with interest and keep whatever profit you made. If the interest rate on gold is low, and the price of gold stable or falling this is a  profitable trade.

The bank lends the gold to earn interest. Just like any other loan.

Tue, 05/28/2013 - 09:04 | 3603194 GetZeeGold
GetZeeGold's picture

 

 

Loan gold at $270 then try to get it back at $1395.......good luck with that.

Tue, 05/28/2013 - 09:14 | 3603207 SWCroaker
SWCroaker's picture

Isn't that an interesting question?

 

  • Banks (perhaps) don't understand the utility of anything that doesn't earn interest?
  • A few silly peeps in the world desire physical.  Big Bullion Banks, who are the type that would sell their own grandmothers, sell "gold" to any and everyone.
  • When the demand comes in for delivery, the BBs sometimes have to scramble to get phyz for the crazies.  They *could* buy phyz on the open market, but that would be similar to being a victim of a short squeeze, which is not something they opt for.
  • So the BB's "lease" actual phyz from a major bullion holder: Central Bank, major BB repository.   They use it to fulfill delievery demand, *without* driving the price up by scrambling in a competitive fashion on the open market.
  • The "lender" of the gold phyz still claims ownership of the gold.  Many use cheesy accounting gimmicks where the lump actual phyz still in their possession and "lent" phyz in a single line item called something like "gold (reserves and leased)".
  • The "rental rate" charged by the lenders is laughably teeny, to the point that if it happened in any other industry, it would be a massive red flag to regulators interested in stuff like fraud, manipulatoin, or collusion.    We have Giessner and Chilton as prime examples of blind regulators.

Many foreign CB's in the past had their gold stored for "safe keeping" at the vaults of a few major powers. (US, UK, France).  They seem to have opted at some point to try to make the dust collecting stuff profitable, by allowing the custodian to "lease" the gold (for teeny teeny amounts of profit) on their behalf.

It is suspected that most "lent" gold is taken for delivery, melted down and refined from it's Western good-delivery form into Asian/Middle-East good delivery form, and ultimately put into the hands of individual owners who are *not* the type to sell it for anything less than a couple of multiples of it's current price.   The counter to that seems to be that the lenders presume they can "get their gold back at any time" by asking for it, and the custodians can just get some off of the market if doing so is needed.

Tue, 05/28/2013 - 10:01 | 3603375 Going Loco
Going Loco's picture

If you want to understand the current shenanigans just read SWCroaker's comment and add 5 further facts

1 Germany must wait 7 years to get some of its gold back from vaults where it should have been allocated but beyond any doubt wasn't

2 Obama met all the bullion banks - no agenda, no minutes

3 Shortly afterwards contracts for the FUTURE sale of 400 tonnes of (probably non-existent) gold were literally dumped on the COMEX in such a way that the only plausible motive was to drive the price down

4 There is evidence of buying pressure for physical gold and while the quantities are probably not large in the overall scheme of things there appears to be no chance that private holders will sell much apart from the usual scrap jewellery

5 There are some quite notable supply constraints from the mines and neither Russia nor China is selling.  Previous sellers like the Bank of England are tapped out

Put sll that together and it becomes s tradeable thesis

Tue, 05/28/2013 - 08:50 | 3603142 Racer
Racer's picture

On loan??????? Yeah sure, I am a millipede

Tue, 05/28/2013 - 09:20 | 3603222 Dr. Venkman
Dr. Venkman's picture

My mother is a fish.

Tue, 05/28/2013 - 10:38 | 3603498 This just in
This just in's picture

Or maybe just smells like one?

Tue, 05/28/2013 - 08:51 | 3603146 MFLTucson
MFLTucson's picture

No problem, the US has 100% thanks to Rubin and Clinton.  But, who wants Gold anyhow when you can have paper!

Tue, 05/28/2013 - 08:53 | 3603155 Diogenes
Diogenes's picture

If they are reserves how can they loan them out? I thought reserves were reserves, assets not loaned out but kept in reserve?

Tue, 05/28/2013 - 08:54 | 3603159 Marcuz Aurelius
Marcuz Aurelius's picture

Well im pretty sure belgium remebers their late central bank govenor who was balls deep into the trilateral comission/BIS ... their manipulation efforts will prove to be ruinous for any future economic rebuilding when the EU and thus brussels blow up.

Tue, 05/28/2013 - 08:54 | 3603160 PaperBear
PaperBear's picture

Good luck getting this 25 tons of gold back.

Tue, 05/28/2013 - 09:05 | 3603197 GetZeeGold
GetZeeGold's picture

 

 

Maybe ask Germany in 7 years?

Tue, 05/28/2013 - 09:26 | 3603163 Darth Silver
Darth Silver's picture

does anyone know how much of the belgium gold is deposited at the NY Fed? given that germany has to wait 7 years for a return, its not that big of leap to assume more of Belgium's gold is leased out, if its allegedly vaulted at the NY Fed.

thoughts?

Tue, 05/28/2013 - 09:01 | 3603181 Sutton
Sutton's picture

Fed says 10,000% of it's gold reserves on loan.

Tue, 05/28/2013 - 09:01 | 3603182 GregGH
GregGH's picture

Hope someone can update this ......  is Canada still kicking Slovenia's ass on gold held ????

 

http://en.wikipedia.org/wiki/Gold_reserve

 

74  Ireland 6.0 15.1% 75  Federal Democratic Republic of Nepal 6.0 [11]   76  Republic of Lithuania 5.8 04.1% 77  Kingdom of Bahrain 4.7   78  Republic of Tajikistan 4.4   79  Republic of Mauritius 3.9 06.5% 80  Canada 3.4 0.3% 81  Republic of Slovenia 3.2 15.8% 82  Aruba 3.1 24.2% 83  Hungary 3.1 0.3% 84  Kyrgyz Republic 2.6 7.5%
Tue, 05/28/2013 - 11:00 | 3603572 auric1234
auric1234's picture

That's not a list of gold. It's a list of gold + gold-denominated debt.

Most of the gold is probably gone...

 

Tue, 05/28/2013 - 09:05 | 3603198 Karl von Bahnhof
Karl von Bahnhof's picture

You can't wipe your ass with gold!

Tue, 05/28/2013 - 09:14 | 3603210 GetZeeGold
GetZeeGold's picture

 

 

Oh crap.....I didn't think about that.

Tue, 05/28/2013 - 10:40 | 3603508 This just in
This just in's picture

Well, you can, but you need a sizable stack.

Tue, 05/28/2013 - 11:37 | 3603663 Diogenes
Diogenes's picture

"You can't eat gold!"

"You can't eat paper either but you can wipe your ass with it"

Tue, 05/28/2013 - 09:24 | 3603234 eddiebe
eddiebe's picture

"During the 1990’s, Belgium sold some 1,000 tons of gold into the market"

The questions arise: Was this stupidity or criminality or both?

Tue, 05/28/2013 - 09:26 | 3603243 Herkimer Jerkimer
Herkimer Jerkimer's picture

'

'

'

Let's replace "Gold" with "weed".

 

Hey! Can I borrow/will you loan me your weed?

 

Why?

 

Because I want to sell it!

 

For me?

 

No. For me!

 

Do I see any money?

 

No.

 

Why I would lend it to you? My weed would be gone?

 

Yes. But you'll get it back.

 

How?

 

We'll request it back.

 

I'll never get it back!

 

It doesn't work that way!

 

Tell me how it doesn't?

 

…! Umm-mmm…

 

•J•
V-V

Tue, 05/28/2013 - 09:32 | 3603262 Herkimer Jerkimer
Herkimer Jerkimer's picture

How do I go down to Scotia Macatto and get told they don't have any more gold, or I can't put an order in, yet the CB's can buy?

 

I think the bullion banks are deliberately restricting supply to the little people, so they can sell, ordered to sell by TPTB, to the CB's for the forthcoming conversion to a gold standard.

 

Tell me I'm wrong. I want to be.

 

Why can't I place an order with Scotia Mocatta?

 

•?•
V-V

Tue, 05/28/2013 - 11:39 | 3603647 Diogenes
Diogenes's picture

I don't know about you but I can't buy from Scotia Mocatta because they charge too damn much. I get a way better deal at RBC.

Tue, 05/28/2013 - 09:54 | 3603344 Silveramada
Silveramada's picture

gold and silver inventories still low, sentiment at the lowest, shorts at record high...

 

http://zysites.com/silververitas/

Tue, 05/28/2013 - 10:15 | 3603405 jvetter713
jvetter713's picture

"On Loan"....lol  Enough said.

Tue, 05/28/2013 - 10:28 | 3603460 WTFUD
WTFUD's picture

It's been 8 weeks now that i am unable to get my preferred 5kilo silver bars from my regular mainstream provider. Something doesn't smell right.

Tue, 05/28/2013 - 11:33 | 3603651 Diogenes
Diogenes's picture

Maybe it's Dr. Venkman's mom.

Tue, 05/28/2013 - 10:29 | 3603462 Bansters-in-my-...
Bansters-in-my- feces's picture

This article fails to mention that Centrals banks leased out gold can still stay on thier books even though it has been leased out and most likely sold onto the open market to supress prices.

One ounce can become many, on the books....

Tue, 05/28/2013 - 10:30 | 3603468 ParkAveFlasher
ParkAveFlasher's picture

Would you like a smoke and a pancake? You know, flapjack and a cigarette? No? All right. Cigar and a waffle? No? Pipe and a crepe? No? Bong and a blintz? No? Oh, well, then there is no pleasing you.

Tue, 05/28/2013 - 10:57 | 3603565 auric1234
auric1234's picture

A fool and his money are soon parted

 

Tue, 05/28/2013 - 11:42 | 3603660 Diogenes
Diogenes's picture

But they are popular everywhere.

Tue, 05/28/2013 - 11:34 | 3603658 fiftybagger
fiftybagger's picture

The Chinese are melting the 400 ounce bars and recasting them as kilo bars.  They ain't comin' back.

Tue, 05/28/2013 - 11:41 | 3603675 Ghordius
Ghordius's picture

they heard about the "barbaric" thing and correctly assume that the most barbaric thing about gold is... the Imperial Measurement System

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