Overnight, there was much commotion in the precious metal space when, out of the blue, the IMF reported that months after announcing it had unexpectedly repatriated over 120 tons of gold from the NY Fed, the Netherlands had also purchased some 10 tons of gold in the open market, taking its total to 622 metric tons, the highest since 2007, a period in which it had been unchanged for 8 years.
This was promptly reported by both Reuters:
Netherlands added to its gold reserves for the first time in 16 years. It bought nearly 10 tonnes in Dec to bring total to 622 tonnes— Anantha (@AnanthalakshmiA) January 27, 2015
The Netherlands added to its gold reserves for the first time since 1998 as the ninth-biggest holder boosted assets to the highest in seven years, while Russia bought for a ninth month, International Monetary Fund data show.
Bullion reserves in the Netherlands climbed to 20 million ounces or 622 metric tons in December, the highest since 2007, after being unchanged at 19.7 million ounces from December 2008 through November, the IMF’s website showed. Russia, with the fifth-biggest hoard, held 38.8 million ounces last month, the most in at least two decades, the data show.
“Central-bank purchases may have lent some support to gold prices in the past, but it is likely short-lived,” said Barnabas Gan, an economist at OCBC in Singapore. “The most important point for gold is that speculative demand will likely stay tepid in 2015 given that a firmer dollar, higher interest-rate environment and a rosier U.S. economy will depress safe-haven demand,” he said by e-mail.
After today's absolutely abysmal micro and macro-economic data, one can debate just how "firmer" the dollar will remain, but at least on the surface, the Dutch action made sense: after all there is nothing wrong with scrambling to not only repatriate your own gold, hinting lack of trust in the most important central bank of all, the NY Fed, but also buying gold in the open amrket, hinting lack of trust in all central banks around the globe.
Moments ago Bloomberg blasted something even more unexpected. Namely that the "Dutch Central Bank Says It Did Not Increase Gold Holdings"
It adds that Reports based on IMF figures showing that the Dutch central bank increased its gold holdings are incorrect, accord. to an e-mailed statement.
Gold reserves were unchanged at 19.691m troy ounces as of Dec. 2014, central bank said
"This is the same information that the Dutch central bank reports to the IMF on a monthly basis,” accord. to statement
And from the official press release:
De Nederlandsche Bank (DNB) has not increased its gold holdings. Several media reported this Tuesday that based on IMF figures, DNB’s gold stock increased in December 2014. This is incorrect.
DNB’s correct and current gold holdings can be verified at http://www.statistics.dnb.nl/usr/statistics/excel/t12.25ek.xls. The table shows that in December 2014, DNB’s gold stock consisted of 19.691 million fine troy ounces and remained unchanged compared to all preceding months.
This is the same information that DNB reports to the IMF on a monthly basis.
Which brings up an interesting mystery with three possible options:
- i) did the Dutch central bank inadvertently disclose what its true gold holdings were to the IMF without meaning to do so? This certainly is likely considering the secrecy with which the central bank had been repatriating its gold.
- ii) is the IMF on purpose misrepresenting the Dutch gold holdings to generate a buying "panic", because while it is explainable for Russia to hoard gold, it certainly does not send a good message if one of the most respected "developed nation" central banks is splintering from its peers and shifting reserves from fiat to precious metals.
- iii) this was an honest fat finger mistake and the intern who plugged in the same number for the past 7 years, and whose finger "slipped", has now been fired.
Keep an eye on Dutch gold and its central bank, because none of these "explanations" make much sense, and considering the strange developments in the gold space in the past 6 months, there is surely more here than meets the eye.