Hungary's Gold Repatriation Adds To Growing Protest Against US Dollar Hegemony

Hungary's Gold Repatriation Adds To Growing Protest Against US Dollar Hegemony

- Hungarian National Bank (MNB) to repatriate 100,000 ounces gold from Bank of England
- Follows trend of Netherlands, Germany, Austria and Belgium each looking to bring gold back to home soil
- Hungary one of the smallest gold owners amongst central banks, with just 5 tonnes
- Central bank gold purchases continue to be major drivers of gold market
- Russian central bank gold reserves now exceed those of China
- Decisions to repatriate and increase gold reserves come as rifts between East and West widen

A country's sovereignty is becoming the driving force of so many changes in the geopolitical sphere, today. Whether it is Brexit, surprise electoral victories in central Europe or a change in trade deals, sovereignty is at the forefront of so many of these decisions.

One of the first indicators that there was a change in the water when it comes to globalisation and international cooperation was through central bank gold buying and repatriation.

For some time now many central banks have been working on building up their gold reserves and ensuring they are stored on soil it believes to be safe and trustworthy.

The most recent central bank to make this change is that of Hungary. Last week it was announced that it intends to bring 100,000 ounces of its very limited 5 tonnes gold reserves, back home from the Bank of England.

This is not an unusual move. In recent years we have seen the likes of Germany, Venezuela and the Netherlands each repatriate their gold from various locations. The pace does appear to have been picking up since the late Hugo Chavez decided to bring home 180 tonnes of gold in 2011.

Furthermore, huge central banks namely Russia and China have been adding to their gold hoards, one more publicly than the other. Both have also been encouraging the use of gold as a means of payment in international trade as a means of avoiding US dollar hegemony.

The decision to place more focus on gold reserves is a statement by central banks and their governments to reduce the counterparty risk on their reserve assets. When holding another country's currency you are vulnerable, the same applies to when a third-party holds your gold at a time when their own assets are perhaps more exposed than you're comfortable with.

Russia, China and Turkey leading the gold rush

Hungary's decision on gold repatriation was not something that made the mainstream news. After all, 100,000 ounces is very little when you consider than Russia increased its physical gold exposure by 20 tons in January 2018 alone.

Hungary decision is, however, a major comment on the current mindset of countries that feel they need to start working to protect their finances and borders. Hungary's political changes are widely known and have been criticised extensively by both the EU and wider Western world.

The decision to bring gold home is a statement that says Prime Minister Viktor Orban would rather have the country's assets close to home rather than in the hands-off a country that perhaps does not have his own best interests at heart.

This is a common theme, not just reflected in gold repatriation decisions but also in gold purchases.

Russia, China and Turkey have each materially increased their gold reserves in recent years. Since March 2015 Russia has bought gold every single month. January's purchase took their reserves above those of China, a level which had previously been monitored as an example of the East's great interest in moving away from US dollar dominance.

China has been famously coy about its gold reserves. apart from the period from July 2015 to October 2016, China only reported its gold reserve increases at various multi-year intervals. Most recently it has been reporting zero additions to the IMF.

Russia's reasons for buying so much gold is akin to those of China, Turkey and smaller countries such as Kazakhstan. Gold gives each of these countries independence from the US dollar amid financial sanctions, trade wars and ongoing posturing by the West.

The West is also full of gold bugs

Whilst many in the West are dismissive about gold, the behaviour of central banks suggests quite a different mindset. The top four holders of gold are all from the West. Germany, the second largest has been making big strides of late to show their interest and faith in gold.

Not only did they make the decision to repatriate a late proportion of their gold back to home soil but they also recognised that transparency when it came to the country's gold reserves was paramount.

'...another milestone and a global first, an additional fourth step towards increasing transparency was taken with the publication of a list of all German gold bars, totalling around 270,000 in number. The Bundesbank has now published this roughly 2,400-page list three times since October 2015, even though it involved a series of significant challenges. There is no ‘blueprint’ for inventory lists of gold holdings and, in 2015, virtually no central bank in the world had ever released such a list.'

 

Act like a central bank

Gold cannot be devalued as the euro, dollar, sterling and all fiat currencies currently are. It cannot be confiscated as can deposits through bank bail-ins and it is extremely difficult to confiscate gold coins and bars if owned in allocated and segregated storage in safe vaults in the safest jurisdictions in the world.

Gold is a borderless money that acts as the ultimate reserve and safe haven in a diversified portfolio. This is something central banks are strongly aware of. The difference between the East and West banks is that the East is making big strides to bring gold to the forefront of their international affairs.

By adding gold to their reserves they are gaining equal footing with Western banks who have so far tried to dominate under a US-centric financial system.

Much of the above may sound as though it does not apply to the everyday saver and investor, but that couldn't be further from the truth. The decision to move assets into physical gold is a decision to take control of your portfolio and to reduce the counterparty risk to which it is exposed. This is no different whether you are a bank with billions or a person with a few thousand.

Recommended reading

Russian Central Bank Buys Gold – 600,000 Ounces Or 18.7 Tons In January As Venezuela Launches ‘Petro Gold’

Turkey, Gold and the End of US Dollar Hegemony

News and Commentary

Gold prices edge higher as dollar sags (Reuters.com)

Asian Stocks Mixed Ahead of U.S. Data; Yen Higher (Bloomberg.com)

U.S. February budget report shows first sign of wider deficits to come (MarketWatch.com)

Stocks Retreat Before Price Data; Dollar Drops (Bloomberg.com)

Here’s the ideal amount of gold to keep in your investment portfolio (MarketWatch.com)


Source: Gadfly, Bloomberg.

Jim Grant: "Uncomfortable Shocks" Lie Ahead As The Great Bond Bear Market Begins (ZeroHedge.com)

Sea Change Is Underway in Money Markets for Banks, Investors (Bloomberg.com)

Central Banks Are Looking for New Ways to Meet Inflation Targets (Bloomberg.com)

Gary North on central banking, gold, federal debt, and Keynesianism (Barbarous-Relic)

Getting the Cartier Crowd Hooked on Cheap Credit (Bloomberg.com)

Gold Prices (LBMA AM)

13 Mar: USD 1,318.70, GBP 948.94 & EUR 1,069.60 per ounce
12 Mar: USD 1,317.25, GBP 950.66 & EUR 1,069.87 per ounce
09 Mar: USD 1,319.35, GBP 955.21 & EUR 1,072.50 per ounce
08 Mar: USD 1,325.40, GBP 955.08 & EUR 1,070.39 per ounce
07 Mar: USD 1,332.50, GBP 960.07 & EUR 1,071.86 per ounce
06 Mar: USD 1,324.95, GBP 957.01 & EUR 1,074.00 per ounce
05 Mar: USD 1,326.30, GBP 958.78 & EUR 1,075.63 per ounce

Silver Prices (LBMA)

13 Mar: USD 16.51, GBP 11.88 & EUR 13.38 per ounce
12 Mar: USD 16.46, GBP 11.88 & EUR 13.39 per ounce
09 Mar: USD 16.49, GBP 11.92 & EUR 13.40 per ounce
08 Mar: USD 16.48, GBP 11.89 & EUR 13.31 per ounce
07 Mar: USD 16.65, GBP 12.01 & EUR 13.42 per ounce
06 Mar: USD 16.62, GBP 11.96 & EUR 13.41 per ounce
05 Mar: USD 16.51, GBP 11.95 & EUR 13.42 per ounce


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Comments

saldulilem Tue, 03/13/2018 - 12:53 Permalink

Nice article, but the author forgot to actually present any arguments in support of how (1) Hungary repatriating gold from London implies (2) a growing protest against US dollar hegemony.

Observant Tue, 03/13/2018 - 15:00 Permalink

I wonder whatever happened to the 800 tonnes of Libya's gold after Qaddafi was murdered?

   Maybe in some underground vault in Tel Aviv?

 

Just askin'....

Moe Howard WarPony Wed, 03/14/2018 - 02:05 Permalink

Now you know why it suddenly became URGENT to "free" Libya from Quadaffy Duck.

He was good for decades as the boogieman, until Chavez demanded his country's gold back - and Quadaffy Duck started talking Gold for African Oil. Can't have that of course.

Once TPTB got the gold, and eliminated the Gold for Oil scheme, they left Libya a smoking ruin and the years have shown, they don't seem to give a flying fuck about the people they "freed".

In reply to by WarPony

Maestro Maestro Tue, 03/13/2018 - 15:11 Permalink

Worse than the bankers rigging gold and silver prices and not having the gold that they sold you (or selling gold that they don't have via fraudulent LME unallocated paper spot contracts or COMEX Futures contracts) is the fact that we don't even have MONEY today.  Therefore all financial transactions and economic numbers predicated on the existence of money are FRAUD and FORGERIES presently.

 

Electronic digits and paper fiat currencies in use today are NOT money, according to the law of the country that issues the reserve currency of the world, the US Dollar (Article 1, Section 10 of the US Constitution); or by the tenets of the science of Economics (i.e., fiat currencies are not money because they are not a store of value nor a unit of account due to the fact that NOT ONE fiat currency's value is actually determined or stipulated in concrete legal terms).  Dollars and Euros and Yens are not even lawfully DEFINED as to what they all are exactly; what their economic worth and transactional value is.  Hence, fiat currencies simply cannot constitute the legal foundation of any lawful contract! 

 

 (Also, there cannot be either inflation nor deflation in the ABSENCE of money.  Both inflation and deflation are monetary events which cannot take place where there literally is no money.)

What we have today is massive GLOBAL FRAUD mascarading as a monetary system based on the (fraudulent) US dollar because all fiat currencies are basically only a derivative of the US dollar, including the Euro, the Yen, the Yuan, the Rouble, the Shekel and the Riyal.  Furthermore, why do a few people get the right to print fake fiat money out of nothing and buy your goods and services with it whereas you have to WORK to obtain the same worthless money created out of nothing?  THAT is the question at the heart of the matter.

 

That the bankers manipulate interest rates or the price of gold via fraudulent Futures trading (by selling gold that they don't have) with fiat money is a moot point.  To put it differently: why do the bankers get to have anything that they want without working for it and you, you don't?  All this talk about market rigging, monetary theory and fraudulent (paper) gold trading is a cover-up for INJUSTICE.  The US Constitution FORBIDS the use of debt as money; the US Constitution proscribes (debt) notes which is what the US dollar is presently.  

Think, all other currencies are just another name for the US Dollar.  What passes for money today is a CRIME, no more no less.  

 

People, you are all aiding and abetting this crime every time you buy, sell, pay or get paid.  And then you ask, Why our leaders, the politicians, the bankers, and our military men and women are EVIL?  The answer is, because they are just like YOU.  They are your sons and daughters. 

 

Maestro Maestro Moe Howard Wed, 03/14/2018 - 05:43 Permalink

Regardless of what they call it, the Constitution prohibits debt (notes) as money.

Furthermore, the Fed itself is illegal as the Constitution states that the Congress has the duty of managing the country's money.  The Congress is guilty of treason for outsourcing their fiduciary responsibility to the Fed and thus breaking the law of the land.

In reply to by Moe Howard

Moe Howard Old Codger Wed, 03/14/2018 - 02:13 Permalink

I believe that the US number is including the gold in the ground that has yet to be dug up.

 

There is gold in Fort Knox, old dirty bars from the early 1900s, there are other "things" as well. I have lived and worked here [Fort Knox area] for 25 years now, driving past the Depository for many a year twice a day or more.

 

What you don't see is gold deliveries. What is there is there. Nothing has been added to my knowledge for at least 25 years.

In reply to by Old Codger

rtb61 Wed, 03/14/2018 - 03:32 Permalink

The underlying reality, the Gold is theirs, why shift it back home, well, they do not trust the countries holding the gold, the one and only reason for doing so. Clearly they believe that if push comes to shove the US/UK and even Switzerland will steal the gold held for other countries.

This is a collapse of trust as a result of too many lies exposed. Of course gold, not really that useful a metal, not like you can generate energy from it, in this case, just a major measure of the loss of trust in both the US and UK, those governments names are mudd https://en.wikipedia.org/wiki/Samuel_Mudd.

Yet they keep bullshitting like everyone still believes protected from the truth by sheer unadulterated arrogance, just protected from the truth, not at all protected from the consequences of the truth. Trying to force a constructive change of course over the current destructive one, quite the interesting hobby, if you all join it, perhaps it can be made to happen ;D.