Ok, so we hear the Finnish Finance Minister say that only half their gold is leased. “It is very common”, they say.. Like a Money Market deal.
So what is leasing?
In a lease, the Central Bank “lends” gold to a commercial bank (called a bullion bank, e.g. HSBC, JP Morgan etc.) and the bullion banks SELL that gold they borrowed.
Why? Because they can borrow gold from the Central Bank for a fraction of a percent, insure themselves in the paper market against price rises for another fraction of a percent, and earn 2.5% on a US Treasury. It’s free money for them, as long as they can pay back the ACTUAL gold at the end of the lease….
That’s the rub. If the gold was sold, it’s sitting in someone’s vault. They own it. They possess it.
When the bullion bank comes to repay its golden loan to the Central Bank, they’d better pray they can lay their hands on some ACTUAL gold.
The figures of late suggest that over the last decade or so, as much as half of Central Bank gold is gone. Literally gone. Sitting in someone’s safe.
When the vaults are audited, there’ll be hell to pay.
Here’s a nice analysis by Eric Sprott, and another older one by Frank Veneroso.
All point to large holes in the gold stored by our Western Central Banks.
The IMF, incidentally allows, nay, ENCOURAGES the Central Banks to cover it all up. They allow the Central Banks
to list “(4) gold (including gold deposits and, if appropriate, gold swapped)”
as ONE LINE ITEM, under ASSETS. How can a piece of swapped gold be an asset? It’s gone! It’s a Liability!
(e.g. here for the ECB, see item (4):)
For the record, here is Austria’s Finance Minister admitting they do it too:
“Since 2007 Austria’s National bank had had a constant reserve of around 280 tons of gold. Through leasing of its gold the Austrian National Bank has in the last 10 years earned around 300,000,000 euros.
The bank’s governor Wolfgang Duchatczek revealed the statistics”
Oh, and Germany, don’t even ask for the other 1500 tonnes back!