Gold price decline: Did the BIS liquidate 34 tonnes of gold?

BIS sold gold

The Bank for International Settlements (BIS) reports a significant decline in its gold positions at the end of September 2019. The value of gold in the balance sheet item “Assets” fell by USD 2.54 billion to USD 29.4 billion compared with the previous month. According to calculations by Goldreporter at the time of preparing the accounts, this corresponded to an outflow of 34.42 tonnes of gold to 616.54 tonnes.

 

Gold price falls with stocks

The assets listed by the BIS under “Gold and gold receivables” declined by USD 540.6 million to USD 18.53 billion (-2.8%). This results in a decrease of 0.06 tonnes to 388.13 tonnes. The price of gold fell by 2.82 percent in the same period (London P.M.). The price discount in September on the basis of FOREX trading even amounted to 3.7 percent. It is noticeable that the gold price development correlates again and again with the changes in the gold positions of the BIS (see chart below). The BIS gold position (under “Assets”) rose by an estimated 67 tonnes in August, while the gold price rose by 6.4 per cent.

 

Gold market giant BIS

Background: The Bank for International Settlements (BIS) in Basel is regarded as the central bank of central banks. It is also one of the most important players on the international gold market. Once a month, the supranational financial institution submits an accounting report. The report also includes the “gold holdings” of the bank. This includes in particular the position “Gold and gold receivables” which can be found in the report under “Assets”. In general, all items are shown in the IMF exchange rate currency SDR (Special Drawing Rights). Therefore, a conversion into US dollars and a valuation of the figures with the gold price at the time of accounting are required in order to derive weight values in the gold holdings. It is completely unclear whether the reported gold is real gold bars or only gold receivables (swaps, options, futures/forwards).