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Over 50% of Finland’s Gold in Bank of England

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The Bank of Finland has announced that over 50% of the countries Gold reserves are held in London. Finland joins a long list of Western countries whose Gold reserves are stored at either New York, London or both. This leads credibility to the claim that Central Banks have been leasing and loaning out its Gold reserves to help surpress gold prices.

The Bank of Finland’s reserves include 49.035 tonnes of gold, valued at a market price of EUR 1,559 million as at 25 October 2013.

The Bank has confirmed the current arrangements for storing the gold held in its reserves. Having received the agreement of the central banks involved, it has decided to publish this information. The gold is stored on a geographically decentralised basis at a number of central banks: 51% is in the United Kingdom (Bank of England), 20% in Sweden (Sveriges Riksbank), 18% in the United States (Federal Reserve Bank of New York), 7% in Switzerland (Schweizerische Nationalbank) and 4% in Finland (Bank of Finland).

 

Source: Bank of Finland

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Bundesbank Looks For Its Gold Back From New York Fed – Who is Next?

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The move everybody suspected would happen one day has been reported by Handlesblatt that the Bundesbank is looking to repatriate its gold from the New York Fed. There has been much noise in Germany about auditing its gold within the New York Fed only to be rebuffed.  Indeed Germany will not be alone in repatriating its gold if this story proves to be true. Chavez started the trend but expect many more countries to follow quickly. Nobody wants to be the last man standing.

In what could be a watershed moment for the price, provenance, and future of physical gold, not to mention the “stability” of the entire monetary regime based on rock solid, undisputed “faith and credit” in paper money, German Handelsblatt reports in an exclusive that the long suffering German gold, all official 3,396 tons of it, is about to be moved. Specifically, it is about to be partially moved out of the New York Fed, where the majority, or 45% of it is currently stored, as well as the entirety of the 11% of German gold held with the Banque de France, and repatriated back home to Buba in Frankfurt, where just 31% of it is held as of this moment. And while it is one thing for a “crazy, lunatic” dictator such as Hugo Chavez to pull his gold out of the Bank of England, it is something entirely different, and far less dismissible, when the bank with the second most official gold reserves in the world proceeds to formally pull some of its gold from the bank with the most. In brief: this is a momentous development, one which may signify that the regime of mutual assured and very much telegraphed – because if the central banks don’t have faith in one another, why should anyone else? – trust in central banks by other central banks is ending.

Much more importantly, it is being telegraphed as such, with Buba fully aware of just what the consequences of this (first partial, and then full; and certainly full vis-a-vis the nouveau socialist regime of Francois Hollande which will soon hold zero German gold) repatriation will be in a global monetary arena, which is already scraping by on the last traces of faith in a monetary system that is slowly but surely dying but first diluting itself to oblivion. And in simple game theory terms, the first party to defect from the prisoner’s dilemma of all the bulk of global gold being held by the Fed, defects best. Then the second. Then the third. Until, in this particular case, the last central bank to pull its gold from the NY Fed and the other 2 primary depositories of developed world gold, London and Paris, just happens to discover their gold was never there to begin with, and instead served as collateral to paper gold subsequently rehypothecated several hundred times, and whose ultimate ownership deed is long gone.

It would be very ironic, if the Bundesbank, which many had assumed had bent over backwards to accommodate Mario Draghi’s Goldmanesque demands to allow implicit monetization of peripheral nations’ debts has just “returned the favor” by launching the greatest physical gold scramble of all time.

A translated paragraph from Handlesblatt reads

The German Bundesbank is developing a new approach as to where its gold will be stored. According to exclusive information, to be fully announced on Wednesday, the bank will in the future hold less gold in the New York Fed, and no more hold in Paris (Banque de France). As a result, the distribution of German gold, of which 45% is held in New York, 13% in London, 11% in Paris and 31% in Frankfurt, is about to change.

ZeroHedge pointed out in its article, a number of speeches given by German officials outlying its trust for the New York Fed but asks what has happened since then.

So we wonder: what changed in the three months between November and now, that has caused such a dramatic about face at the Bundesbank, and that in light of all of the above, will make is explicitly very unambigous that the act of gold repatriation, assuming of course that Handelsblatt did not mischaracterize what is happening and misreport the facts, means the “excellent relationship” between the Fed and Buba, not to mention Banque de France which will shortly hold precisely zero German gold, has just collapsed.

Also, if the Bundesbank is first, who is next?

Finally, once the scramble to satisfy physical gold deliverable claims manifests itself in the market, we can’t help but wonder what will happen to the price of gold: both paper and physical?

Source: ZeroHedge

Venezuela Holds Largest Oil Reserves In World

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Saudi Arabia is no longer number one. Venezuela now holds the title of the largest(provable) oil reserves in the world. Chavez better watch out, there will be a lot of eyes on those reserves.

BP has just released its annual Statistical Review of World Energy in which it claims that Venezuela now holds the largest proven oil reserves in the world, overtaking the original leader Saudi Arabia.

The South American nation’s oil deposits were increased from last year’s figure to an estimated at 296.5 billion barrels, more than Saudi Arabia’s 265.4 billion barrels.

Global reserves have been increased by 1.9 percent from last year’s 1.62 trillion barrels to 1.65 trillion. Robert Wine, a spokesman from BP, explained that the reason for the revisions is that BP’s review is published in June, before most countries issue their annual reserve figures.

Last year’s average oil price was also at record levels which meant that lots of hard-to-reach oil deposits became commercially viable. North Sea Brent crude oil, a general benchmark for most of the world’s oil, averaged $107.38 a barrel in 2011.

Oil reserves in Venezuela now account for about 17.9 precent of the world’s oil; Saudi Arabia hold 16.1 percent; whilst Canada are third with 10.6 percent.

The Venezuelan president Hugo Chavez yesterday released plans that promise he will more than double the countries oil production capacity by 2019, if re-elected in October.

All of BP’s estimates were calculated from a combination of official sources, OPEC data, and other third party estimates.

Source: Oilprice.com

Back Of Envelope Calculation Of Gold Sales

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Calculations taken from an Eric Sprott presentation.

And perhaps I can explain it best just by comparing ‘10 to ‘11.In ’10 we had the IMF theoretically selling 400 tons of gold.This year we have central banks buying 400 tons of gold.That’s an 800 ton change in one year in a 4,000 ton market.We’re getting data outta China which suggests that their purchases might be up 3 or 400 tons this year.

So with those two items I can come up with one 1,100 tons of change year over year in a stagnant market that provides 4,000 tons available.Where could the gold possibly have come from?And I have no other conclusion to come to other than to believe that central banks are surreptitiously continuing to lease out their gold.And then when they lease it out they essentially lease it to a bullion dealer who sells it to the real buyer and the bullion dealer owes it back to the central bank who still says they own it but of course getting it back won’t be easy because of the shortage.

And what about China, as figures show demand is clearly rising

this shows the gold imports that mainland China receives from Hong Kong.And this date is up to November of this year.And you can see the stunning change in demand whereas most months was below 20 tons, we’ve had a series of month where it goes 20, 40, 50, 60, 80 and the latest month which was November was 102 tons.As I mentioned, the annual production of mines is around 2,700 tons, 350 that’s produced in China; none of it leaves the country.The world has 2,350 tons left to buy which is less than 200 a month and China bought 102 tons of that last month.

Pension funds have been massively short of gold in their portfolios as a hedge in recent years and are now due to beef up their holdings.

the World Gold Council that basically said studies were done showing that even a pension plan that had minimal amount of risk should have two or three percent of their investment in gold, medium risk would be four to nine, max risk or high risk would be at ten percent.And just to put that all in reference, the amount of gold in gold stocks that is available in the world’s investment pool today is .75 percent of all assets.So even just to get to two would imply a huge influx of buying in both bullion and equities from that sector.But the work stands up to analysis and I think ultimately the pension fund advisors will have to go there.

Then there’s gold’s relationship to silver in its price.

A company called Gold Money that many of you might know that’s on the Internet, their sales of gold and silver are just about equal and I’m unofficially I think the Royal Canadian Mint’s about 1.5 to 1.And all I can suggest to you is if people keep buying gold and silver at a 1 to 1 ratio, there’s no way in this earth that the price could be 55 to 1.In other words you’re buying 55 times more silver and even just the relationship of silver to gold, there’s 80 million ounces of gold available per year.There’s 900 million ounces of silver.That would imply something like 11 to 1 ratio but half the silver’s used in industry.So it really is something like 5.5 to 1 is the ratio of what’s available and yet the prices are trading at a 55 to 1 ratio.

 

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