DarkRange55
We are now gods but for the wisdom
- Oct 15, 2023
- 2,044
Central bank gold leasing developed after the collapse of Bretton Woods in 1971, when currencies no longer required gold backing but central banks still held vast reserves they wanted to make productive. The typical lease involved a central bank lending gold bars—often 400-ounce loco London bars—to a bullion bank such as JPMorgan or Deutsche Bank. The bullion bank would sell the gold into the OTC market, invest the cash proceeds, and later buy gold back to return to the central bank at maturity, paying a small lease rate, usually under 1%. Swaps worked similarly, exchanging gold for cash and reversing later. This system expanded in the 1980s and 1990s, with thousands of tonnes circulating, until the Washington Agreement on Gold in 1999 capped official sales and declared that leasing and derivatives activity would not be expanded further, because by then official loans outstanding among the signatories were about 2,119 tonnes—roughly 15% of their official holdings at the time. The leasing market gave bullion banks cheap financing and liquidity, and let central banks earn a modest yield, but it also fed criticism that leasing was being used as a political tool to suppress gold prices. By boosting supply through leased gold, critics argued, central banks artificially kept prices low during a period when high gold prices were seen as a sign of inflation and distrust in fiat money. Organizations like the Gold Anti-Trust Action Committee (GATA), analysts Frank Veneroso and James Turk, and academics such as Rosa Abrantes-Metz, who found anomalies in the London PM fix, pointed to evidence of possible manipulation. Defenders, including the Bundesbank, mainstream economists, and analysts like Peter Fertig, countered that leasing was a standard liquidity operation, that logistical constraints explained slow deliveries, and that macroeconomic factors such as the dollar's strength and interest rates drove prices far more than official activity.
Germany's gold repatriation saga illustrates these tensions. After World War II, West Germany had accumulated gold through trade surpluses and stored it abroad in New York, London, and Paris. This was done partly out of Cold War security fears, as gold in Germany was seen as vulnerable to a Soviet invasion, and partly for practical reasons, since holding gold at the New York Fed and Bank of England gave Germany immediate access to the deepest FX and gold markets. For decades this was not questioned. But by the early 2010s, mistrust rose. In October 2012 the Federal Court of Auditors (Bundesrechnungshof) criticized the Bundesbank for failing to conduct physical audits of its foreign-held gold and demanded systematic verification. This fueled parliamentary debate, with figures like Peter Gauweiler of the CSU, Philipp Mißfelder of the CDU, and Marco Wanderwitz of the CDU pressing for inspections, which the Bundesbank and Fed denied. Grassroots groups such as "Holt unser Gold heim!" ("Bring our Gold Home!") amplified the issue, and the newly formed Alternative für Deutschland (AfD) seized on it as a sovereignty symbol. In January 2013, months before Merkel's September election, the Bundesbank announced it would repatriate 674 tonnes—300 from New York, 374 from Paris—by 2020, so that about 50% of Germany's reserves would be in Frankfurt, 37% still in New York, and 13% in London. While the timing helped neutralize euroskeptic pressure ahead of the election, there is no hard evidence the decision was a direct political concession to a minority party; rather, it reflected auditor pressure, public opinion, and a desire to reassure voters before the election. Merkel's government avoided making it a campaign theme, leaving the Bundesbank to manage it as a central bank issue.
Initially the Fed said it would take seven years to deliver 300 tonnes, citing the need for secure transport, careful scheduling, and the technical requirement that many old bars from the 1950s–1960s be assayed, melted, and recast into modern London Good Delivery standards, which critics saw as suspicious if the bars had really been untouched for decades. Upon arrival, Bundesbank experts inspected the gold for authenticity, weight, and purity. But by August 2017 the Bundesbank declared the plan complete three years ahead of schedule, having repatriated the full 674 tonnes from New York and Paris. It did not, however, bring everything home. About half of its reserves remain in New York and London, which the Bundesbank defended as deliberate: gold in London and New York can be mobilized quickly for swaps and leasing in the world's most mature trading hubs, while gold in Frankfurt is secure but essentially "dead weight" outside those markets. Moving too much home would have reduced floating supply available for lease and impaired liquidity. This balance—about 50% in Frankfurt for sovereignty (roughly 1,676 tonnes out of 3,352 tonnes as of 2025), 37% in New York (around 1,239 tonnes), and 13% in London (about 437 tonnes)—was Germany's compromise, with no gold left in Paris.
The controversy highlighted the opacity of the gold market. The London OTC market is bilateral and largely private, with trades not reported in real time. Custodians often hold gold in pooled accounts rather than by serial number, and practices like rehypothecation allow multiple claims against the same bars. Since the end of the GOFO benchmark in 2015, transparency has decreased further. Critics say this structure hides manipulation and excessive leverage, while defenders argue it is normal wholesale practice and that the LBMA has expanded clearing and vault data to improve reporting. This opacity, combined with documented manipulation cases in precious-metals futures—including JPMorgan's $920m spoofing settlement—keeps suspicions alive.
As for the United States itself, it holds about 8,133 tonnes of gold, owned by the Treasury and stored mainly at Fort Knox (approximately 4,583 tonnes), West Point (about 1,680 tonnes), and Denver (around 1,366 tonnes), with a small working stock across locations. These are classified as "deep-storage" reserves under Treasury control, and the Treasury's Office of Inspector General conducts recurring audits of the Mint's custodial schedules. The New York Fed does hold gold, but only as custodian for foreign central banks and the IMF, under terms that recognize it as the depositor's property and only movable by the depositor's instruction. The Fed does not lease or sell custodial gold on its own account, and the Treasury insists U.S. gold is not leased, swapped, or encumbered. There is no documentary evidence that JPMorgan or any bullion bank leases U.S. government gold from the Fed; such claims rely on inference and speculation about delayed deliveries, not proof. The public record—Treasury audits, Fed custody arrangements, and Washington Agreement disclosures—supports the view that U.S. official gold is not in the leasing market.
Leasing continues globally, but not on the scale of the 1990s. At its peak, 15–20% of official reserves were out on loan; today the precise figure is unknown because no authority publishes totals. Industry analysts estimate several thousand tonnes remain on lease worldwide at any given time, but "20% today" is at the high end and not corroborated by official data, with recent focus shifting more toward central bank gold purchases (over 1,000 tonnes annually in recent years) rather than leasing volumes. What is certain is that London and New York remain the active leasing hubs, while Frankfurt does not. Germany's decision to leave half of its reserves in those hubs reflects this reality: gold at home reassures the public, but gold abroad ensures access to global liquidity.
Switzerland historically held one of the world's largest official gold reserves, peaking at about 2,590 tonnes around 2000. For most of the 20th century, the Swiss constitution required that at least 40% of the Swiss franc be backed by gold, which gave the SNB little flexibility. In the 1990s, however, Switzerland modernized its monetary framework and amended its constitution, first proposing to lower the backing to 25%, then eliminating it entirely with a 1999 amendment that took effect in 2000. This change reclassified a large share of the SNB's reserves as "excess gold." Under the 1999 Washington Agreement, Switzerland, though not in the EU, signed on and became one of the most aggressive sellers. From 2000 to 2005, the SNB sold over 1,300 tonnes; by 2007, the total reached roughly 1,550 tonnes. The proceeds—tens of billions of Swiss francs—were distributed: two-thirds to the cantons and one-third to the federal government. These disposals halved Switzerland's stockpile to around 1,040 tonnes, which remains the level today. No further large sales have been made since 2007. The SNB explained the sales as rational: gold was no longer required for monetary backing, and diversifying into other assets would allow for more flexible policy. Critics, however, later argued the bank sold near historic lows ($250–$400/oz in the early 2000s, compared to more than $3,500/oz today), and that this represented one of the greatest lost opportunities in modern central banking.
Storage of Switzerland's remaining gold has historically been split between domestic and foreign vaults. Like Germany, Switzerland kept part of its gold in London for liquidity, since London is the world's most active OTC gold trading and leasing hub, ensuring immediate access to markets. A smaller portion was kept in Canada, primarily during the Cold War, as a geopolitical hedge—ensuring that some reserves would be beyond Europe if the continent ever faced crisis or invasion. The rest was stored domestically in Switzerland. The distribution has remained relatively stable, with roughly 70% held domestically (primarily in Bern and a federal bunker near Kandersteg), 20% at the Bank of England in London, and 10% at the Bank of Canada. There has been no major repatriation program like Germany's, but Switzerland's mix reflects its long-standing emphasis on both security and liquidity.
In 2014, the "Save Our Swiss Gold" referendum was launched by the Swiss People's Party (SVP) and allied activists. It proposed three sweeping changes: require the SNB to hold at least 20% of its total assets in gold, repatriate all Swiss gold held abroad, and ban any future gold sales. Supporters argued that gold was a timeless safeguard against currency debasement, that the SNB had erred in selling so much at low prices, and that re-establishing a gold floor would strengthen the franc and restore trust. The SNB, the government, and nearly all mainstream parties opposed the initiative. They warned that it would severely limit monetary policy flexibility, especially since the SNB was at that time intervening heavily to enforce its 1.20 CHF/EUR exchange-rate floor. Forcing the bank to acquire around 1,500 tonnes of gold over five years, regardless of price, would have drained resources and potentially driven the franc even higher, hurting Switzerland's export sector. They also argued that banning sales entirely would lock the SNB into an inflexible balance sheet. On 30 November 2014, voters decisively rejected the proposal: 77.3% voted "No," with 22.7% supporting it. Every canton voted against it. The rejection preserved the SNB's independence and left its reserves policy unchanged. Within weeks, in January 2015, the SNB shocked markets by abandoning the 1.20 EUR/CHF peg—illustrating precisely why it had fought to keep maximum flexibility.
Today Switzerland remains a major official holder, with about 1,040 tonnes of gold (valued at roughly $119 billion as of September 2025), ranking seventh in the world. While most of it is now held domestically, a share remains abroad in London and Canada to ensure liquidity in the world's deepest leasing and trading market. The referendum defeat confirmed that the Swiss public values gold as a symbol of stability but ultimately prioritized central bank independence and monetary policy freedom.
https://www.bloomberg.com/news/arti...dy-shows-signs-of-decade-of-bank-manipulation
Dr. Rosa Abrantes-Metz, a former adjunct professor at NYU Stern, known for her research on market manipulation. She co-authored a study showing suspicious downward price moves during the London PM gold fix (2001–2013), suggesting possible collusion among the banks setting the benchmark. Her work gained wide media attention, triggered lawsuits, and prompted investigations by U.S. and European regulators into gold and silver price fixing.
There are several other notable studies and investigations that have explored gold price manipulation.
Germany's gold repatriation saga illustrates these tensions. After World War II, West Germany had accumulated gold through trade surpluses and stored it abroad in New York, London, and Paris. This was done partly out of Cold War security fears, as gold in Germany was seen as vulnerable to a Soviet invasion, and partly for practical reasons, since holding gold at the New York Fed and Bank of England gave Germany immediate access to the deepest FX and gold markets. For decades this was not questioned. But by the early 2010s, mistrust rose. In October 2012 the Federal Court of Auditors (Bundesrechnungshof) criticized the Bundesbank for failing to conduct physical audits of its foreign-held gold and demanded systematic verification. This fueled parliamentary debate, with figures like Peter Gauweiler of the CSU, Philipp Mißfelder of the CDU, and Marco Wanderwitz of the CDU pressing for inspections, which the Bundesbank and Fed denied. Grassroots groups such as "Holt unser Gold heim!" ("Bring our Gold Home!") amplified the issue, and the newly formed Alternative für Deutschland (AfD) seized on it as a sovereignty symbol. In January 2013, months before Merkel's September election, the Bundesbank announced it would repatriate 674 tonnes—300 from New York, 374 from Paris—by 2020, so that about 50% of Germany's reserves would be in Frankfurt, 37% still in New York, and 13% in London. While the timing helped neutralize euroskeptic pressure ahead of the election, there is no hard evidence the decision was a direct political concession to a minority party; rather, it reflected auditor pressure, public opinion, and a desire to reassure voters before the election. Merkel's government avoided making it a campaign theme, leaving the Bundesbank to manage it as a central bank issue.
Initially the Fed said it would take seven years to deliver 300 tonnes, citing the need for secure transport, careful scheduling, and the technical requirement that many old bars from the 1950s–1960s be assayed, melted, and recast into modern London Good Delivery standards, which critics saw as suspicious if the bars had really been untouched for decades. Upon arrival, Bundesbank experts inspected the gold for authenticity, weight, and purity. But by August 2017 the Bundesbank declared the plan complete three years ahead of schedule, having repatriated the full 674 tonnes from New York and Paris. It did not, however, bring everything home. About half of its reserves remain in New York and London, which the Bundesbank defended as deliberate: gold in London and New York can be mobilized quickly for swaps and leasing in the world's most mature trading hubs, while gold in Frankfurt is secure but essentially "dead weight" outside those markets. Moving too much home would have reduced floating supply available for lease and impaired liquidity. This balance—about 50% in Frankfurt for sovereignty (roughly 1,676 tonnes out of 3,352 tonnes as of 2025), 37% in New York (around 1,239 tonnes), and 13% in London (about 437 tonnes)—was Germany's compromise, with no gold left in Paris.
The controversy highlighted the opacity of the gold market. The London OTC market is bilateral and largely private, with trades not reported in real time. Custodians often hold gold in pooled accounts rather than by serial number, and practices like rehypothecation allow multiple claims against the same bars. Since the end of the GOFO benchmark in 2015, transparency has decreased further. Critics say this structure hides manipulation and excessive leverage, while defenders argue it is normal wholesale practice and that the LBMA has expanded clearing and vault data to improve reporting. This opacity, combined with documented manipulation cases in precious-metals futures—including JPMorgan's $920m spoofing settlement—keeps suspicions alive.
As for the United States itself, it holds about 8,133 tonnes of gold, owned by the Treasury and stored mainly at Fort Knox (approximately 4,583 tonnes), West Point (about 1,680 tonnes), and Denver (around 1,366 tonnes), with a small working stock across locations. These are classified as "deep-storage" reserves under Treasury control, and the Treasury's Office of Inspector General conducts recurring audits of the Mint's custodial schedules. The New York Fed does hold gold, but only as custodian for foreign central banks and the IMF, under terms that recognize it as the depositor's property and only movable by the depositor's instruction. The Fed does not lease or sell custodial gold on its own account, and the Treasury insists U.S. gold is not leased, swapped, or encumbered. There is no documentary evidence that JPMorgan or any bullion bank leases U.S. government gold from the Fed; such claims rely on inference and speculation about delayed deliveries, not proof. The public record—Treasury audits, Fed custody arrangements, and Washington Agreement disclosures—supports the view that U.S. official gold is not in the leasing market.
Leasing continues globally, but not on the scale of the 1990s. At its peak, 15–20% of official reserves were out on loan; today the precise figure is unknown because no authority publishes totals. Industry analysts estimate several thousand tonnes remain on lease worldwide at any given time, but "20% today" is at the high end and not corroborated by official data, with recent focus shifting more toward central bank gold purchases (over 1,000 tonnes annually in recent years) rather than leasing volumes. What is certain is that London and New York remain the active leasing hubs, while Frankfurt does not. Germany's decision to leave half of its reserves in those hubs reflects this reality: gold at home reassures the public, but gold abroad ensures access to global liquidity.
Switzerland historically held one of the world's largest official gold reserves, peaking at about 2,590 tonnes around 2000. For most of the 20th century, the Swiss constitution required that at least 40% of the Swiss franc be backed by gold, which gave the SNB little flexibility. In the 1990s, however, Switzerland modernized its monetary framework and amended its constitution, first proposing to lower the backing to 25%, then eliminating it entirely with a 1999 amendment that took effect in 2000. This change reclassified a large share of the SNB's reserves as "excess gold." Under the 1999 Washington Agreement, Switzerland, though not in the EU, signed on and became one of the most aggressive sellers. From 2000 to 2005, the SNB sold over 1,300 tonnes; by 2007, the total reached roughly 1,550 tonnes. The proceeds—tens of billions of Swiss francs—were distributed: two-thirds to the cantons and one-third to the federal government. These disposals halved Switzerland's stockpile to around 1,040 tonnes, which remains the level today. No further large sales have been made since 2007. The SNB explained the sales as rational: gold was no longer required for monetary backing, and diversifying into other assets would allow for more flexible policy. Critics, however, later argued the bank sold near historic lows ($250–$400/oz in the early 2000s, compared to more than $3,500/oz today), and that this represented one of the greatest lost opportunities in modern central banking.
Storage of Switzerland's remaining gold has historically been split between domestic and foreign vaults. Like Germany, Switzerland kept part of its gold in London for liquidity, since London is the world's most active OTC gold trading and leasing hub, ensuring immediate access to markets. A smaller portion was kept in Canada, primarily during the Cold War, as a geopolitical hedge—ensuring that some reserves would be beyond Europe if the continent ever faced crisis or invasion. The rest was stored domestically in Switzerland. The distribution has remained relatively stable, with roughly 70% held domestically (primarily in Bern and a federal bunker near Kandersteg), 20% at the Bank of England in London, and 10% at the Bank of Canada. There has been no major repatriation program like Germany's, but Switzerland's mix reflects its long-standing emphasis on both security and liquidity.
In 2014, the "Save Our Swiss Gold" referendum was launched by the Swiss People's Party (SVP) and allied activists. It proposed three sweeping changes: require the SNB to hold at least 20% of its total assets in gold, repatriate all Swiss gold held abroad, and ban any future gold sales. Supporters argued that gold was a timeless safeguard against currency debasement, that the SNB had erred in selling so much at low prices, and that re-establishing a gold floor would strengthen the franc and restore trust. The SNB, the government, and nearly all mainstream parties opposed the initiative. They warned that it would severely limit monetary policy flexibility, especially since the SNB was at that time intervening heavily to enforce its 1.20 CHF/EUR exchange-rate floor. Forcing the bank to acquire around 1,500 tonnes of gold over five years, regardless of price, would have drained resources and potentially driven the franc even higher, hurting Switzerland's export sector. They also argued that banning sales entirely would lock the SNB into an inflexible balance sheet. On 30 November 2014, voters decisively rejected the proposal: 77.3% voted "No," with 22.7% supporting it. Every canton voted against it. The rejection preserved the SNB's independence and left its reserves policy unchanged. Within weeks, in January 2015, the SNB shocked markets by abandoning the 1.20 EUR/CHF peg—illustrating precisely why it had fought to keep maximum flexibility.
Today Switzerland remains a major official holder, with about 1,040 tonnes of gold (valued at roughly $119 billion as of September 2025), ranking seventh in the world. While most of it is now held domestically, a share remains abroad in London and Canada to ensure liquidity in the world's deepest leasing and trading market. The referendum defeat confirmed that the Swiss public values gold as a symbol of stability but ultimately prioritized central bank independence and monetary policy freedom.
https://www.bloomberg.com/news/arti...dy-shows-signs-of-decade-of-bank-manipulation
Dr. Rosa Abrantes-Metz, a former adjunct professor at NYU Stern, known for her research on market manipulation. She co-authored a study showing suspicious downward price moves during the London PM gold fix (2001–2013), suggesting possible collusion among the banks setting the benchmark. Her work gained wide media attention, triggered lawsuits, and prompted investigations by U.S. and European regulators into gold and silver price fixing.
There are several other notable studies and investigations that have explored gold price manipulation.
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