The Phaserl


Why Austria Is Repatriating Gold From London

by Koos Jansen, Bullion Star:

At the LBMA conference in Vienna, which was held from 18 – 20 October 2015, the Executive Director of the Austrian central bank, Peter Mooslechner, was interviewed by Editor-in-Chief for Kitco News, Daniele Cambone. You can watch the interview here. This particular interview is interesting because the central banker from Austria made some exceptional remarks about repatriating gold and indirectly about gold management by central banks around the world in our current economic climate. Central bankers have a long history of keeping silent about anything related to their gold policy, and this interview suits the tradition in part, though Mooslechner by accident told us what’s happening behind the scenes.

Many central banks around the world are aware the international monetary system is moving away from the US dollar and that the role of gold will (officially) be much greater in the future.

In this development central banks benefit from a smooth and slow transition to a new system, as sudden shocks will bring the global economy in a free fall and more time provides better preparations. Central bankers prefer slow and attentive change. Signs of the slow development towards gold by central banks can be seen across several continents. In Europe slowly more and more countries are repatriating their gold from the UK (Bank Of England) and the US (Federal Reserve Bank Of New York). Certainly not all their gold but weighed amounts and in the case of Germany and Austria the gold is repatriated over several years. If all European countries would repatriate all their gold at once it would cause a panic in financial markets. In the East, Russia and China are increasing their gold reserves every single month by relative small amounts, respecting the slow development towards gold. Asian central bankers differ from their European colleagues because they verbally acknowledge the role of gold in finance. In 2004 Zhou Xiaochuan, governor of the People’s Bank Of China, said:

… China’s gold market should move from commodity trade to financial product trade. Gold is a commodity that combines the attributes of a currency, financial commodity and general commodity. … gold still has a strong financial nature and remains an indispensable investment tool. In financial centers in the world, the gold market – together with the money market, securities market and FX market – constitutes the main part of the financial market.

Obviously all these central banks are aware what the future will hold. How else can we explain Europe’s repatriating gold policy and Asia’s buying gold policy?

Candid statements from European central bankers regarding their gold policy are scarce. The slow development towards gold previously described is usually covered in excuses by European policy makers. I can recall the Dutch Minister Of Finance, Jeroen Dijsselbloem, was asked in a television interview why the Dutch central bank (DNB) had covertly repatriated 123 tonnes of gold from the Federal Reserve Bank of New York in 2014. Dijsselbloem answered with a condescending smile, saying, “ the decision was made by DNB to spread its gold stock in a more balanced way, but it was of little importance”. Of course the military operation that DNB had carefully planned and executed over the course of two years was of utmost importance for the financial well being of the Netherlands, but Dijsselbloem could not openly acknowledge this importance because of the sensitivity of the subject. Just like Jean-Claude Juncker said in 2011:

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