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Ireland’s Monetary Gold Reserves: High Level Secrecy vs. Freedom of Information – Part 2

by Ronan Manly, BullionStar:

This is Part 2 of a two-part series. Part 1 of this series, “Ireland’s Monetary Gold Reserves: High Level Secrecy vs. Freedom of Information – Part 1” published on 23 January, looked at initial attempts in 2011 and 2012 to extract basic information about Ireland’s monetary gold reserves from the Central Bank of Ireland and the Irish Department of Finance. These attempts proved unsuccessful due to non-cooperation from the central bank which at that time was not covered under the Irish Freedom of Information Act (FOI Act), and also a bizarre refusal of a FOI request from the Department of Finance and a subsequent claim by that Department that it had zero records of said gold reserves that it has entrusted to the Central Bank of Ireland (a central bank which it owns).

On 14 October 2014, a new and expanded Freedom of Information Act was enacted into law in the Republic of Ireland. This news FOI Act (2014) extended the scope of coverage of Freedom of Information requests to “All Public Bodies” in the Irish State, and for the first time included Ireland’s central bank, the Central Bank of Ireland. Information and records relating to the expanded list of public bodies are not fully retrospective, and FOI requests under the new FOI Act (2014) only cover the right of access to records created by these additional public bodies on or after 21 April 2008.

FOI to the Central Bank of Ireland – 2015

Given the introduction of the new FOI Act (2014) and the fact that it covered the Central Bank of Ireland, on 21 June 2015 I submitted a FOI Request to the Central Bank of Ireland with a series of questions about Ireland’s gold reserves. I was cognizant of the fact that the FOI Act only covered records after 20 April 2008 so I structured the questions to take account of this time limitation. The Central Bank of Ireland financial year follows the calendar year, with the annual financial accounts being made up to 31 December (i.e. calendar year-end). Therefore, the logical place to start was with the central bank’s 2009 Annual Report and 2010 Annual Report.

In the 2009 annual report, page 77, note 10 to the Balance Sheet for the line item “Gold and Gold Receivables” states that:

“With the exception of coin stocks held in the Bank, gold holdings consist of deposits with foreign banks. The change in the balance in 2009 is due to the change in the market value of gold during the year.”

In the 2010 annual report, page 98, note 10 to the Balance Sheet for line item “Gold and Gold Receivables” states that:

“Gold and gold receivables represent coin stocks held in the Bank, together with gold bars held at the Bank of England. The increase in the balance in 2010 is due to the change in the market value of gold during the year.”

Notice the difference in wording between the 2009 and 2010 annual reports. Exclusive of the gold coin holdings, the gold reserves in 2009 were stated as consisting of “deposits with foreign banks” while in 2010, the gold reserves were stated as consisting of “gold bars held at the Bank of England“, i.e. one is gold deposits with foreign banks (plural) and the other is allocated gold bars at a specific location (i.e. the Bank of England).

If you go back further and look at earlier annual reports of the Central Bank of Ireland from the years 2008 and 2007, the wording used is “ gold holdings consist of deposits with foreign banks.“ Going back another year to 2006, that year’s annual report contained a critical passage on the Irish gold holdings which stated that:

“The gold is held in physical form and ….may be placed on deposit in the London gold market depending on market conditions”.

See screenshot below.

Note 10 to the Balance Sheet for line item “Gold and Gold Receivables” in the 2006 annual report, page 89, stated in a similar way to the 2007 -2009 annual reports, that:

“With the exception of coin stocks held in the Bank, gold holdings consist of deposits with foreign banks. The change in value is due mainly to the change in the market value of gold during the year.”

The phrase “gold holdings consist of deposits with foreign banks” refers to gold placed on deposit in the London Gold Market, i.e. these gold deposits are central bank gold lending deposits placed with commercial bullion banks.

Excerpt from Central Bank of Ireland Annual Report 2006 – Gold Holdings

In fact, the phrase “gold holdings consist of deposits with foreign banks” is stated in all the Central Bank of Ireland annual reports from 2009 all the way back to the 2000 Annual Report.

Given that the Central Bank of Ireland Annual Report 2010 stated that the gold holdings consisted of “gold bars held at the Bank of England“, my FOI request asked for details of these gold bars in the form of a gold bar weight list. Because, if one claims to have physical gold bars stored at the Bank of England, one certainly has access to produce a weight list with the details of said gold bars.

Since the form of the Central Bank of Ireland’s gold holdings changed from “deposits with foreign banks” in 2009 to gold bars held at the Bank of England“ in 2010, my FOI Request also asked for records of any correspondence relating to this change. Gold deposits are on a fine ounce basis, gold bars held are on an allocated bar set-aside basis. They are two very different things. When you put gold on deposit with a bullion bank (i.e. lend it), you get back the same amount of gold that you placed on deposit (and maybe interest in the form of gold), but you don’t necessarily get back the same gold bars, since the bullion bank probably sold or lent on the gold that you deposited.

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