I´m worried about governments selling their gold to kick the can down the road for a while

[swissaustrian]

So we see all this talk about using the gold reserves of several European countries to fund the numerous bailouts. Right now, everyone is denying such plans. We have seen this before. First they deny, then they argue, finally they act. I expect the same thing to happen with regards to gold sales. It´s all about kicking the can down the road for a few more months. Gold is the best asset governments have. They could sell it eventually.
Now: Why should this worry me or any other gold investor for that matter?
My answer: If selling gold reserves gets fancy, we could have quite massive downside moves in gold. I mean, Euro countries hold more than 10000 tonnes of gold. That´s a lot. Even if creditor nations (and private investors) buy it all, prices could fall significantly for a while. So maybe one needs some patience to see the real endgame for fiat vs. gold.

[ctiger2]

No worries, Govts are NET buyers of Gold. Any Gold that comes into the market will be purchased no problem. IIRC China needs 8000 tons.

[Seraphim]

Good. Might give us an extra 3 months to buy some.

To be honest, the markets aren't dumb enough to fall for it. Pledge/sell gold and inflate the paper. Not much of solution. If this happens it may mean a solid dip for a few months, but it just means the rocket launches harder later on.

[Seraphim]

This. Governments are buying...this is a dog and pony show.


No worries, Govts are NET buyers of Gold. Any Gold that comes into the market will be purchased no problem. IIRC China needs 8000 tons.

[swissaustrian]

No worries, Govts are NET buyers of Gold. Any Gold that comes into the market will be purchased no problem. IIRC China needs 8000 tons.
Sure in the long run this doesn´t make a difference. But for a few months, this could have quite a massive impact...

[Bern]

Europe doesn't dare sell their gold to Russia, India and China. Gold is the currency of central banks and it always has been. I've been tracking news stories about central bank gold buying here FYI:

http://www.pmbug.com/forum/f2/central-banks-buying-gold-114/

[Acala]

Besides, we WANT gold in circulation, not in Central Bank vaults. For those of you who own gold personally, the biggest upside in exchange value comes from re-monetization and that will be promoted by putting gold into circulation now.

[swissaustrian]

Europe doesn't dare sell their gold to Russia, India and China. Gold is the currency of central banks and it always has been. I've been tracking news stories about central bank gold buying here FYI:

http://www.pmbug.com/forum/f2/central-banks-buying-gold-114/
Wait until they have no other choice but selling. The "independence" of central banks from governments will mean nothing. Politicians will finally sell. Just like they did over here in Switzerland. And we didn´t even need to sell.

[Seraphim]

I doubt any big government will sell. A few small ones might be coerced into doing so by the big dogs, but I doubt any serious gold selling will take place by governments until a new global financial system is ushered in.

Unless, of course, Gordon Brown stages a coup d'etat in England.


Wait until they have no other choice but selling. The "independence" of central banks from governments will mean nothing. Politicians will finally sell. Just like they did over here in Switzerland. And we didn´t even need to sell.

[Bern]

Wait until they have no other choice but selling. ...

I think there will be war before countries give away their treasure.

[Bossobass]

I have believed for some time that the end game is to transfer the world's gold (and other resources) into the CBers hands as part of the collapse of the current multi-currency fiat debt pyramid and ushering in of the new world currency.

A simple requirement of a pledge of 'x'% gold (and/or other resources; timber, coal, oil, water, silver, etc) to buy into the new currency will accomplish the end game.

Why would governments and their people ever agree to such a system? The CBers will hold all of the debt. In exchange for agreeing to their new system, they will simply offer to forgive the debt.

This has been done many times in 3rd world countries and as a result the playbook has already been written and perfected. Look at the Philippines:

The IMF loads them with debt they know can never be repaid. The money goes to global "transnationals", 80% of which are American companies. When the debt load becomes unsustainable, after loans have been repeatedly made just to make payments on existing debt, a deal has to be struck. Since the government in debt has no choice but to agree to the deal, which is always a "give us your resources in perpetuity and we'll 'restructure' your debt", the deal always gets done. Marcos was one of those dolts who actually believed he was the ruler and had say. We all know what happened to him.


A government survey showed that 80 percent of foreign investment in 900 of the 1,000 largest firms in 1970 was American.


On October 17, 1983, it was announced that the Philippines was unable to meet debt-service obligations on its foreign-currency debt of US$24.4 billion and was asking for a ninety-day moratorium on its payments. Subsequent requests were made for moratorium extensions. The action was the climax of an increasingly difficult balance of payments situation. Philippine development during the decade of the 1970s had been facilitated by extensive borrowing on the international capital market. Between 1973 and 1982, the country's indebtedness increased an average of 27 percent per year. Although government-to-government loans and loans from multilateral institutions such as the World Bank and Asian Development Bank were granted at lower-than-market rates of interest, the debt-service charges on those and commercial loans continued to mount. In 1982 payments were US$3.5 billion, approximately the level of foreign borrowing that year and greater than the country's total debt in 1970. The next year, 1983, interest payments exceeded the net inflow of capital by about US$1.85 billion. In combination with the downturn in the world economy, increasing interest rates, a domestic financial scandal that occurred when a businessman fled the country with debts estimated at P700 million, escalating unrest at the excesses of the Marcos regime, and the political crisis that followed the Aquino assassination, the debt burden became unsustainable (see table 16, Appendix).

The Philippines had turned to the IMF previously in 1962 and 1970 when it had run into balance of payments difficulties. It did so again in late 1982. An agreement was reached in February 1983 for an emergency loan, followed by other loans from the World Bank and transnational commercial banks. Negotiations began again almost immediately after the moratorium declaration between Philippine monetary officials and the IMF. In the meantime, additional external funds became nearly impossible to obtain.

In each of these arrangements with the IMF, the Philippines agreed to certain conditions to obtain additional funding, generally including devaluation of the peso, liberalization of import restraints, and tightening of domestic credit (limiting the growth of the money supply and raising interest rates). The adjustment measures demanded by the IMF in the December 1984 agreement were harsh, and the economy reacted severely. Because of its financial straits, however, the government saw no option but to comply.


The debt level became unmanageable, forcing the Marcos government to declare a moratorium on debt payments in 1983. The Philippines never recovered from its fiscal woes ever since, in spite of painful restructuring under the tutelage of the International Monetary Fund (IMF) in exchange for the moratorium and additional funding. With drastically shrinking revenues due to the implementation of globalization policies especially in the 1990s, the debt and budget problems exploded into a full-blown fiscal crisis we are confronted with today.


The single largest foreign debt (and most expensive white elephant) of the country was also contracted by Marcos-- the $2.3 billion Bataan Nuclear Power Plant (BNPP). This lone project comprised 9 percent of the total foreign debt of the country when it was completed in 1984. Subsequent investigations showed that the BNPP was overpriced by $600 million, and that Marcos and his crony Herminio Desini, who facilitated the project, were bribed with $80 million by the project contractor US-based Westinghouse Corporation.

The BNPP was mothballed by the Aquino administration after it found that the plant sits on a major fault line. It never got to produce a single kilowatt of electricity, but all the Aquino government can do was to accept a $188-million settlement with Westinghouse

Even those who have followed this MO fairly closely in almost every 3rd world country in the world have had blinders on that it could never happen to big countries like the US. Well, here we are, $15 trillion in debt and climbing, talk of "privatization" of public assets, "dollar crisis", failure of "too big to fail", fail, crisis, double-dip, the "D" word, terror, war, uprising, protest, unemployment, joblessness, foreclosure, food stamps, homeless, tent city... all the mind-fuck buzz words.

People in general don't give a flying fuck what paper or card or checkbook the use to buy stuff. They work, they get the credit, they spend it for stuff. That's all they know or care to know. If they're suddenly told that to keep the game flowing and avoid the continuing catastrophic hardship (that's on the near horizon and which they've been conditioned to believe is inevitable) America will have to pledge its interstate highways system, 2 trillion tons of coal, offshore oil rights, gold, timber, etc. to get the new global currency in exchange for forgiveness of its massive and unpayable debts, they'll shrug and say hell yes.

That's just my take. Governments will continue to acquire gold (and other commodities and resources) for the CBers to take as collateral in the transition to the new system.

Bosso

[Athan]

So we see all this talk about using the gold reserves of several European countries to fund the numerous bailouts. Right now, everyone is denying such plans. We have seen this before. First they deny, then they argue, finally they act. I expect the same thing to happen with regards to gold sales. It´s all about kicking the can down the road for a few more months. Gold is the best asset governments have. They could sell it eventually.
Now: Why should this worry me or any other gold investor for that matter?
My answer: If selling gold reserves gets fancy, we could have quite massive downside moves in gold. I mean, Euro countries hold more than 10000 tonnes of gold. That´s a lot. Even if creditor nations (and private investors) buy it all, prices could fall significantly for a while. So maybe one needs some patience to see the real endgame for fiat vs. gold.

Actually this is good. See the people need real currency, not governments. The government only needs to pay off certain debts. It really should not be in the business of hording and keeping money out of the actual economy.

[jason43]

If the price drops because states decide to sell, it will be a perfect opportunity to buy. The paper you spend on it wont be getting any more valuable;o)

[Steven Douglas]

Oh, I would love nothing more than to see gold and silver dumped, and for both even to take a market dump - because I buy regardless, thinking long term only, and that would just give me time and allow me to buy more.

Fantasy. It is not going to happen. As long as fiat currencies hold any value at all, Gresham's law is firmly in effect. Thiers law won't take over until a valid specie is safely on the market and protected - then watch as all the good money causes the paper money to hyperinflate, even as it blows up and gets chased out the windows into nothingness.

And for your reading pleasure:


A sentiment of trust in the legal money of the State is so deeply implanted in the citizens of all countries that they cannot but believe that some day this money must recover a part at least of its former value. To their minds it appears that value is inherent in money as such, and they do not apprehend that the real wealth, which this money might have stood for, has been dissipated once and for all. This sentiment is supported by the various legal regulations with which the Governments endeavor to control internal prices, and so to preserve some purchasing power for their legal tender. Thus the force of law preserves a measure of immediate purchasing power over some commodities and the force of sentiment and custom maintains, especially amongst peasants, a willingness to hoard paper which is really worthless.

[swissaustrian]

Talking about governments "loosing" gold. The British Ron Paul, Nigel Farage is worried:

Nigel Farage - Where is Europe’s Gold?
With world markets still in turmoil and gold and silver reasserting themselves once again, today King World News interviewed former LBMA commodities broker and trader and current MEP Nigel Farage to get his take on the situation. When asked if there is a chance Europe is headed into a depression, Farage responded, “Well I think there is and of course it was banking collapses back in 1931 that really led to things being bad. Now we’ve lumbered ourselves with a European social market model for our labor forces, which leaves us hopelessly uncompetitive with the Far East. Countries like Italy, I mean their industrial production, their foreign and direct investment has collapsed in the last five years. You ask yourself, ‘If the banks go bust, what on earth is going to be left in some of these countries?’”
Nigel Farage continues:
“I’m beginning to feel there is a certain inevitability (to a depression) now. The crisis that has been created by all of these mistakes is now bigger than governments themselves. If we get the kind of banking collapses that I now believe are possible, we could be heading into something that we haven’t seen in over 70 years. A Great Depression is not impossible.
It’s just a real mess and there is total confusion, fear, total paralysis actually and know one knows what’s really going on. Six weeks ago the British Prime Minister, David Cameron, said, ‘We have six weeks to save the European economy and possibly the global economy too.’
The deadline was the Cannes Summit, which has come and gone last weekend. You could tell from the European leaders leaving that Summit, their faces like thunder, that nothing had been agreed.
(President) Obama’s face was an absolute picture at the press conference when he described his own incomprehension at actually who was in charge in Europe. And of course he’s absolutely right because we have a European Commission, headed up by Mr. Barroso, we have a European Council, headed up by Herman van Rumpoy and we have a Eurozone Group...
“I mean who is actually in charge of this? This incredible bureaucratic structure of unelected people and the buck doesn’t stop with anybody. So we now face the real doom scenario for the euro that if the Italian government can’t finance its debts, where on earth are two or three trillion euros going to come from to bail out Italy?
So it looks to me, and I’ve been saying this for some time on your program, that I always felt this thing would fail. But I think we are very much nearer to the failure being really huge and possibly very dramatic indeed.”
When asked about leaders in countries inside of Europe beginning to question their various central banks because they are worried about the whereabouts of their gold, Farage responded, “Huge ruse as you say. Big suspicion in Germany as to where the gold is. The Greeks, of course, have demanded that the Germans give back their gold that they believe was taken from them in World War II.
And of course the British government, where Gordon Brown famously sold most of our gold reserves at $284 an ounce. So gold is not just a big play in the financial markets, it’s a big play in the whole debate in the architecture of the current Eurozone woes.” When asked if he believed European central banks had leased out most of their gold, Farage responded, “I just don’t know the answer to that question. But if I look at just how poorly the central banks had performed over the last decade or so, frankly nothing would surprise me. There seems to be almost no limit to the stupidity of these people.”
The incredible KWN interview with Nigel Farage is available now and you can listen to it by CLICKING HERE (http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/11/9_MEP_Nigel_Farage.html)

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/11/8_Nigel_Farage_-_Where_is_Europes_Gold.html

[LibForestPaul]

If they start selling gold, than they are planning to outlaw it as well...NWO does not need gold.

[sickmint79]

they know they need it so they are net buyers... it would be foolish to sell any gold now. gold is there as an insurance policy in case the fiat fails.

[Arklatex]

Let them sell it!

[Seraphim]

This.

Perhaps a VERY small minority of foolish governments will sell their gold (or be coersed into doing so). The truth is, the big dogs are buying the yellow stuff with rabid ferver. That is NOT going to change until the new global financial system is implemented.


they know they need it so they are net buyers... it would be foolish to sell any gold now. gold is there as an insurance policy in case the fiat fails.

[Becker]

it's a legitimate fear if you can't afford to lose money in the near future. Good for people who can wait it out for 3-4 years. look no further than 2008.

[TCE]

Central banks hold a lot of gold as well, so they would likely be buyers if any kind of government sell-off were to occur. As others have mentioned, it is probably for the best that governments sell off their gold from a liberty standpoint because it would be allowing the people to purchase it and probably at a lower price. Sure, some would wind up in a Central Bank vault somewhere or that of another government, but some of it would be purchased by Americans and people throughout the world, so I see it as a good thing.

OP, I'm not sure I understand your concern. If there is a heavy downward pressure on gold for, say, two years, after all of the new gold hitting the market had been bought up, it would continue to increase. Many see gold as a long-term investment/value-holding asset anyway, so regardless, those holding onto their gold over a five or ten year period would make out very well in such a circumstance. If your situation occurs and gold plummets several hundred dollars an ounce, the fools will be the ones selling.

[danda]

Stephen Douglas: Thank-you for educating me about Thiers law. I looked it up, and had a point clarified for me about Gresham's Law, which I thought conflicted with Ron Paul's Competition in Currencies act. Namely, Gresham's law only applies when Legal Tender laws are in effect, requiring people to accept bad money at face value. So obviously, the solution is to remove the legal tender law, as Dr. Paul advocates, and we then arrive in the land of Thiers Law.

Actually, this has been intuitive to me, and I've long advocated removing legal tender laws, but the gresham's law bit nagged at me before.

[Steven Douglas]

This.

Perhaps a VERY small minority of foolish governments will sell their gold (or be coersed into doing so). The truth is, the big dogs are buying the yellow stuff with rabid ferver. That is NOT going to change until the new global financial system is implemented.

There is one other thing I think a lot of people are missing, and that is the MAJOR difference in how governments treat gold as protection of individual wealth (giving it a bottom to fall to, beyond which it can't go), versus how governments treat gold in relation to protecting their own interests from other government interests (quite apart from the people themselves).

Roosevelt, acting as an agent of the banks and banking system, allowed the entire banking system to default on the people themselves, even going so far as to confiscate their gold in return for irredeemable currency (that would continue to be debauched), rather than forcing banks to pay out fractional gold on the debauched currency. Around forty years later, Nixon finally defaulted on all the remaining governments (within a week of Switzerland unilaterally pulling out of Bretton Woods, and three years after DeGaulle had already allowed France's gold, through a new French law allowing full currency convertibility of Francs to gold, to be raped by 30% by the Anglo-American system).

So-called "Nixon Shock" only finally acknowledged that our promise-to-pay-debt-currency, even to governments, had been inflated beyond our ability to ever repay in the gold it was supposedly backed by. France was especially angry at this, because Nixon effectively allowed NY financial interests to exploit France's law in a way that raped France's reserves, but wouldn't bend the American dollar over later to take one in the pooper for France in return.

So, with an historical view on how governments vs. citizens are treated (governments actually have power, understand a little more, and try to actually stand up for themselves), the question remains how governments under any new regime would view gold in terms of backing - and I have no illusions about that. I don't think it will mean that we are protected as individuals, or that gold will somehow be convertible by common individuals - only that the statist systems themselves on the whole are protected from other statist systems, as their gold is used to determine their initial reserves, with the IMF (or whatever it is called) acting as the new Fed.

In other words, I don't think China is encouraging its citizens to acquire gold and silver to protect them, so much as to build up a store of wealth for China that it can later call in, Roosevelt-style, as it issues fractional credits in return, even as all governments, "fer da gud of da glowbul peephole" confiscate gold for the last time, and make individual ownership of gold, with few exceptions, like rationed industrial uses, completely illegal. The gold could end up being the final source of a fractionally reserved global wealth siphoning and redistribution machine - which might even last a couple hundred years. Until, that is, all classes are finally separated by broad, thick, virtually impenetrable lines, before even that system finally collapses, and the final fiat currency is entirely depleted of its value. Then what? Who knows. But I think that's the plan that has already been planned, in great detail, Global Jekyll Island-style, for what everyone knows is inevitable. Whether it succeeds or not remains to be seen, but history tells me its chances of success (not as a system, just in its ability to be implemented) are extremely good. To many boneheads and pointy heads on the left and the right already willing to defend (for their own contradictory reasons) the system we have in place (given that the Titanic hasn't sunk yet, and, why, look at all the good that happened as a result of hitting that iceberg!)

So the Fed rescued the fractional reserve lenders as well as the government, and now that that currency soil is nearly fallow, the New and Improved Global "Fed-by-some-other-name" will swoop in and save the day as it rescues both. And every other like fiat system in the process. Oh, happy day. Whirled Peas only imagined finally manifested.

Oh, Iran, you don't stand a chance, baby. You think we can borrow ourselves into Wars we can't afford now, wait'll you see what's coming next! No war to it, if you don't comply, you're squished.

[Verrater]

China will buy it, if anyone is selling that is for sure.

[Zippyjuan]

I have not followed everything going on in Europe (though I try to follow some of it) so I have not really heard of countries contemplating selling gold to raise money for bailouts but should that occur, it is not likely that the gold will hit the global markets. Most likely situation would be anther country purchasing it or using the gold as leverage (collateral) to borrow funds. Aside from any currency devaluation effects, I would not expect government gold sales to impact the global price of gold. Just my opinion though- I could as easily be wrong.

[swissaustrian]

Seems like I was on to something. FT reports:


Cash for gold in the eurozone bailout
Ever since the eurozone bond markets first started to get the jitters, hedge fund managers have been whispering that gold could play a part in resolving the crisis.
Until recently this discussion has mainly been the preserve of gold market conspiracy theorists and backbench German politicians.
But now the use of gold to fund a eurozone bailout is coming closer to reality. Buried within a draft of the European Commission study on joint 'eurobonds,' reported by the Financial Times this week, is the suggestion that gold could be used as collateral for these bonds.
In order to "enhance" the guarantees on the eurobonds, the draft says, governments could provide collateral, including "gold reserves which are largely in excess of needs in most EU countries."
Between them, the central banks of the eurozone hold 10,792 tonnes of gold -- 6.5 per cent of all the yellow metal that has ever been mined -- worth some $590 billion.
Let's be clear: This does not imply central banks are getting ready to sell gold to bail out the eurozone. Beyond the numerous legal problems (selling reserves to fund government borrowing contravenes the Maastricht treaty), gold disposals just looks too desperate.
But bullion could be used as collateral. In fact, if Europe's politicians truly believe that the problems of larger eurozone countries such as Italy are based on liquidity rather than solvency, the use of gold as collateral could be a neat way to regain the confidence of the bond markets.
For prospective investors (no doubt including emerging market governments, sovereign wealth funds, and the like) the appeal comes from the likely hedge that the gold would provide against a default. If a country such as Italy were to default, most analysts believe, the price of gold (certainly when denominated in euros) would go sky high.
For eurozone countries, gold-collateralised bonds could unlock a large pool of new financing. Italy's central bank, for example, holds 2,451 tonnes of gold, worth about E100 billion. While that pales in comparison to its total debt stock of nearly E2,000 billion, it could alleviate some of the short-term funding pressure.
Italy needs to raise about E600 billion over the next three years. If it used the yellow metal as collateral for the first 20 per cent of the new bonds, therefore, it could cover its needs until mid-2014. A successful sale of the gold-backed debt would create a virtuous circle, making it easier to raise money through non-collateralised borrowing.
Such a deal has precedents. Indeed, Italy has done it before, when it received a $2 billion bailout from the Bundesbank in 1974 and put up its gold as collateral.
In 1991 India used its gold as collateral for a loan with the Bank of Japan and others.
And in 2008, according to the World Gold Council, Sweden's Riksbank swapped its gold to raise cash and provide liquidity to the Scandinavian banking system.
As Paul Mercier, then deputy director of market operations at the ECB, told a gold industry conference in 2009: "In a generalised crisis that leads to the repudiation of foreign debts or even the international isolation of a country ... gold remains the ultimate and global means of payment that is still accepted and it is one of the reasons used by some central banks to justify gold holdings."
The problem is, as that statement implies, that countries have historically turned to their gold reserves only in the direst of situations. And lenders are likely to require that the gold is moved to a neutral location. India's move to ship 47 tonnes to the Bank of England in its 1991 deal caused outrage within the country.
Nonetheless, as the eurozone crisis grinds into its third year, it might just be time to dust off those Roman coins in the Banca d'Italia's vaults.

http://www.ft.com/intl/cms/s/0/c7f61068-1472-11e1-8367-00144feabdc0.html

[gerryb]

I hope they put it back on sale for $250

[Acala]

it's a legitimate fear if you can't afford to lose money in the near future. Good for people who can wait it out for 3-4 years. look no further than 2008.

It is a bad idea to invest money in gold if you need that money to live on in the short term. I have never seen any of the gold bugs on this forum advocate spending your lunch money on gold. So if all you have invested in gold is savings and not money you don't need immediately, then a drop in the price of gold for a couple years is unimportant except as a further buying opportunity. You don't lose money on an investment until you sell at a low price. So don't sell at a low price. BUY at a low price.

[jkr]

traaaaaaaaaaa-DITION!

[llepard]

There is no doubt that Central Banks will try to imply that they are selling gold. But, that will be a head fake. The writing is clearly on the wall.

[Bern]

They are going to offer their gold reserves as collateral for loans which they are absolutely not going to be able to repay in the future. They are essentially handing over their real wealth to the global puppet masters.

http://s3.amazonaws.com/kym-assets/photos/images/original/000/001/384/Atrapitis.gif

[swissaustrian]

They are going to offer their gold reserves as collateral for loans which they are absolutely not going to be able to repay in the future. They are essentially handing over their real wealth to the global puppet masters.
+ rep.
This is exactly what this is about. Expropriating old Europe.

[swissaustrian]

European Governments Have a Lot of Gold. But That Won't Be Much Help.
Fact No. 1: European governments are among the biggest holders of gold on the planet.
Fact No. 2: Massive debts owed by some of those governments are fueling a political crisis in Europe and turmoil in markets around the world.
Those two facts lead to an obvious question from a lot of investors: Why don't those governments sell gold to pay off their debts?
If only it were that simple.
For starters, not even the Europeans own that much gold. The borrowing needs, and subsequent debts, of countries like Italy, France, and Spain are so huge, analysts say, that liquidating their gold reserves wouldn't go far toward balancing their books for the long term.
"If they sold their gold, I'm not sure it would do anything to their credit rating," says Kenneth Rogoff, an economics professor at Harvard University who has studied official gold reserves. "This is not exactly a game changer."
Market and political realities too would make it challenging for Europeans to rely on a golden parachute, experts say. For one thing, there's a risk that trying to sell the gold or use it as collateral for a loan could be seen in the market as a sign of desperation -- which could drive up borrowing costs by making lenders even more wary, defeating the purpose.
Nevertheless, some investors still need convincing that gold isn't the cure-all that Europe is seeking. After all, governments, central banks and multilateral financial institutions like the International Monetary Fund hold roughly 18% of the world's gold, according to the World Gold Council, a trade group. Italy has more gold than any nation besides the U.S. and Germany, the council says. France ranks fourth and Portugal 12th. Even Greece, the land of King Midas, is in the top 30, well ahead of wealthy nations such as Australia and emerging powers like Brazil.
And with gold prices near a record in nominal terms -- up 17% this year alone -- the value of those holdings has soared in recent years. Italy's current gold holdings, now valued at $134 billion, would have fetched only $21 billion at the end of 2000.
The other side of the coin, however, is that Italy's gold represents only about 6.7% of its gross domestic product. Portugal's supply is proportionally bigger, at more than 9% of its GDP. But cashing in its gold would barely make a dent in Portugal's government debt, which represents 93% of GDP, according to IMF data.
In addition, European Union members accepted restrictions on using their gold reserves when they launched a common currency. The euro treaty prohibits the countries from financing government operations by selling gold held by central banks -- which is where most European nations have their reserves -- according to Natalie Dempster, the gold council's director of government affairs.
Using gold to finance state operations "is simply not an option," she says. The gold, Ms. Dempster adds, is mainly there to protect the euro.
For euro-zone nations, similar hurdles apply to the idea of using official gold as collateral to borrow at cheaper rates than investors are currently offering. But Europe could in theory transfer some gold held by member states -- or the European Central Bank, which has its own bullion -- out of reserves and use it to partially back a bond issue, according to Ms. Dempster.
A similar notion was recently raised in a paper issued by the European Commission, she says. In the gold council's view, that would require the ECB to determine that the move supported member states' economic policies and didn't interfere with price stability.
An additional hurdle for governments when it comes to gold markets is an accord known as the Central Bank Gold Agreement, which is signed by many European nations and, like the euro treaty, limits gold sales by governments, according to the gold council.
Even if a nation found a way around such obstacles, officials could face a backlash from voters who believe gold prices will keep rising. Before 2010, many European nations were net sellers of gold, which some of them had come to view as an antiquated asset.
"That," says Harvard's Mr. Rogoff, "turned out to be not such a good idea."

http://online.wsj.com/article/SB10001424052970203802204577066641295941430.html

[swissaustrian]

Seems like I was (kinda) right afterall

Negative Salaries, Negative Bailout And Now Negative Gold - Greece Just Became The Bankster's Paradise
While Iceland is now known as the country that is the closest earthly approximation to banker hell, it is safe to say that Greece is the terrestrial equivalent of banker heaven. Because as explained earlier today, the country's population is about to get a worse deal than your average run of the mill slave - they may get whipped, but at least never have to pay for the privilege, unlike the Greeks. Hence negative salaries. As also explained, the European bailout of Greece, is now formally a Greek bailout of Europe, funded by the country's already negative primary surplus, or better said - deficit (don't try to make mathematical sense of that - a scene out of Scanners is guaranteed). Hence, negative bailout. But the piece de resistance, and the reason why Greece is the in situ version of bankster heaven is the news from the NYT that Greece is also about to have negative gold.

Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal.
Well, they may be broke, and they may be bailing out Europe, but at least they'll have no gold: sounds like a sweet deal - it makes perfect sense that Greeks are taking every incremental humiliation from a syndicate of few fat, bald types who have access to a digital money printer, with the supine determination of an Oliver Twist.
http://www.zerohedge.com/news/negative-salaries-negative-bailout-and-now-negative-gold-greece-just-became-banksters-paradise

Here's the original article by the NYT:
http://www.nytimes.com/2012/02/22/world/europe/euro-zone-leaders-agree-on-new-greek-bailout.html?_r=1

[swissaustrian]

Don Coxe continues:
“The big story that’s unfolding is something I’m very interested in because I started writing about the odds of this last summer. As a result of that, I’ve been kept up to date about the discussions that are proceeding to try to find a way to save the euro, by getting at the gold reserves of the PIIGS countries.
Some of them, particularly Italy, have huge gold reserves.
So, there was a paper prepared by what are called, ‘The German wise men,’ last fall. It was immediately rejected by everybody in sight.
They came back a few weeks ago with a revised version, where they came up with this formula where the countries would have the guarantees of all of their debt above 60% of their GDP (the legal limit under the Maastricht Treaty) -- they would be covered by a euro bond. And the countries who were getting this euro bond would pledge their holdings of gold.
This wouldn’t have the situation, where as Jens Wideman of the Bundesbank said, ‘We’re not going to use Germany’s credit card for those who spend too much.’ They would have the security of gold. This is under active discussion. I have reason to know they have been discussing it with people in the industry .”
This European gold bond is huge news. When asked if this was bringing gold back into the financial system, Coxe responded, “Yes, exactly. I did conference calls with people in our organization about this. I said, ‘Something like this could be unfolding because this crisis is developing so fast.’”
When asked if this event would begin to trigger a significant revaluation for gold, Coxe replied, “At this point, how they would do it, and whether there would be any revaluation, what it would be is security for issuing specific bonds. But, of course, once you do that, what you do is you break the virginity of the system.
Then you have to start looking at revaluations, you’re right. All of that will come. My own take is that I think there is a very good chance of this ... that within the next three months we will find that something like this has been done for some of the countries in the eurozone.
That means that gold will have been moving back into the (financial) system.”

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/6/2_Don_Coxe_-_Emergency_Fed_Meeting_%26_Gold_Backed_Bonds.html

[damiengwa]

Why do you want governments to own gold? Gold should be owned by the people. Without gold in the vaults governments have fewer funds to do evil. If they had no gold, could they pull off these bailouts?

I'd like to see gold return to private ownership. That way, the market can bring back a gold standard when the hour is at hand.

[swissaustrian]

Why do you want governments to own gold? Gold should be owned by the people. Without gold in the vaults governments have fewer funds to do evil. If they had no gold, could they pull off these bailouts?

I'd like to see gold return to private ownership. That way, the market can bring back a gold standard when the hour is at hand.
I totally agree with you :)
I don't want them to own it. I just want to anticipate price trends and government sales would have a huge impact for sure.
See here what I wrote in the op:


...
If selling gold reserves gets fancy, we could have quite massive downside moves in gold. I mean, Euro countries hold more than 10000 tonnes of gold. That´s a lot. Even if creditor nations (and private investors) buy it all, prices could fall significantly for a while. So maybe one needs some patience to see the real endgame for fiat vs. gold.

[DEGuy]

Although governments definitely hold a large supply of gold, from various sources, it's only cited between 10% and 25% of the total mined supply. Certainly, this is enough to dramatically affect the market (combined with shady commodity trading practice), but not so much that an efficient market using gold as money couldn't be successful.

[gerryb]

Can't happen soon enough.

They were proving a good sales price from 2000 to 2008.. Then they stopped selling and look what happened.

Hope they start unloading soon.

[swissaustrian]

I started this thread 18 months ago, now it's beginning:

Here We Go: Cyprus To Sell €400 Million In Gold, About 75% Of Its Total Holdings, To Finance Part Of Its Bailout

Curious why every bank and their grandmother, and most recently Goldman today, has been lining up to push the price of gold as low as possible? Here's why:

CYPRUS TO SELL 400 MLN EUROS WORTH OF GOLD RESERVES TO FINANCE PART OF ITS BAILOUT - TROIKA DOCUMENTS - RTRS

Or about 10 tons of gold. But... the bailout was prefunded and there was no need to provide any additional cash? What happened: was the deposit outflow discovered to have been even greater than the worst case scenario and thus Cyprus needed even more cash? As for the buyers? We will venture a guess: central banks buying at the lows.

Finally: congratulations Cypriots. You are now handing over your gold for the one time, unbeatable opportunity to remain a vassal state to the Eurozone. But at least you have your €.

The good news: Cyprus will have at least another 4 or so tons after selling the 10 demanded now, before the Troika kindly requests that Cypriot citizens sell a kidney or two to pay for the ongoing deposit outflow from its insolvent banks, and indirectly, the endless bailout of the Euro.
http://www.zerohedge.com/news/2013-04-10/here-we-go-cyprus-sell-%E2%82%AC400-million-gold-finance-part-its-bailout

[NoOneButPaul]

I got news for you boss this has been going on for decades... the only thing keeping the gold numbers together is the fudging of them.



There is only one crucial statement known thus far by then-Federal Reserve Chairman Alan Greenspan where he comes out in favour of influencing the gold price. It has to do with a comment Greenspan made before a Senate committee on July 30, 1998, which has become famous among Fed observers:

"Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."

What is notable about this comment is that he refers to the leasing of gold as an instrument for influencing price. Admittedly Greenspan made the comment in a different context (discussions about regulation); the discussion was not about the framework in which intervention should actually take place.

But there is a second and until now overlooked Greenspan comment on gold price intervention. It came during the Federal Open Market Committee meeting of May 18, 1993, only about two months before systematic pressuring of the gold price actually began. His statements during that meeting clearly reveal the motives that led to the decision a short time later to intervene in the gold market, because this time the context of Greenspan's comment corresponds.

In addition the comment clearly shows that Greenspan wants to prevent an increase in the price of gold. For this purpose he unmistakably considers direct intervention.

FOMC meetings are recorded and the transcripts made public after five years. Greenspan's newly discovered comment is contained in one of these very transcripts, on Page 40 of the transcript here (Page 42 of the PDF version):

http://www.federalreserve.gov/monetarypolicy/files/FOMC19930518meeting.p...

Apparently Greenspan spoke informally with his colleague, Fed Governor Mullins, during the course of the meeting, and reported this conversation to his other colleagues. Greenspan mentions the Treasury Department, since in the United States only the treasury and not the Federal Reserve can dispose over gold. The market price of gold was increasing at the time. In his unique, somewhat verbose style, Greenspan said:

"I have one other issue I'd like to throw on the table. I hesitate to do it, but let me tell you some of the issues that are involved here. If we are dealing with psychology, then the thermometers one uses to measure it have an effect. I was raising the question on the side with Governor Mullins of what would happen if the Treasury sold a little gold in this market. There's an interesting question here because if the gold price broke in that context, the thermometer would not be just a measuring tool. It would basically affect the underlying psychology."

http://gata.org/node/8208

There's a reason they won't let us see what's in Fort Knox... there's a reason the Germans want their gold back... there's a reason for the paper price suppression of gold and silver. No one knows how much actually exists anymore because the numbers are so fraudulent. Picking on the little guys like Cyprus, Mali, and Libya have everything to do with the world financial markets and nothing else.

I also suspect this massive run into bitcoin is the government trying to pump the digital currency to take pressure off of the gold and silver markets... where, while the paper price may be crashing, the comex inventories and physical premiums are painting a different picture.

In the long run gold and silver are still going to end up on top and I fear that the people running into bitcoin now are only playing into the Fed's hands.

[swissaustrian]

I got news for you boss this has been going on for decades... the only thing keeping the gold numbers together is the fudging of them.

http://gata.org/node/8208

Leasing is not selling, although it has the same effect in the short term.