Record Amount Of Gold In London’s Vaults?
by Tyler Durden
Sun, 01/05/2020 - 08:10
Submitted by Ronan Manly, BullionStar.com,
(Excerpts) According to a press release this week from bullion bank controlled industry group the London Bullion Market Association (LBMA), the total amount of gold held by combined LBMA commercial vaults and Bank of England vaults in London hit a record 8,228 tonnes as of the end of September 2019. This, says the LBMA, equates to 658,274 wholesale market gold bars (London Good Delivery gold bars) valued at approximately US $392.9 billion.
Given that LBMA monthly London vaulted gold holdings data is published on a 3-month lagged basis and was first published in July 2017 (with initial data going back to July 2016), the “record high” of London vaulted gold that the LBMA is referring to here is in terms of the 3.5 years since the LBMA made monthly vaulting data public from July 2016 onwards, i.e. the pink line in the chart below.
But because neither the LBMA’s nor the Bank of England’s reported London gold holdings figures have ever been independently audited, none of this data can be independently verified. The LBMA does not even publish where the gold vaults it refers to are actually located, so immediately you can see a large problem with transparency and verification.
What lies beneath?
According to the LBMA, its gold vaulting data reflects gold held by seven LBMA member commercial vault providers at their subterranean vaults in London, as well as gold held for central banks and bullion banks at the Bank of England’s London vaults. Of the seven commercial vault providers, three of these are bullion banks (JP Morgan, HSBC and ICBC Standard), with the other four being security carriers (Brinks, Malca-Amit, G4S and Loomis). From analysis, princupally at BullionStar, we know that the LBMA gold vaults are located in the City of London, such as the vaults of JP Morgan and possibly HSBC, or in west London near Heathrow Airport, such as the vaults of Malca-Amit, Brinks (Radius Park), and G4S and Loomis.
Note that both central banks and LBMA bullion banks maintain gold accounts at the Bank of England’s vaults in London. While central banks store gold with the Bank of England in London, they also lend their gold out to LBMA bullion banks in London. Therefore, LBMA bullion banks are involved in transacting borrowed central bank gold and need to have gold accounts at the Bank of England.
Furthermore, the Bank of England also plays a role in helping to ‘clear’ the physical gold market in London in cahoots with the London gold clearing banks of HSBC, JP Morgan, Scotia, UBS and ICBC Standard, which are the same five banks that comprise London Precious Metals Clearing Limited (LPMCL). This also means that these banks need gold accounts and at times have gold holdings in the Bank of England vaults.
Looking at the latest Bank of England total vaulted gold as of month-end September 2019, the Bank claims to have been holding a combined 5152 tonnes of gold in its vaults. Which in turn means that excluding the Bank of England vaults, the LBMA commercial and bullion bank vaults claim to have been holding 3076 tonnes of gold as of 30 September 2019. The LBMA points out in its latest press release that the ratio of gold (said to be) held at the Bank of England vaults compared to gold (said to be) held at the LBMA commercial vaults has fallen to 1.67 as of month-end September 2019, a new low since the dataset began, and notably lower than the ratio was a year earlier in September 2018 when it sat above 2.25.
Running on Fumes
Armed with the figures for total gold held in London vaults (8228 tonnes) and total gold held at the Bank of England vaults (5152 tonnes), we therefore know that 3076 tonnes of gold was held in the LBMA commercial vaults as of the end of 30 September 2019. But with 1903 tonnes of this total consisting of ETF stored gold, this means that only 1173 tonnes of gold in these LBMA vaults was unconnected to ETFs. In other words, the LBMA bullion bank gold float to support the entire London Gold Market was only 1173 tonnes, which is only about 0.5% of total above ground global gold stocks.
Visually, we can therefore write the entire London Gold Market as a simple equation as follows:
Total London gold – BoE vault gold – ETF held gold = London gold Float
For month-end September 2019, the figures are as follows:
8228 – 5152 – 1903 = 1173 tonnes float
Read Full post here: https://www.zerohedge.com/economics/record-amount-gold-londons-vaults
Michael Pento – Reset Will be Money Printing & Debt Default
Greg Hunter: Jan 4, 2020
Money manager Michael Pento says, “I have 10% of my portfolio in gold, and I am going to increase that. I would think you need at least 10% in gold, physical gold, right now. If you don’t have that, then you are doing yourself a great disservice.
I include gold, silver and platinum in the precious metals basket, and that amount should be increasing. .
We are going to have a massive reset, and all of this debt is going to have to be defaulted upon.
It is going to be defaulted upon two ways: through inflation and through implicit restructuring. Knowing how they are going to default on this debt is going to make you solvent. . . .
If you look at all the ingredients that surround your decision as to when you should increase your allocation to precious metals, all those ingredients are in place and getting more so.”
Join Greg Hunter as he goes One-on-One with money manager Michael Pento of PentoPort.com.
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