Comment by andsoitis
3 days ago
> “A more equal spread of the gold supply between North America, the United Kingdom, and the U.S. also helps to spread the risk.”
They’re not exiting all the gold held in North America; instead they’re rebalancing so that for more resilience against a backdrop of increased geopolitical risk.
Yes, but it’s a very specific geopolitical risk.
European countries aren’t worried that China will conquer the U.S. and they’d lose access to their gold because a hostile Chinese government controls it.
The increased risk is that the U.S. was considered basically risk free for allies, and now the U.S. isn’t considered risk free anymore and allied status is also at risk.
To the extent this is the justification, why is Canada included?
In case the US takes over Canada, I guess. After all, we've already taken over Lake America.
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so they can say moving out of "North America" instead of "US" and avoid the ire of a certain mad king
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The Canadian government froze the bank accounts of truckers involved in a protest [1] [2] [3].
If a government is willing to go after the property of its own citizens without due process, foreign investors have to think: "What's to stop the same from happening to me?" Even if that foreign investor's a central bank.
[1] https://www.bitsaboutmoney.com/archive/debanking-and-debunki...
[2] Maybe the truckers' protest went too far; they were blocking roads. The point isn't whether they deserved to be punished; the point is that their accounts were frozen without going through the laws and court system.
[3] This was in 2022, so it has nothing to do with the current US administration.
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No, but "removing" around half of it from one place is quite a bit. Though I doubt any single physical kg ever moved more than a few meters to the buying countries vault. edit: They physically moved 27 tons, the rest was traded away and bought again in London.
If they sell enough of it in the US and buy enough in London, traders who take the other side of that position will physically move it to London.
That's exactly the service the commodities markets provide: they will absorb a small trade without anyone incurring the costs of shipping precious metals, and they know who to call to get it shipped once there's enough supply/demand imbalance to make shipping it worthwhile.
In times of crisis it can be physically moved, e.g. under threat of Nazi invasion in 1939-1940 the UK physically moved over 1,500 tonnes of gold from London to Canada ("the largest known movement of physical wealth in history"[0]), and infamously at the start of the Spanish Civil War the Spanish physically moved 510 tonnes of gold from Spain to the Soviet Union (never to see it again[1]).
[0] https://en.wikipedia.org/wiki/Operation_Fish
[1] https://en.wikipedia.org/wiki/Moscow_Gold_(Spain)
The Spanish case shows how tricky it is to sell your gold. Suddenly other countries found out that Spain had money from liquidating its gold and milked it dry.
Given Spain’s history it is incredible that the gold collected over centuries was spent in a few years.
The wiki article is very carefully tip toeing that there is no evidence that the Soviets defrauded or abused the Spanish, but it is hard to believe that 72% of the world’s gold reserves were visibly spent in a few years.
I did not investigate further but I understood the documents are not completely public, and my conspiracy hat tells me that is because it is a national humiliation.
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There's a good film about Norway getting their gold out ahead of the Nazis. Gold Run I think it's called.
That's the fun thing about gold. It's literal gold, not numbers on a spreadsheet. Moving it really means moving it: bars are stamped and owned, and if the owner wants to move them, those bars need to get transported to wherever the owner says they should be.
It's also the idiotic thing about gold, a metal that has no more or less inherent monetary value than a fiat currency =)
Currency is inherently about trust: you believe it can be traded later for goods. The mechanism with fiat is that you need to trust your state and government.
In gold, you trust that everyone is believing gold has value. And that it is commmon knowledge (in the logic sense [0])
Saying that gold has no more or less inherent monetary value than fiat currency assuming a magic wand that can change a large percentage of people's belief.
[0] https://en.wikipedia.org/wiki/Common_knowledge_(logic)
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>inherent monetary value
I agree, the price of gold depends on demand like everything else. Although gold just has some inherent utility value in addition to scarcity that makes it less likely for the price to go to zero, other stuff like cryptocurrency have only scarcity and can go to zero much more easily.
gold has quite the inherent value - no oxygen reaction (all electronics) and partly jewelry.
if the gold has cheaper would be used quite alot due to being the only metal not oxidizing (the other one being platinum which is even rarer and comes from the same ore source)
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> It's also the idiotic thing about gold, a metal that has no more or less inherent monetary value than a fiat currency =)
I don’t know why people keep repeating that. Half of gold production is used in industry and for jewellery. And gold has never lost its value the way that some paper currencies have. It’s not like anyone can print gold bars.
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That is the non idiotic thing about gold, since it is not fiat, is not easy to produce, and it is easy to verify, it can be used as a currency in less stable times/places. It’s a redundancy. Perhaps bitcoin satisfies many of these properties without the high costs to secure and move gold, but it needs electricity and a network?
https://www.macrotrends.net/1335/dollar-vs-gold-comparison-l...
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Can’t move what isn’t there
That is what the pamphlet says.
Fact is, it was not a issue before, because of trust.
"for more resilience against a backdrop of increased geopolitical risk." is just nice wording for "Trump is burning down all bridges".
> "for more resilience against a backdrop of increased geopolitical risk." is just nice wording for "Trump is burning down all bridges".
It is more multifaceted than that. To wit: they're leaving a substantial amount still in North America.
America's actions is a big part of it, but it isn't the only reason.
It's a hedge against the risk of the current government. Leaving a bunch here is part of the hedge. It's not as "multifaceted" as you're making it out to be.
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The US being that 'geopolitical risk'.