Gold News

Mad Dog Gaddafi, the Dutch Central Bank & Your Own Gold Reserves

There's no need to keep so much gold in New York, says the DNB. The cold war's over...
 
SO the Netherlands' central bank has shuffled its global gold holdings, moving 122 tonnes from New York to Amsterdam, writes Adrian Ash at BullionVault.
 
That's a big chunk of metal. Why pay the shipping costs? It makes sense for two reasons. 
 
First, as the DNB says in its news release, this move makes its holdings "more balanced" by location. Just less than one-third is now held at home, with another third still in New York...plus 20% still in Canada and roughly the same unchanged in London. 
 
You can do the same with your own personal gold reserves using BullionVault. Only better, and without the transport charges. 
 
Instead of four vaults on two continents, you can vault market-ready Good Delivery gold in 5 locations across three continents (London, New York, Singapore, Toronto, Zurich). You'll only pay 1 monthly storage fee ($4 minimum or 0.01% by value). Selling a little in one vault to re-buy in another will cost you a maximum 1.0% (half-a-per-cent dealing commission x 2). 
 
That's considerably less than air-freight and insurance...never mind insured shipping by sea (the chosen route according to this site claiming it was reported on this TV channel. Like the DNB or anyone involved will ever say). And using BullionVault, your full allocation is then proven each day...for your study and confirmed by independent, expert scrutiny...by our public Daily Audit
 
Second, Friday's DNB news heads off popular pressure to move gold in future. A growing call under the banner "Bring our gold home!", this has already forced Germany's Bundesbank to look stupid and weak in requesting very slow shipments to Frankfurt from the New York Federal Reserve. The same pressure has also helped seal the likely failure of next week's Swiss referendum on SNB holdings. 
 
Because voters sense that...while adding gold reserves might be wise...holding them all at home and vowing never to sell them isn't so smart. 
 
Fact is, only despots and pariahs hold all their gold reserves at home. (Oh, plus the UK and US Treasury departments. Ha!) Because keeping all your gold at home makes sense if a government fears global sanctions...or foreign invasion...or civil war. 
 
Gold, as even ex-Fed chairman Alan Greenspan knows, is money of the last resort. The ultimate payment, gold money was invented...and has since returned...in times of mistrust and violence. Because it can be used when soveriegn paper, social credit and other debt-based tokens are rejected. 
 
Think of Nazi Germany buying food supplies in WWII...or Great Britain and Russia buying materiel from the United States when a Nazi victory, and the worthlessness of Sterling and Roubles, looked all too possible in 1941. 
 
Hoarding all your central-bank gold inside your own borders...rather than having it ready to use as payment in a global gold-dealing centre...suggests you expect to need its value at home. Which isn't a happy outlook for your citizens. 
 
Think Venezuela under Hugo Chavez...or Libya in the dying days of "Mad Dog" Gaddafi.
 
Private individuals can learn from their bad example, we believe. Because if you're right to buy gold against an economic or social meltdown at home, then you're certainly right to keep the bulk outside your own borders.
 
Yes, the DNB must be seen to acknowledge and agree with popular demand for it to keep a bigger chunk of the Netherlands' gold reserves at home. But a spokesman quoted by De Telegraaf – which appears to have broken Friday's news at least an hour ahead of the DNB's announcement – is surely tempting fate by saying "It is no longer wise to keep half of our gold in one part of the world." Meaning on a different continent across 3,000 miles of cold ocean.
 
"Maybe that was desirable during the Cold War, but not now."
 
Well, maybe. For your own personal reserves, you might like to choose a secure jurisdiction which you can flee to...or from where you can receive the cash proceeds from selling a little...if exchange controls block you from buying gold at home, or moving money abroad, in future. 
 
The 5 locations which BullionVault offers all have a strong, if imperfect history of defending personal property rights. London, New York and increasingly Singapore are also world trading centres for gold...places where Good Delivery gold can be instantly sold for maximum value. 
 
But like the Dutch National Bank, it's also worth keeping some of your gold at home as well...just in case you do need "money of the last resort" to escape a collapse in domestic banking or law and order. 
 
Again, you can get that insurance in place at very low cost using BullionVault. Learn more about receiving a 100 gram Pamp Fortuna gold bar...delivered in time for the Christmas holidays.

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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