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Poland joins Hungary with Huge Gold Purchase and Repatriation

With a variety of the world’s central banks going on a gold buying spree in recent years such as Russia and China, there has unsurprisingly been no shortage of newsflow in this area for the world’s financial media to comment on. But even in such an environment of abundant sovereign gold purchases, a number of buying bombshells have stood out for their intensity and ‘shock and awe’ abruptness. Particularly from nations which on the surface might seem like unlikely gold buyers.

One of these was the announcement last October by Hungary’s central bank, that after 32 years of holding unchanged gold reserves, it had rapidly increased its monetary gold holdings by 1000% or 10 fold, from 3.10 tonnes to 31.5 tonnes, and also repatriated (brought home) his entire holding from London to Budapest, away from the clutches of the Bank of England.

At the time we asked: “With almost all of Poland’s gold held at the Bank of England, a relevant question now is how long before Poland also sees fit to repatriate its gold in physical form away from the fractionally-backed LBMA controlled gold trading centre of London. “
The answer to this question was, not long at all.
- The NBP’s management board made a strategic decision to significantly increase the central bank’s gold reserves. This decision was then implemented by the NBP.
- Over 2018-2019 the central bank bought 125.7 tonnes of gold and now has 228.6 tonnes of gold.
- Of the 125.7 tonnes, 100 tonnes were purchased in 2019 and 25.7 tonnes in 2018. Notably, the entire 125.7 tonnes was bought ‘in the last 12 months’.
- The NBP has decided to bring back ‘almost half’ of its gold (which is all stored at the bank of England in London) and store this repatriated gold domestically in the NBP’s vaults.

Poland’s gold holdings as a percentage of total reserves was also, it says, below average.
For example, as of June 2019, when Poland was still reporting 128.6 tonnes of gold held, this represented 4.7% of its reserve assets.
In comparison, the average for all central banks globally is 10.5% according to the NBP, and 20.5% for European countries.
For Euro area countries, gold as a percentage of reserves assets is even higher, at 53.6%, pulled up especially by the large claimed gold holdings of Germany, France and Italy.

Although the official language in the press release is diplomatic, the NBP makes it clear that there is real risk to holding its gold in London, something that was also clear in the repatriation decisions of central banks such as Hungary and Austria, and perhaps crystallized by the Bank of England’s brazen confiscation of Venezuela’s gold in London last year.


As two of the most independently minded countries in the present day European Union, which are both thorns in the side of the European federalists, the physical gold buying and gold repatriations by the Poles and Hungarians are intriguing to say the least. No other EU states have made such huge and dramatic gold purchases for decades. Could the huge gold purchases and repatriations by the Poles and Hungarians be signalling a skirmish in the two countries’ battle with the EU elites? Because don’t forget, the EU is raging at both countries and even plans to put them under economic sanction.

Poland and Hungary also still use their own currencies, the zloty and forint, respectively, and while their central banks are members of the ESCB, neither are part of the Euro and fully answerable to the ECB. Which also explains their freedom to maneuver and pursue their own reserve management agendas, something that full ECB members banks cannot do independently.

Importantly, as non Euro members, the Hungarian National Bank and National Bank of Poland have never been signatories of the Central Bank Gold Agreement (CBGA) syndicate, and thus have the freedom to buy gold when they feel like it, unlike the CBGA signatories which more and more now appear to have signed up to a pact to avoid purchasing any gold as well as avoiding selling any gold.

Whatever the exact motives, both Hungary’s and now Poland’s gold purchases and repatriations are sending clear signals to the EU elites that in the realms of both politics and monetary policy, the two countries still have an independent streak and sense of national sovereignty found lacking in many other EU member nations.

For now, the final word goes Polish central bank president Adam Glapiński who said in the 5 July announcement, that:
“I am proud and moved that during my term – in the year in which we celebrate the centenary of the Polish zloty as the foundation of our country’s economic strength – we managed to increase strategic gold reserves and take actions to repatriate a significant part of Polish gold to the country.
By implementing our constitutional, statutory and simply patriotic commitment, we not only build the economic strength of the Polish state, but also create reserves that will safeguard its financial security. This is the global trend, but also the expectation of Polish society.”
Open Letter To Mark Zuckerberg

Dear Mr. Zuckerberg:

Your company made big headlines when it announced it would be launching a cryptocurrency called the Libra in 2020. Not surprisingly, given the nature of the times, the project has been greeted with intense criticism and skepticism. Don’t lose heart. In one sense, the idea of a company creating its own kind of money is an old one. The airlines’ frequent-flier miles are really a form of money that customers can earn and use to buy trips and various other things. Credit card companies, hotels and numerous retailers have all sorts of loyalty programs in which people earn points that will let them buy all manner of goodies.

But if you play your cards right with the Libra, you could be to money and finance what Henry Ford was to automobiles. Your new currency could take its place alongside the inventions of coins and paper money many centuries ago. It could replace the U.S. dollar as the global currency.

Make it as good as gold.
Backing your new money—as you plan to do—with a basket of currencies won’t cut it. In today’s monetary system the values of currencies jump up and down, so you won’t get the stability you need.
The World Acquires More Gold While China Is Dumping Treasuries

Currently China holds well north of $1 TRILLION in U.S. Treasuries – debt – that you and I, the tax payers of this country, send interest payments to month after month for them to continue holding our debt. It’s like the mortgage on your house, student loan or car note you have but instead of you getting anything for the debt payment you get to know the warmongers are going to purchase more bombs, weapons of all kinds and create more destruction. China, on the other hand, takes the payment and is building out the Belt and Road Initiative around the world. So, while we are working like slaves to pay our taxes, China is using our labor (taxes) paid to them to build a better global economic and financial system that does not include you and I. Pretty cool, aye?
Right so the debtor is blaming the creditor for extending credit and complaining paying interest to the creditor?

China has been stockpiling oil instead of gold which has higher strategic value
(15-07-2019, 12:01 AM)specuvestor Wrote: [ -> ]Right so the debtor is blaming the creditor for extending credit and complaining paying interest to the creditor?
This is not a US citizen blaming China.
This is a US citizen blaming the US Gov for getting into debt and making him work as a slave in order to "purchase more bombs...", while he is praising the Chinese Gov for using the debt interest in order to build the BRI.

(15-07-2019, 12:01 AM)specuvestor Wrote: [ -> ]China has been stockpiling oil instead of gold which has higher strategic value
I think China has been stockpiling both oil and gold.
As far as oil goes, rather than stockpiling it they have closed long term deals with oil exporting countries like Iran, Russia, Syria, Angola, Venezuela etc.
Dollar’s declining role already under way?

Recent data on currency reserve holdings among global central banks suggests this shift may already be under way.  As a share of overall central bank reserves, the USD’s role has been declining ever since the Great Recession (see chart). The most recent central bank reserve flow data also suggests that for the first time since the euro’s introduction in 1999, central banks simultaneously sold dollars and bought euros.  

Central banks across the globe are also adding to gold reserves at their strongest pace on record. 2018 saw the strongest demand for gold from central banks since 1971 and a rolling four-quarter sum of gold purchases is the strongest on record. To us, this makes sense: gold is a stable source of value with thousands of years of trust among humans supporting it.

[Image: reserve%20currency%20status_2.jpg?itok=7gd_rKPG]
Ray Dalio

Paradigm Shifts

While I’m not sure exactly when or how the paradigm shift will occur, I will share my thoughts about it. I think that it is highly likely that sometime in the next few years,
1) central banks will run out of stimulant to boost the markets and the economy when the economy is weak, and
2) there will be an enormous amount of debt and non-debt liabilities (e.g., pension and healthcare) that will increasingly be coming due and won’t be able to be funded with assets.

Most people now believe the best “risky investments” will continue to be equity and equity-like investments, such as leveraged private equity, leveraged real estate, and venture capital, and this is especially true when central banks are reflating. As a result, the world is leveraged long, holding assets that have low real and nominal expected returns that are also providing historically low returns relative to cash returns (because of the enormous amount of money that has been pumped into the hands of investors by central banks and because of other economic forces that are making companies flush with cash).

I think these are unlikely to be good real returning investments and that those that will most likely do best will be those that do well when the value of money is being depreciated and domestic and international conflicts are significant, such as gold. Additionally, for reasons I will explain in the near future, most investors are underweighted in such assets, meaning that if they just wanted to have a better balanced portfolio to reduce risk, they would have more of this sort of asset. For this reason, I believe that it would be both risk-reducing and return-enhancing to consider adding gold to one’s portfolio.

540 comments as for today
What's causing this precious metal to shine brighter this year?

According to Crispin Odey, London's Odey Asset Management hedge fund manager, gold caught his attention during the stock market collapse in the fall of 2018. The yellow metal "should have gone down last year," Odey said.

The yellow metal was supposed to have finished the year at $1,000 per ounce, Odey noted, but "Instead it was $1,200. I thought, 'Something's going on here.'"

So, what's behind gold's increasing appeal and market value? Some of Uncle Sam's biggest economic competitors were jacking up their inventories of the precious metal. To be specific: China and Russia.

In fact, these two countries are still actually ramping up their gold deposits, perhaps their own way of dealing with the American's currency stranglehold on the global financial system.

For instance, the China National Gold Group (CNGG), the nation's premier gold producer, recorded solid growth in gold production and sales in the first half of 2019. CNGG's revenues hit 47.6 billion yuan ($7 billion) in the period, CNGG President Song Xin disclosed.

The People's Bank of China hiked its acquisition of the precious metal for the 7th consecutive month in June. Chinese gold stockpiles totaled 61.95 million ounces in the same month, rising 330,000 ounces from a month earlier.

And now, Russia. The country's appetite for gold is just insatiable: it bought 200,000 ounces of gold on January, 1 million ounces in February, more than half a million ounces the following month, 550,000 ounces in April and 200,000 ounces in May, making Russia a force to reckon with in gold shopping.

Based on the latest reports, gold comprises 20% of the country's foreign reserves, making it officially the biggest buyer of gold in the world today.
I found an 1 year old but still interesting article confirming Singapore as one of the major gold hubs worldwide for physical gold.

China’s Secret Gold Supplier Is Singapore
05 Apr 2018

Since 2013 China continues to absorb physical gold from the rest of the world at a staggering pace. Worth noting is that gold imported into the Chinese domestic market  is not allowed to be returned in the foreseeable future. Because ownership and the disposition of these volumes of gold likely will be of great importance next time around the international monetary system is under stress, it’s well worth tracking China’s progress of imports – especially because the mainstream media and most consultancy firms are in denial of these events.

Below we’ll discuss what countries supplied gold to China in 2017, Singapore’s role not only in 2017 but in the past few years, and physical flows through the vaults of the Shanghai Gold Exchange International Board in the Shanghai Free Trade Zone (SFTZ). We’ll see that Singapore has been a major gold supplier to China since 2013, which was previously not publicly known.
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