Italy’s central bank, the Banca
d’Italia, has recently published an important document detailing
the storage locations and composition of the country’s gold reserves.
The document confirms that Italy’s gold is held across four vault
locations, three of which are outside Italy.
This is a significant announcement given that
the Banca d’Italia is the world’s third largest official holder of gold after the U.S. and Germany. Italy officially holds 2,451.8 tonnes of gold, worth more than €72 billion (US$ 100 billion) at current market prices [1].
In the detailed three page report focusing exclusively on its gold reserves (and only published in Italian),
the
Banca d’Italia reveals that 1,199.4 tonnes, or nearly half the total,
is held in the Bank’s own vaults under its Palazzo Koch headquarters on
Via Nazionale in Rome, while most of the other half is stored in the Federal Reserve Bank gold vault in New York.
From
Goldcore:
Today’s AM fix was USD 1,285.00, EUR 927.26 and GBP 761.03 per ounce.
Yesterday’s AM fix was USD 1,283.00, EUR 924.15 and GBP 759.04 per ounce.
Gold fell $5.50 or 0.43% yesterday to $1,284.90/oz. Silver slipped $0.13 or 0.68% yesterday to $19.06/oz.
Gold remained in range bound trading yesterday and into this morning,
fluctuating between $1,280 and $1,285/oz. Likewise, silver traded in a
narrow band between $18.90 and $19.10/oz. The precious metals appear to
be treading water while awaiting the open of New York morning trading,
and the release of the latest U.S. non-farm payroll figures today.
Consensus payroll data estimates from surveyed economists indicate
improving expectations for April and a possible drop in the unemployment
rate. Any surprises in the U.S. payroll data today could be the
catalyst to move the gold price out of its very narrow trading pattern,
although given that it’s the end of the trading week, the short term
direction for gold may not become apparent until next week.
Gold in USD Simple Moving Averages, 9 Years – (Thomson Reuters)
Italy May Have Over 1,000 Tonnes Of Gold At The New York Fed
Written by Ronan Manly
Italy’s central bank, the Banca d’Italia, has recently published an
important document detailing the storage locations and composition of
the country’s gold reserves. The document confirms that Italy’s gold is
held across four vault locations, three of which are outside Italy.
This is a significant announcement given that the Banca d’Italia is
the world’s third largest official holder of gold after the U.S. and
Germany. Italy officially holds 2,451.8 tonnes of gold, worth more than
€72 billion (US$ 100 billion) at current market prices [1].
In the detailed three page report focusing exclusively on its gold
reserves (and only published in Italian), the Banca d’Italia reveals
that 1,199.4 tonnes, or nearly half the total, is held in the Bank’s own
vaults under its Palazzo Koch headquarters on Via Nazionale in Rome,
while most of the other half is stored in the Federal Reserve Bank gold
vault in New York. The report also states that smaller amounts are
stored at the Bank of England in London, and at the vaults of the Swiss
National Bank in Bern, Switzerland.
The Gold in Rome
Of the 1,199.4 tonnes held in Rome, 1,195.3 tonnes are in the
form of gold bars, with 4.1 tonnes held as gold coins (871,713 coins).
There are 95,493 bars in the Rome vault, most of which are the standard
trapezoidal shaped bars, however the holdings also include brick shaped
U.S. Assay Office bars produced by the U.S. Assay Office, and another
bar type which the Bank d’Italia refers to as ‘panetto’ (or loaf) shaped
‘English’ bars.
Like other major European central banks, the Banca d’Italia’s gold
reserves were mainly accumulated during the late 1950s and early 1960s.
Although Italy was already an important official gold holder during the
first half of the 20th century, it still only held 402 tonnes of gold as
of 1957. However, from 1958 until the late 1960s, the country’s gold
reserves increased nearly 600% to exceed 2,560 tonnes by 1970[2].
Since 1970, Italy’s gold holdings have remained fairly constant,
although at times some of the gold has been used in various financial
transactions such as gold collateral against a German loan during the
1970s, and as contributions to the European Monetary Cooperation Fund
(EMCF) and more recently to the European Central Bank (ECB).
The RAI Broadcast, the BIS and Bern
While the report from the Banca d’Italia appears to be the
first official written confirmation that documents the exact storage
sites of its gold reserves, the four storage locations were previously
confirmed to Italian TV station RAI in 2010 when an RAI presenter and
crew were allowed to film a report from inside the Bank’s gold vaults in
Rome.
In the RAI broadcast for an episode of ‘Passaggio a Nord Ovest’, the
presenter Alberto Angela states that in addition to Rome, the Italian
gold is stored at the Federal Reserve Bank in New York, the Bank of
England in London, and at the Bank for International Settlements (BIS)
in Switzerland. The reporter uses the exact words “Banca dei Regolamenti
Internazionali”.
The BIS connection was also confirmed in August 2009, when Italian
newspaper “La Repubblica” published an article about Italy’s gold,
stating that it was held in Rome, at the Federal Reserve in New York, in
the vaults of the the Bank of England, and in the ‘vaults’ of the BIS
in Basel.
This apparent contradiction between, on the one hand, the RAI and La
Repubblica, who both state that some of the Italian gold is stored with
the BIS in Switzerland, and on the other hand, the Banca d’Italia’s own
document which states that its gold in Switzerland is stored at the
Swiss National Bank (SNB) in Bern, is not really a contradiction since
the BIS does not have its own gold storage facilities in Switzerland.
The BIS simply uses the SNB’s gold vaults in Bern.
The BIS confirms this fact on its web site, under foreign exchange
and gold services, where it states that it offers its clients
“safekeeping and settlements facilities available loco London, Bern or
New York”.[3] The term loco refers to settlement location for precious
metals transactions.
By confirming that it stores gold at the Swiss National Bank in Bern,
the Banca d’Italia has also inadvertently confirmed that the Swiss
National Bank’s gold vaults are located in Bern. While this was
generally known, the SNB currently will not confirm this fact publically
and does not go beyond saying that it stores its own gold “domestically
and internationally” in “decentralised” locations.[4]
However, Bern based Swiss newspaper “Der Bund” published an article
in 2008 stating that the SNB’s gold vaults are in Bern, specifically
underneath the Bundesplatz square which is adjacent to the SNB’s
headquarters at No. 1 Bundsplatz. The SNB has two headquarters, one in
Bern, the other in Zurich.
So it appears that the Italian gold in Switzerland is on deposit with
the BIS (either earmarked or as a sight deposit) and is, at the same
time, stored in Bern at the SNB vaults. Therefore the RAI and La
Repubblica reports and the Banca d’Italia report are most likely both
all in agreement, since they are merely saying the same thing, just in
different ways. Another possibility is that the BIS sight deposit was
converted back to earmarked gold in the SNB vault sometime since the
2010 RAI broadcast.
The reason for the confusion is because the Banca d’Italia will not
confirm any of these details about how their gold in Bern is held, and
they stated last week that they cannot comment beyond what is published
in their April document.
Some of the details in the Bank’s gold reserve document were also
confirmed a week prior to its publication when three Italian senators
from Beppe Grillo’s political party Movimento 5 Stelle (Five Star
Movement), namely, the party treasurer Giuseppe Vacciano, Andrea Cioffi
and Francesco Molinari, visited the Rome vault on 31st March 2014.
The senators’ report states that as well as the 1,199.4 tonnes of
gold held in Rome, “the remainder is mostly deposited at the Federal
Reserve”, but also at the Bank of England and at “la Banca Centrale
Svizzera” (which is the Swiss National Bank). The senators also reported
that “For confidentiality reasons we were not notified of the exact
extent of the deposits in different countries”.
Italian Gold in New York
As per the senators’ experience, the Banca d’Italia document
does not specify how much of the Italian gold is held in New York,
London and Bern, beyond stating that most of the gold that is not stored
in Rome is stored in New York. However, the document does state that
“the bulk” of foreign stored gold is in New York with “contingents of
smaller size” located in London and Bern, so essentially it implies that
the London and Bern holdings are not very large.
Of the 1,252.4 tonnes not in Rome, technically, a majority of this
figure is anything greater than 626.2 tonnes. So with a simple
calculation, there is at least 626.2 tonnes of Italian gold in New
York. But given that the “bulk” of 1,252.4 tonnes is in New York as the
Bank’s document implies, and that “most of the remainder” not in Rome
is in New York as the senator’s comments imply, then there could be
anywhere up to between 1,000 tonnes and 1,200 tonnes of Italian gold in
the FRB in New York.
In fact, 522 tonnes of this Italian gold that was earmarked at the
Federal Reserve in New York in September 1974 was used as gold
collateral for the Bundesbank loan to Italy during the first gold loan
to Italy between 1974 and 1976. This collateral rose to 543 tonnes
between 1976 and 1978.
London – The Bank of England
It is possible using historical data and records of Italian
gold movements to estimate how much, or how little, Italian gold may be
in London.
It would appear that the Banca d’Italia does not hold very large
amounts of gold in London. During the late 1960s, mainly between 1966
and 1968, the Banca d’Italia moved most of their gold that was stored at
the Bank of England back to Italy. Regular shipments were exported and
delivered to the Bank’s vaults in both Rome and Milan. By the end of
1969, the Banca d’Italia held less than 1,000 gold bars in London, or
just under 400,000 ounces (approx. 12 tons).
Therefore, since Italian gold reserves have not in total changed very
much since 1969, it would be realistic to assume that the Banca
d’Italia’s London gold holdings have not changed very much since 1969,
unless gold was moved back to London (or swapped back to London) after
1969. This would only make sense if it had been moved back to London for
a specific reason such as to allow Italian gold lending through the
London market. Gold lending only really began in London in the
mid-1980s, and there is no public record that the Italians have engaged
in gold lending through London.
Bern, Switzerland
Historical records from the BIS show that there wasn’t any
Italian gold left in Bern after WWII, so whatever Italian balance is in
Bern has been built up since 1946. It’s interesting to note that Sweden
and Finland both recently published the international locations of their
gold reserves, and revealed that only very small percentages of their
gold is kept in the SNB vaults in Switzerland. Of Sweden’s 125.7 tonnes
of gold reserves, only 2.8 tonnes or 2.2% is stored with the SNB
vaults[5]. For Finland, only 7%, or 3.4 tonnes of its 49 tonnes of gold
reserves are stored with the SNB in Switzerland[6].
If this Swedish-Finnish 2-7% range of allocations at the SNB was
applied to the Italian gold that is reported to be outside Italy, it
would work out at between 25 tonnes and 87.6 tonnes of Italian gold held
at the SNB vaults in Bern. Assuming that there is very little Italian
gold in London (400,000ozs or about 12 tonnes), and only a small
allocation in Bern, then there could be nearly 1,200 tonnes of Italian
gold at the Federal Reserve in New York.
Gold Audits and Repatriation
The Banca d’Italia state in their gold document that external
auditors verify the gold held in Rome each year in conjunction with the
Bank’s own internal auditors. The external auditors also verify the gold
held abroad using annual certificates issued by the central banks that
act as the depositories i.e.
This sound very similar to the way the German gold reserves stored
abroad was audited. i.e. the gold stored abroad is not physically
audited at all (although the Bundesbank did describe recently in quite a
vague way that their gold in New York was recently audited by some of
their own appointed representatives).
Given the widespread recent media coverage of the German Bundesbank’s
plans to repatriate 300 tonnes of its gold reserves from the Federal
Reserve in New York to the Bundesbank’s headquarters in Frankfurt, it
will be interesting to see whether, in time, a critical mass is reached
in Italian public opinion or even in Italian political opinion that
would lead to the Banca d’Italia raising a similar request to the
Federal Reserve.
The fact that the initial gold repatriated from New York by the
Bundesbank needed to be melted down and recast (suggesting that it was
low grade coin bars), does not inspire confidence that the Banca
d’Italia might not face a similar problem if it attempts any gold
repatriation from New York.
Source Links (all in Italian):
Banca d’Italia gold document, April 2014
http://www.bancaditalia.it/media/chiarimenti/riserve-auree.pdf
RAI gold vault video
http://www.youtube.com/watch?v=4u4iSEQOxyk&sns=em
La Repubblica gold article:
http://www.repubblica.it/2009/07/sezioni/economia/scudo-fiscale-1/lingotti-italiani/lingotti-italiani.html
Movimento 5 Stelle article:
http://www.latina5stelle.it/vacciano_riserveauree_bankitalia/
Movimento 5 Stelle video of visit to Bank: https://www.youtube.com/watch?v=RNbGc2P677s
[1] Excluding the IMF, Italy is the world’s third largest official
gold holder; including the IMF, Italy is the world’s fourth largest gold
holder.
[2] Central Bank Gold Reserves, An Historical perspective since 1845, Timothy Green, Research Study No. 23, November 1999, WGC
[3] http://www.bis.org/banking/finserv.htm
[4] http://www.goldcore.com/goldcore_blog/swiss-gold-stored-“decentralised-locations”-–-snb-does-not-disclose-where
[5] http://www.thelocal.se/20131029/51064
[6]http://www.suomenpankki.fi/en/suomen_pankki/ajankohtaista/tiedotteet/pages/tiedote26
