- Published
When the central bank of the Netherlands confirmed this week that it had moved tonnes of the country's gold out of North America, it said the relocation would make it "better prepared for severe crises".
asserted
it → publish → crises
Some 86 tonnes from the combined total of about 313 tonnes held in the US and Canada were relocated to London "in view of increasing geopolitical unrest", it said, so the shiny stuff could be "readily available for use in a crisis situation".
uncertain
stuff → combine → situation
Questions were bound to follow.
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Questions → bind → ?
Why were the Dutch doing this?
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Dutch → do → this
Were they anticipating some major economic shock on the horizon?
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they → anticipate → horizon
It seems not, but the move was clearly in response to the unstable and uncertain state the world finds itself in, with trade and military wars prompting countries to take precautions and hold their gold closer to home.
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trade → seem → home
Earlier this year, France announced it had removed its gold reserves from the US to home shores.
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it → announce → shores
Meanwhile, Germany's Bundesbank transferred more than 216 tonnes of the metal from storage locations abroad - 111 tonnes from New York and 105 tonnes from Paris - over a few years ending in 2016.
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Bundesbank → transfer → 2016
It is a strategy which has played out before in times of global instability.
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which → play → instability
"Some European central banks moved part of their gold holdings to New York during the Cold War," said research analysts Lina Thomas and Daan Struyven of Goldman Sachs.
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analysts → move → Sachs
Joseph Cavatoni, senior market strategist at the World Gold Council, told the BBC while wars and trade tensions were "playing into some of these decisions", it didn't "top the list" of motivating factors.
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it → tell → factors
Inflation, interest rates and just having gold in a place where it can be traded quickly also played a role.
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it → have → role
"I don't get a sense that there's an impending doom," Cavatoni said, "but what I do think is people are being better educated around how to manage their reserve assets, growing their reserve assets, and actually thinking more effectively around how to make the most of those assets."
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people → get → assets
De Nederlandsche Bank said the gold removed from the US and Canada between March and August this year was now being held in the vaults of the Bank of England.
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gold → say → England
"We expect that we will never need to use them, but we do need to strengthen our resilience and preparedness," said the governor of the Dutch central bank, Olaf Sleijpen.
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governor → expect → bank
London was seen as the best choice due its position in the world as a major trading centre.
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London → see → centre
If you want to be able to buy or sell gold fast in a crisis, London is the place to be, which makes the Bank of England a popular storage spot.
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Bank → want → England
Underneath the 300-year-old institution in central London sit about 400,000 bars worth more than £200bn.
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bars → sit → London
According to industry surveys by the World Gold Council, the Bank of England remains the most popular vaulting location, but central banks are increasingly diversifying where they store the precious metal.
uncertain
they → accord → metal
Where to store your country's gold is "increasingly top of mind for reserve managers", according to Thomas and Struyven of Goldman Sachs.
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store → store → Sachs
The Dutch sold about 59 tonnes in New York and then bought more stocks in London, meaning that amount didn't need to be hauled across the Atlantic.
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amount → sell → Atlantic
But more than 27 tonnes were "physically transferred" from the US and Canada to the Dutch town of Zeist.
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tonnes → transfer → Zeist
A similar quantity was also sent from Zeist to London.
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quantity → send → London
Companies that perform such services are tight-lipped on how operations are carried out, but it's fair to say the security measures and planning are extensive to avoid the risk of a real-life Italian Job.
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measures → perform → Job
Cavatoni, of the World Gold Council, said one standard approach to move gold stocks was to sell the commodity in one place and buy it in another.
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approach → say → another
"Let's say I want my gold in New York and I have it in London.
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I → let → London
I could sell it in London, buy it in New York, same day, same time, effectively book transfer without actually having to put it on any other logistical change.
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I → sell → change
There are only a few select companies which handle gold shipments across borders, one of which is Brink's Global Services, who told the BBC it had seen "increased demand" from the likes of central banks in recent times.
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it → be → times
"Heightened geopolitical and economic uncertainty, along with gold's growing role as a strategic reserve asset, appear to be contributing to this trend," said Nader Antar, Brink's executive vice president.
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Antar → grow → trend
The reason gold storage is such a topic in the minds of central banks is because they have been increasingly buying the stuff.
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they → buy → stuff
But storing it at home comes at a cost, said Thomas and Struyven of Goldman Sachs.
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Thomas → store → Sachs
"Domestic storage requires investment in physical security, audit infrastructure, and insurance; costs that can be disproportionate for smaller central banks," they said.
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they → require → banks
Over the past four years, central banks have accumulated an annual average of 1,000 tonnes of gold, up significantly from the 500 tonnes average over the preceding decade, according to the World Gold Council.
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banks → accumulate → Council
The trend stretches back to the global financial crisis.
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trend → stretch → crisis
And that is only expected to go up in the next year.
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that → expect → year
Gold has been having a moment in recent years.
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Gold → have → years
Its price has surged to hit a series of record highs, passing $5,000 an ounce in January.
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price → surge → January
There are several reasons behind its value jumping, but a major factor has been the precious metal's position in the human psyche as a so-called safe haven asset, to invest during periods of financial and geopolitical turmoil caused through trade and military wars.
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factor → be → trade
Inflation and interest rates also influence gold's popularity.
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Inflation → influence → popularity
Due to the commodity's scarcity and the value placed on it across thousands of years, it is somewhat resistant against rising prices, and so is seen as a good investment.
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it → place → investment
…and 4 more, not listed.
The Aporia
