French central bank and JP Morgan team up to boost Gold Lending

Monday, December 10, 2018
By Paul Martin

BY BULLION STAR
THEDAILYCOIN.ORG
DECEMBER 10, 2018

French central bank and JP Morgan team up to boost Gold Lending by Ronan Manly – Bullion Star

The central bank gold lending market, centered in London, is probably the most secretive financial market in the world, with very little known about its transactions and market structure.

The gold lending market’s opacity is further supported by regulators who protect the secrecy of the central banks, and mainstream financial news agencies whose editorial policies seem to forbid any market investigations, in-depth or otherwise.

It is in the gold lending market that the central banks of the world lend out their gold holdings to commercial bullion banks, where the physical gold is sold and shipped out, and where the central banks then claim to hold interest-earning ‘gold deposits’ with the bullion banks. These gold-deposits (which are merely a claim on a bullion bank) then mostly roll over short-term, passed around indefinitely between the clubby LBMA cartel of bullion banks, in a totally opaque behind the scenes network.

The physical gold bars lent out are long gone to Switzerland and the Far East, and the central banks then deceptively claim that they still hold the gold on their balance sheets (due to an IMF accounting trick) when in fact all they have is a liability to the bullion banks. In the middle of this market sits the Bank of England, offering gold custody and storage to other central banks (in the vaults under the Bank of England headquarters in London) and offering gold accounts to the bullion banks concerned.

Look for gold lending market documentation on the London Bullion Market Association (LBMA) website and you won’t find it. Search for documentation and reports on the websites of the bullion banks, ditto. Talk to ex-traders who have worked in the gold lending area and they say they can’t talk about it. Ask the Bank of England and Bank of International Settlements (BIS) to explain how the gold lending market works and they characteristically go silent or answer a different question.

Within the myriad of central bank websites and reports around the world, there are a few glimpses into the gold lending market, such as a smattering of reports from some South American central banks, but these are the exceptions rather than the rule, the rule being utter secrecy to reveal anything about the extent to which gold is lent out and stays lent out i.e. the true size of outstanding central bank lent gold positions.

It is into this murky world of opacity and ‘no comment’ that the Banque of France claims to have recently entered with the aid of one of the giants of bullion banking, JP Morgan. How recently is the question, because the Banque de France was already known to be active in the gold lending market since at least 2013.

Gold Services – Active in the Gold Market

The Rest…HERE

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