Notes From Underground: Gold swaps between European Central Banks and the BIS

There are discussions abound about the role that GOLD has taken on in the short-term funding needs of some sovereign states in Europe. It seems that  since the beginning of the year some banks have been raising currency by swapping gold with the BIS. These are not sales but swaps. The GOLD market has judged this action to be bearish GOLD, but at this point we don’t see that view as factual.

Remember, most central banks have a dreadful record when it comes to GOLD trading (think the Bank of England selling most of its gold at around $290). Previously, we suggested that the IMF use its GOLD hoard to raise funds for the funding of the European debt crisis. It appears that the European regionals did it themselves and we do not believe it is bearish the GOLD market, but it explains the erratic behavior of GOLD most recently and we again reiterate that the OBAMA-BERNANKE team is close to a panic to issue a second dose of QE-—-a second dose of quantitative ease will unnerve the DOLLAR hoarders.

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