Bank for International Settlements (BIS) Gold Swaps Rose Substantially in May

Mon June 10 2024

Gold swaps undertaken by the Bank for International Settlements, the central bank of the world's central banks, rose by a substantial 31 tonnes in May over the 78 tonnes reported in April, reaching 109 tonnes, an increase of 40% The bank's statement of account of May, from which the gold swaps can be estimated, was published last week: Table 1 below sets out the historical level of monthly gold swaps estimated since August 2018. There is still a considerable level of gold being traded via these swaps. The swaps are down sharply from the 501 tonnes estimated in January 2022 but they seem to remain quite volatile, suggesting that they are being used to cover short-term trading requirements by central banks and bullion banks.

While the BIS long has refused to explain what it is doing in the gold market and for whom, it seems that the swaps are undertaken by the BIS for one or more of its central bank members, with the swapped gold being accounted for as being held in a BIS-registered sight account at a central bank. In any case, the swaps represent surreptitious central bank intervention in the gold market. Given what is happening in the gold market generally, it appears reasonable to assume that the U.S. Federal Reserve is the BIS member instigating these transactions. The evidence strongly suggests that the gold involved in the swaps comes from bullion banks and is registered as being held by gold exchange-traded funds.

That is, investors who buy claims on gold through ETFs may actually be assisting central bank efforts to control the monetary metal's price. GATA published a more detailed report on the use of gold swaps to cover the BIS' December 2023 swap transactions: The BIS' upcoming 2023-24 annual report, typically published at this time of year, may shine some light on the bank's gold swaps.

Table 1 — Swaps estimated by GATA from BIS monthly statements of account

Month .... Swaps

& year .... in tonnes

May-24 .... /109

Apr-24 .... /78

Mar-24 .... /71

Feb-24 .... /68

Jan-24 .... /117

Dec-23 .... /121

Nov-23 .... /100

Oct-23 .... /68

Sep-23 .... /96

Aug-23 .... /129

Jul-23 .... /103

Jun-23 .... /87

May-23 .... /188

Apr-23 .... /135

Mar-23 .... /77*

Feb-23 .... /136

Jan-23 .... /103

Dec-22 .... /0

Nov-22 .... /105

Oct-22 .... /7

Sep-22 .... /57

Aug-22 .... /75

Jul-22 .... /56

Jun-22 .... /202

May-22 .... /270

Apr-22 .... /315

Mar-22 .... /358

Feb-22 .... /472

Jan-22 .... /501

Dec-21 .... /414

Nov-21 .... /451

Oct-21 .... /414

Sep-21 .... /438

Aug-21 .... /464

Jul-21 .... /502

Jun-21 .... /471

May-21 .... /517

Apr-21 .... /472

Mar-21 .... /490+

Feb-21 .... /552

Jan-21 .... /523

Dec-20 .... /545

Nov-20 .... /520

Oct-20 .... /519

Sep-20 .... /520

Aug-20 .... /484

Jul-20 .... /474

Jun-20 .... /391

May-20 .... /412

Apr-20 .... /328

Mar-20 .... /326**

Feb-20 .... /326

Jan-20 .... /320

Dec-19 .... /313

Nov-19 .... /250

Oct-19 .... /186

Sep-19 .... /128

Aug-19 .... /162

Jul-19 .... /95

Jun-19 .... /126

May-19 .... /78

Apr-19 .... /88

Mar-19 .... /175

Feb-19 .... /303

Jan-19 .... /247

Dec-18 .... /275

Nov-18 .... /308

Oct-18 .... /372

Sep-18 .... /238

Aug-18 .... /370

* The estimate originally reported by GATA was 78 tonnes, but the BIS annual report states 77 tonnes. It is believed that slightly different gold prices account for the difference.

+ The estimate originally reported by GATA was 487 tonnes, but the BIS annual report states 490 tonnes, It is believed that slightly different gold prices account for the difference.

** The estimate originally reported by GATA was 332 tonnes, but the BIS annual report states 326 tonnes. It is believed that slightly different gold prices account for the difference.

GATA uses gold prices quoted by USAGold.com to estimate the level of gold swaps held by the BIS at month-ends.

Source: https://goldseek.com/