7/17/2019 Notes to Koos Jansen's Paper "The Real Reason Belgium Sold 1,098 Tonnes of Gold"

http://slidepdf.com/reader/full/notes-to-koos-jansens-paper-the-real-reason-belgium-sold-1098-tonnes 1/2

Notes to Koos Jansen's paperThe Real Reason Belgium Sold 1,098 Tonnes Of old 

 jwr47 

In studying Koos Jansen's paper I found the following clarifying quotations in Central Bank Gold

gree!ents " #orld Gold Council$

• central %anks ha&e i!!ense pricing power in the gold !arkets In recognition of this( !ajor

)uropean central %anks signed the Central Bank Gold gree!ent *CBG+ in ,---( li!iting

the a!ount of gold that signatories can collecti&ely sell in any one year

.he following quotations see!s to %e rather sarcastic and ironic to !e$

• .he agree!ents ha&e %een %eneficial to all aspects of the gold !arket fro! gold producers(

fa%ricators( in&estors and consu!ers and in particular to hea!il" inde#ted poor $ountries 

*/I0C+( se&eral of who! are large e1porters of gold

• .he gree!ent( the fourth of its kind( !arks a continued co!!it!ent fro! so!e of the

world2s largest gold reser&e holders to preser&e the clarity and transparency that thisagree!ent pro&ides for gold !arket participants

.he following state!ent see!s to contradict the 34 ainstrea! edia rticles ocking Gold5$

• It also fir!ly reasserts the i!portance of gold as an asset in glo%al !onetary reser&es

Before the official launch of the )uropean single currency on ,st January ,---( the central %anks of 

the prospecti&e euro area transferred foreign reser&e assets to the new institution In this decision

gold played a !ayor role *although it contradicts Bernanke's 3%ar%arous relic56idea+$

• f the initial transfer of assets( which a!ounted to nearly 849 %illion(the )CB agreed that

,: per cent should %e in gold( a clear de!onstration of the fact that )uropean policy!akers

continued to %elie&e that gold strengthened the %alance sheet of a central %ank and enhanced

 pu%lic confidence

Before launching the )uro countries had to decide how they had to take care of the re!aining ;:

 per cent in 3foreign currency assets5$

• .he )CB indicated clearly that these transfers of gold would not affect the total consolidated

gold holdings of the )uro<one .he re!aining ;: per cent was transferred in foreign

currency assets( %ut there was no i!plication that the ratio would re!ain the sa!e

In CBG, *dated ,---+ the !anage!ent clai!s gold sales had to %e restricted to relie&e 3the pain

for gold producing countries5( especially the 3/ea&ily Inde%ted 0oor Countries5( although they

didn't care for 3the pain for gold producing countries5 %y selling unli!ited a!ounts of paper gold$

• .he central %anks of #estern )urope in particular held=and still hold=su%stantial stocks

of gold in their reser&es .hose in the >etherlands( Belgiu!( ustria( ?wit<erland and the

@K( had already sold gold or announced their intent to do so thers were taking ad&antage

of rising de!and for %orrowed gold and increasing their use of lending( swaps and other

deri&ati&e instru!ents n increase in lending typically resulted in additional gold %eing

sold( !eaning that the trend was adding further supplies to the !arket

• In addition to the desta%ilising effect of these sales( !arket fears a%out central %ank

intentions were causing further falls in the price of gold .his was causing considera%le pain

for gold producing countries !ong these were a nu!%er of de&eloping countries(

including a significant nu!%er of those classified as /I0Cs */ea&ily Inde%ted 0oor

Countries+

7/17/2019 Notes to Koos Jansen's Paper "The Real Reason Belgium Sold 1,098 Tonnes of Gold"

http://slidepdf.com/reader/full/notes-to-koos-jansens-paper-the-real-reason-belgium-sold-1098-tonnes 2/2

Gold is still to %e considered as an 3i!portant asset in glo%al !onetary reser&es5$

• Aespite a nu!%er of sales( gold2s share of the )CB2s total reser&es has grown considera%ly

since then( due to the sharp increase in the gold price s at ?epte!%er 9,9( the )CB had

per cent of its reser&es in gold *fro!$ 3.he )CB and gold5+