{"id":1621,"date":"2014-11-15T11:49:57","date_gmt":"2014-11-15T16:49:57","guid":{"rendered":"http:\/\/olduvai.ca\/?p=1621"},"modified":"2014-11-15T11:53:54","modified_gmt":"2014-11-15T16:53:54","slug":"how-central-banks-use-gold-swaps-to-boost-their-gold-holdings-zero-hedge","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=1621","title":{"rendered":"How Central Banks Use Gold Swaps To &#8220;Boost&#8221; Their Gold Holdings | Zero Hedge"},"content":{"rendered":"<p><a href=\"http:\/\/www.zerohedge.com\/news\/2014-11-15\/how-central-banks-use-gold-swaps-boost-their-gold-holdings\">How Central Banks Use Gold Swaps To &#8220;Boost&#8221; Their Gold Holdings | Zero Hedge<\/a>.<\/p>\n<p>With the specter of a &#8220;yes&#8221; outcome to the Swiss gold referendum finally being priced in by the market, and the frontrunning of the SNB&#8217;s potential 1,500 tons of gold purchases starting to move the price of gold higher, a question has emerged: is there enough physical gold to satisfy Swiss gold demand in case of a favorable outcome to the referendum. Well, as Deutsche Bank reports, that may not even be an issue. Because as the following step by step explanation demonstrates, the SNB may simply &#8220;window dress&#8221; its balance sheet with gold swaps.<\/p>\n<p>So for anyone curious how banks &#8220;represent and warrant&#8221; that they have thousands of tons of physical gold when in reality they have far less if not zero physical in storage and all in &#8220;synthetic&#8221; form, here is the blow by blow.<\/p>\n<p><em>From Robin Winkler of Deutsche Bank<\/em><\/p>\n<p>An early suggestion of the \u2018gold initiative\u2019 was to transfer Swiss gold reserves to a sovereign wealth fund to protect them from perceived mismanagement by the SNB. This idea was soon dropped. The concern behind the referendum is not the SNB\u2019s management competence but the perceived shortage of gold reserves. Transferring the SNB\u2019s FX reserves to a fund to avoid gold purchases would therefore be a blatant disregard of the political will and probably involve another referendum.<\/p>\n<p><strong>Gold swaps a more realistic option<\/strong><\/p>\n<p>Another option for the SNB would be using gold swaps to \u2018window dress\u2019 its balance sheet rather than holding physical gold or futures contracts. The SNB could borrow gold from counterparties prior to monthly balance sheet reporting dates, re-exchanging it for currency the following day.<\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>How Central Banks Use Gold Swaps To &#8220;Boost&#8221; Their Gold Holdings | Zero Hedge. With the specter of a &#8220;yes&#8221; outcome to the Swiss gold referendum finally being priced in by the market, and the frontrunning of the SNB&#8217;s potential 1,500 tons of gold purchases starting to move the price of gold higher, a question [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[63,374,1137,1136,775],"class_list":["post-1621","post","type-post","status-publish","format-standard","hentry","category-economics","tag-banks","tag-gold","tag-gold-referendum","tag-gold-swaps","tag-switzerland"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/1621","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1621"}],"version-history":[{"count":3,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/1621\/revisions"}],"predecessor-version":[{"id":1625,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/1621\/revisions\/1625"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1621"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1621"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1621"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}