European Central Banks About To Withdraw Restrictions On Gold Sales

In 1999, 15 European central banks agreed to restrict the central bank gold sales to 400 tonnes over the course of the following five years. Five years later, a similar agreement was implemented, with a small difference that gold sales restriction was increased to 500 tons. In 2009, five years after the second agreement, 17 central banks in Europe, along with Sweden and Switzerland, extended the agreement with a 400 tonnes restriction.

Now, five years after the third agreement, it seems there will be no renewal, according to Wall Street Journal who referenced top German central banker Thiele.

“The negotiations are still ongoing,” Deutsche Bundesbank board member Carl-Ludwig Thiele said in a recent interview with The Wall Street Journal. “No one can see into the future, and therefore it is currently under discussion whether it should be continued,” he added. The Bundesbank currently holds around 3,400 metric tons of gold.

Mr Thiele indicated that one reason the agreement may not be extended is because over the past five years central bank gold sales have decreased significantly. Instead, central banks around the globe have increased their holdings in the aftermath of the financial crisis. In previous years, it has only parted with four-to-five tonnes, which it gave to the Finance Ministry to use for making gold coins.

We don’t expect this to have an impact on gold demand nor the gold price. Our view is not to read too much in this news. By contrast, we believe the German gold repatriation case could be much more impactful in the gold market. Unless there is a specific reason in German Bundesbank board member Thiele’s hidden agenda …

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