Belgium Decreases Loans of Gold Reserves to Bullion Banks

The central bank of Belgium announces that some 25 tons of their gold reserves have been lent to bullion banks. The news was published by GoldCore, based on an announcement by Belgian central bank Director and Treasurer Jean Hilgers. Belgium currently has 227.5 tons of gold reserves. Nearly 10% is lent to bullion banks. The Director says that the proportion will further decline in 2013.

The gold which has been loaned to bullion banks has been declining significantly in the past couple of years:

  • On December 31, 2011, Belgium had loaned 84.3 tonnes.
  • Over 2012, Belgium had loaned on average 48.1 tons.
  • For 2013, the expectations are that the loans will further decline.

GoldCore writes that “the National Bank of Belgium may be nervous regarding their gold loans and may be seeking their repayment early. They will be aware of the great difficulty that the Bundebank is having repatriating their gold reserves and the bizarre fact it will take the Federal Reserve seven years to return the German gold reserves stored in the U.S. to Germany.”

Belgian gold reserves reduced by 80% since 1978

Belgium has sold large amounts of their gold holdings prior to the introduction of the euro. This is a high level overview of their declines prior to the start of the EU:

  • March 22, 1989: sales of 127 tonnes announced.
  • June 17, 1992: sales of 202 tonnes announced.
  • April 24, 1995: sales of 175 tonnes announced.
  • March 27, 1996: sales of 203 tonnes announced.
  • March 18, 1998: sales of 299 tonnes announced.

In total, Belgium has sold some 1,000 tons of gold into the market. Belgian gold reserves were +1,000 tonnes  in 1978. Interestingly, the EU membership and monetary union played a significant role in the sales of its gold. The revenues of their gold sales were reported to be used to reduce government debt in foreign currencies.

Fractional gold system

We believe this is a good evolution. It perfectly fits with the ongoing trend of dismantling the fractional gold system. After several countries announced the repatriation of gold, of which Germany’s case is the most notable one, Belgium is now contributing in a similar way. Although it is not bringing home its gold, it is helping to reduce the loaned / leased gold activity. The fractional gold system is like a card house: the more holders get out of it, the higher the probability that the system will fall apart. We honestly can’t wait to witness such a moment.

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