Owning gold is life insurance and wealth preservation. Anyone who has lived through hyperinflationary periods in the Weimar Republic, Zimbabwe, Argentina or Venezuela understands the importance of gold. But it is not enough just to own gold or silver. It is also extremely important how you hold it and where you hold it. We have just seen another example of how governments unilaterally “confiscate” gold.

VENEZUELA CAN’T GET THEIR GOLD BACK

The Venezuelan government gold held at the Bank of England (BoE) is just the latest example of the importance of choosing the right jurisdiction and the right vaults. Venezuela is holding 14 tonnes of gold with the BoE in London, worth $545 million. This is a relatively small amount when it comes to sovereign gold. Still, Venezuela has for some time asked to get it back but the BoE has come up with all kinds of excuses like it is hard to get insurance for such a big amount and this has allegedly delayed the release of the gold by several weeks. This is, of course, a ridiculous excuse.

Our company ships large amounts of gold and silver from all over the world to private vaults in Switzerland and Singapore. We have never had a problem organizing immediate shipment or getting insurance cover. So the reason for the delay is clearly not insurance or transport. The UK, as still part of the EU, is cooperating with the US in relation to the sanctions against Venezuela. So the question is now if Venezuela will ever see their gold back. It is reported that both Libya’s and Ukraine’s gold has been “taken care of” by the US. Maybe Venezuela’s gold will end up in the same place.

MAJOR PHYSICAL GOLD SHORTAGE IN INTERBANK MARKET

Most central banks hold gold with the Bank of England as well as with the Fed in New York. A major part of the central banks’ gold is either sold covertly or leased to the market. When a central bank wants its gold back, it doesn’t exist anymore in London or New York. A bullion bank has sold the leased gold to China or India and all the central bank has is an IOU stating that they are owed gold by the bullion bank. So there is no physical gold available to deliver against the IOU.