On May 28, the Austrian Central Bank surprised the world when it announced that it too would follow in the footsteps of Germany and the Netherlands, and repatriate half of its sovereign physical gold, currently held almost entirely at the Bank of England, to Austria while transferring a modest portion in Switzerland by the year 2020.
Back then, the central bank headed by Ewald Nowotny said it took the decision after recommendations made by the Austrian Court of Audit in February, which warned of a "heightened concentration risk" linked to storing the majority of its reserves in Britain. At the time, the bank had argued the policy was warranted because London was a major international centre for the gold trade."
This was the official statement the Austrian National Bank (OeNB) released in May:
With great fanfare, Austria has now proudly announced to the world that it has moved 15 tonnes of gold from London of its gold reserves as part of its aforementioned repatriation plan.In May 2015, the gold reserves held by the OeNB amounted to 280 tons, having remained unchanged since 2007. Austria’s gold reserves are fully owned by the OeNB, which maintains and manages them with utmost care. In line with the OeNB’s current gold storage policy, 17 % of its gold holdings are at present kept in Austria, 80 % in the United Kingdom and 3 % in Switzerland.Recently, the Governing Board of the OeNB adopted the 2020 gold storage policy following a regular in-house gold strategy and storage policy review, while also considering the recommendations made by the Austrian Court of Audit. The cornerstones of this policy are as follows:
- By the year 2020, 50% of Austria’s gold reserves are to be held in Austria (OeNB and Münze Österreich AG), 30% in London and 20% in Switzerland.
- Starting from mid-2015, the new storage policy will be gradually implemented in keeping with security and logistical requirements.
- A comprehensive review and, if need be, adaptation of the storage policy is scheduled for 2019.
- The OeNB will regularly report on the progress in its upcoming annual reports.
"By the end of November, the Austrian National Bank brought 15 tonnes of its gold back into its own vaults," the OeNB said in a statement. A spokesman for the central bank said it had begun repatriating the gold from London in October.
According to Reuters, after the repatriation, Austria held roughly 65 tonnes of gold, or about 23 percent of its reserves, on its territory, the spokesman said. Around three quarters, 209 tonnes, were in London, he said, and six tonnes were in Switzerland.
"London and Zurich remain the most significant trading centres for physical gold," the OeNB said in its statement, a point it has made before in explaining why it kept such a large share of its reserves abroad.
In the decades after World War Two, security concerns also played a part because international trading centres were the best place to make use of the gold if needed in the case of an international crisis, the OeNB said in its statement.
"Geopolitical considerations in the time of the Cold War also played a role," said the central bank in Vienna, which was only an hour's drive away from the Iron Curtain that divided Europe for four decades.
But perhaps what is most surprising about the repatriation is that in order to "prove" the gold is indeed back, the Austrian central bank also released a 3 minute clip showing the Austrian gold back in the country:
(Note: I would love to hear from a German speaker who can provide in English a brief summary of the video.)
(via Zero Hedge)
A note from Danneskjöld on what was said on the video:
The official statement from OeNB from May is more or less a brief summary of what is said in the video.