Monday, February 17, 2020

Gold Panic Flow Out of Great Britain?

What the hell is this?

Ed Conway, Sky News economics editor, writes:
 This is a story about a chart. A pretty astonishing chart. A chart that has all sorts of consequences, including misleading ministers, distorting our view on the nature of the UK economy and creating a genuine mystery about what's going on in the bowels of the UK economy. 
Here's the chart in question: exports of gold from the UK. For the vast majority of history they were near zero (average monthly level apt £126m). Then, suddenly, in the last two months of last year, gold exports were catapulted higher. It's a staggering chart.

It is not clear this is the movement of physical gold out of the UK though it might be.

Conway explains how it might just be a paper shuffle:
As far as I can divine here's the answer. A US bank with London gold vaults shifted some of that gold from being "unallocated" to being "allocated". Effectively it moved it on its balance sheet. The gold stayed in the same vault but technically it shifted from UK ownership to US.
In other words, a couple of clicks in a bank's spreadsheet caused the biggest fluctuation in Britain's trade figures in modern history. At least that's the most plausible explanation. Tho it raises further questions: why? Is the bank in trouble? And who owns the gold anyway? 
Short answer: we may never know. No other sector is as cloak and dagger as gold. What we do know is that crazy stuff is happening beneath Britain's national statistics and it's time we started paying attention to it.
In other words, even if it is a paper shuffle, why?

Some major player wants to get it off the books of the UK for some reason.

Best guess on my part is that it is a major player that doesn't want the gold to be in the legal name of the UK as Brexit trade deals develop.


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