Netherlands moves gold from US to London: Why the UK capital is a major repository | Today’s news

The Dutch central bank has moved around $12 billion worth of its gold holdings from New York and Ottawa to London, amid concerns over rising geopolitical tensions around the world. London is home to the world’s most active and liquid gold market, with hundreds of billions of dollars worth of the precious metal traded every week.

This has made the Bank of England a long-standing storage partner for central banks, allowing them to quickly buy, sell or lend large amounts of gold when needed. Gold held at the Bank of England also meets global standards for bar weight and fineness. This means that gold can be easily exchanged and traded in international markets.

From March to August, the bank moved about 86 metric tons of gold, more than a quarter of its precious metals stored in the U.S. and Canada. Following the transfer, London now accounts for nearly one-third of the Netherlands’ gold reserves, making it the largest holding location.

The Dutch Central Bank made the transfer by selling approximately 59 tons of gold in New York and buying an equivalent amount in London. It also physically transported more than 27 tonnes of precious metals from the US and Canada to Zeist, with a similar volume subsequently moved from Zeist to London.

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Finance Minister Eelco Heinen said preparations for the transfer were confidential until the operation was completed because the move was considered a matter of vital public interest.

What did the central bank of the Netherlands say?

Dutch Central Bank Governor Olaf Sleijpen said on Wednesday that moving the country’s gold reserves to London made it easier to trade them, a move also intended to increase the Netherlands’ resilience and preparedness. He noted that the country does not expect to have to draw on reserves.

“With this relocation, we have improved the marketability of our gold reserves. We expect that we will never have to use them, but we need to strengthen our resilience and preparedness,” Dutch central bank governor Olaf Sleijpen said on Wednesday, according to Bloomberg.

The Dutch central bank said the bullion held at the Bank of England “is considered to be the most easily tradable gold in the world”, adding that “this makes DNB the fastest to deploy in a crisis situation”.

It said holding more of its gold reserves in London helps strengthen gold’s role as a trusted financial anchor. It holds 30.8% of its total 612.4 tonnes of gold reserves at its cash center in Zeist, located south-east of Amsterdam.

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Central banks have traditionally stored their gold in multiple locations, weighing the safety of holding reserves at home against the need to quickly access and mobilize them through major global financial centers.

“We’ll save money on transaction costs by using Bank of England vaults”

More than 60 central banks hold their gold reserves at the Bank of England, its governor Andrew Bailey said in a recent interview with Sky News months ago. The institution holds roughly 430,000 gold bars in nine vaults, allowing central banks to trade gold with each other without physically moving the bars out of Bank of England custody.

Where countries keep their gold is becoming an increasingly important consideration, especially for nations that are expanding their reserves. India has increased its total gold holdings in recent years while simultaneously reducing the amount of gold it holds at the Bank of England.

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Jan Kubíček, a member of the board of the Czech central bank, said that London serves as Europe’s gold market and that storing reserves in the Bank of England’s vaults helps the country reduce transaction costs.

“London is the gold market in Europe. We save money on transaction costs by using Bank of England vaults,” Kubíček was quoted as saying by The New York Times.

Central banks generally avoid revealing where their gold holdings are kept, with many considering the information highly confidential.

China’s central bank has become one of the biggest buyers of gold in recent years, increasing its reserves for 17 months in a row. However, little information is available on where these funds are stored. Brazil’s central bank also increased its gold reserves for the first time in four years at the end of last year, but also did not disclose where they were stored.

London and New York have been the world’s leading gold warehouses for decades. However, Hong Kong is trying to establish itself as an alternative, potentially giving central banks an option outside of traditional Western storage centers.