Gold Price Swings on BIS Swap News

14 July 2010  Numismaster

My July 7 column noted some of the details of the gold swap revealed in the recently released financial statements of the Bank for International Settlement. As I wrote that column, there was little specific information on the nature of the largest gold swap in history, but I mentioned that some experts were investigating further.

It happened that the Wall Street Journal’s article on the gold swap appeared the same day (Page C14) as this column. However, the Journal’s writer took a much different slant than I did, claiming that this swap could cause a large amount of physical gold to be sold onto the market if the swap were undone.

Contrary to normal practice when it conducts a significant financial transaction, the BIS had not issued a news release at the inception of this gold swap. In fact, it was almost completely hidden except for some notes near the end of the more than 200-page March 2010 financial report that was released on June 28.

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