General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsQueerDuck
(1,759 posts)... is it an accounting and bookkeeping move only?)
I've been wondering that myself. I don't think the logistic are in place to move 129 tons of gold bullion.
QueerDuck
(1,759 posts)QueerDuck
(1,759 posts)bucolic_frolic
(55,273 posts)cloudbase
(6,278 posts)DFW
(60,240 posts)And it's far more boring to look at.
2MuchNoise
(773 posts)DFW
(60,240 posts)In my work, I've been inside some Central Banks, and after a while walls of gold bricks are still just bricks at the end of the day. On the other hand, if they have some old Spanish gold 8 escudos minted in the early 1700s that sunk in a hurricane, and were just recently recovered by divers, or some gold Roman aureii minted under Trajan, Nero or Marcus Aurelius, now THAT is cool!
DFW
(60,240 posts)"Lingots," which fluctuate between 95% and 96% pure, and Kilos, which are expected to be at least 99.9% pure. The price of the metal is the same, but the kilos are easier to trade on the world market, as they are more widely accepted (i.e. standardized).
The gold can be sold anywhere, of course, but selling bullion sitting in New York on the American market when the ounce price is $5400 an ounce, which it was earlier this year, and replacing it at $4500 an ounce, which it was shortly after, with gold bought in Europe, removes a logistics headache, as well as gives the BdF a huge profit. Sell high, buy back low is not exactly a novel concept that will win you the Nobel Prize in Economics. Not only that, they could sell the unpopular lingots stored in New York, and replace the gold in the form of the more liquid Kilos in Europe. They would have to slightly discount the lingots in NYC to accommodate refining costs for a buyer who will want to melt them down for kilos at some point, but I'm sure that was factored in. The only variable was the fluctuation in the gold price, but watching it jump up nearly $100 a day for a steady climb only made a correction more and more certain. Someone at the BdF obviously said "this is high enough, let's not get greedy and act too late," and that somebody had an excellent instinct. Every central bank with substantial gold holdings has someone to manage them (I have worked with several over the years), so I'm sure the move by the BdF was no random action that happened to luck out.
MineralMan
(151,338 posts)willing to buy at the current price. Knowing when that time is at hand is the trick. It's a high-pressure business I could not be in, for sure.
DFW
(60,240 posts)The one who sweat blood are the be ones who play the the theoretical market. They play it like a commodities game, buying and selling contracts that represent physical product they never see. I have no contact with anyone involved with that, but the ones who deal in bars and coins that real clients have to sell seem pretty laid back. The more they know what they are doing, the more laid back they seem.
I was in the shop of one of them once when a woman brought in a big (30 gram) gold coin with Arabic script on both sides. He called me to the counter to ask if I had any idea what it was. As it turned out, I did. She asked what he would offer for it, and I told him he could probably get $6000 or $6500 for it. He offered her about $5250 (in euros), and she gasped in surprise. I was pretty sure of myself,, so I asked what was wrong. She said nothing, but the other shops nearby had. All had offered about $1300, so how could I offer $5250? I asked if the other shops had been able to tell her what it was, and she said no, they had no idea (as did my pal in whose shop I was in). I explained that it was an Egyptian 500 Qirsh of 1876 (1st year of Abdul Aziz, Islamic year 1293). It wasnt in perfect shape , but better than usual, thus the higher price. The woman went home with (in euros) $4000 more than she expected, my friend was looking at a $750 profit when he sold it, and I was looking forward to a fancy lunch st a local Paris restaurant next time I was in town. I asked her where she had found such a specimen, and she said her grandfather had brought it back from Egypt nearly a century ago, which made perfect sense. There are fakes of these coins, but part of my job is to detect counterfeit money, including older forms, and I recognized her piece as genuine.
So, not is it not always hi pressure, sometimes, it is downright fun.
MineralMan
(151,338 posts)The only physical gold I've owned was a bunch of South African Krugerrands. Given to us by her father to help us afford the down payment on a house. At the time, in 1974, they were selling for about $175 each. He had given us 100 of them. But, instead of making a down payment, we found a little fixer-upper house for $20,000. The coins came very close to paying for the house, and we had enough savings to make up the difference.
In 2004, I sold that house for $337,000. So, it was a good investment of the value of that gold. We actually did a little better than the gold over that 30 year time period. So, you never know, I guess.
Kid Berwyn
(24,497 posts)

