Category Archives: Gold History

Lifting the Veil Covering Gold And Central Banks

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The latest edition of LBMA’S Alchemist has been out for some time and it unpacks a lot about what is going on in the gold industry. However, the main focus of this edition is the role of central banks in the gold industry. The first article discusses the Banque de France, its past role in the gold market and the future.

The Banquet de France has had a major role in the past when it comes to the gold market. In the 19th century France was at the centre of the gold market. Since its creation in 1800 the central bank of France has held the largest gold reserve in the world.

Even though today France is a member of the European union and has swapped its francs for the Euro, the Banquet de France holds more than 60% of its reserves in physical gold. That translates to about 2,436 tons of pure gold bullion. This places it behind the US, Germany and Italy. 2,436 tons of bullion are valued at $96 billion which is about 4% of France’s GDP. Clearly the French value gold so much so that they store it in an underground vault called the Souterraine. The value is situated 29 meters below the River Seine.

There is another insightful article in the Alchemist that goes into detail about some lesser known central bank gold operations and periods in the history of the gold market. One such period is the Brown Bottom. This happened when the UK auctioned half of its gold reserves. This caused the price of gold to drop quite significantly. This seemingly wholesale auctioning of gold exacerbated the fears that some big gold investors and holders of gold like the European Central Banks had. People also believed that the introduction of the euro would collapse the gold market and bring prices down. To ally those fears and to protect gold the Central Bank Gold Agreement was signed on the 26th September 1999 in Washington DC. It limited the official sale of gold and reduced the level of uncertainty in the gold market. This also sets the psychological stage for the gold bullion market that followed. Gold is a useful asset to central banks even if there is no dividend or high returns.

When it comes to gold, it is important to understand the recession, interest rates and inflation figures. According to economic analysts, the US GDP growth is likely to slow down to 2.6% in 2018 from its previous growth on 2.9%. It is unlikely that we will see a recession in the US in 2019, inflation is expected to stay pretty much close to the Fed’s target, but gold prices aren’t expected to rally as significantly. Gold butis expected to trade towards the $1,300 per ounce mark.

The reason for this bullish forecast for gold is that the US Fed need to hike its rates, but the US Central bank isn’t keen on tightening its monetary policy. Other supportive factors include trade wars and possible geopolitical risks. These might bring some short-term gains. However, these aren’t sure-fire reasons to trigger a rush for gold. Investors who are interested in gold should keep abreast of all the factors that influence the gold market.



The Great Australian Gold Heist

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Gold has been the most coveted precious metal through out history. People would do just about anything to get their hands on gold even if it means stealing it from someone else. There have been robberies where a significant amount of gold was stolen by different kinds of people, rich or poor, young and old. The yellow gold has been held in high esteem firstly because of the value it has. Fiat currency cannot stand up to gold. Kingdoms sanctioned voyages to discover gold, pirates plundered and pillaged for gold and with the evolution of man, a couple of decades later gold is still as important and as coveted as it ever was. Pirates and monarchy’s hoarding gold and criminals are always plotting to steal some. The ingenuity that goes into some of these crimes is outstanding.


The Great Gold Robbery


The most famous gold robbery in the world is probably the Abell and Co. Spielmann, and Built robbery that took place on the 15th of May 1855. 91 kg of gold that came from the three companies were stolen whilst on route between London Bridge and Boulogne France. There were three boxes, each with god estimated at £12,000. The gold was under heavy security. The boxes were checked before being sealed and then secured with iron bars. The boxes could only be opened with two keys that were kept apart. According to the British Transport Police, the safe keys were given to railway staff in London and Folkestone and to the captain of the steamer carrying the safes. The boxes were weighed before being sealed and afterwards. They were then put into the Lord Warden Steamship at Folkstone.


The boxes were reweighed in Boulogne, France and it was found that the Abell box weighed 40 pounds less, the Built box slightly more and the Speilmann box weighed considerably more. However the combined weight was the same as the original. The robbery could only have taken place between London and Boulogne but the train had not made any stops between those two destinations.


When the Built box arrived in Paris on the 16th May and opened, it was discovered that sixteen bags of lead shot hat be substituted for the gold and only thirteen gold ingots remained.


Abell’s box was opened by the bank Pockar, Dufonf and Co. All the gold that has been placed inside had been entirely replaced by lead shots.

There was no damage on any of the boxes. They were opened with the only keys that were meant to open them. The British Police launched an investigation of what happened during the trip from London to Boulogne. Out of the hundred suspects interviewed, four were charged: Edward Agar, William Pierce, James Burgess and Williams Tester. Edward Agar was believed to have been the mastermind behind the robbery. He had met Pierce, who was an experienced forgerer to forge the train tickets. James Burgess was the inside security man who served as a train guard whilst Williams Tester was Station Master at Margate.


The criminals found a way to make wax impressions of the keys for duplicates to be made. They stocked up on lead shots and hit bags of it at London Bridge station in custom-made carpet and leather bags. They ensured that the weight of the lead would be the equivalent of £12,000 worth of gold. On the night of the robbery Agar and Pierce purchased first-class tickets for a trip from London to Folkestone. On entering the train, they handed their luggage (bags filled with lead) over to Burgess, who was then a porter and he stored them in his van.


Agar slipped into Burgess’ van whilst Pierce stayed in the carriage. Agar began working on opening the first box using the duplicate keys and used a mallet to simply knock the iron bars. When the train arrived at Redhill, he had emptied the first box and Tester took possession of the gold whilst Agar put the lead shot in the first box.


Between Redhill and Folkestone, Agar had been joined by Pierce in Burgess’ van to assist with the other boxes. The two then got off the train at Folkestone together with the carpet and leather bags they had come with initially. Burgess remained in the train carrying his duties as a porter.


For three days, they melted the gold in a make-shift furnace built at Agar’s West London house. Agar was helped by a barrister by the name of James Townsend Saward, a crooked criminal barrister who helped him sell the gold off.


There were other robberies ranging from the elaborate and sophisticate well thought-out escapades to the ridiculous heists that belong in comic books like the Kanowna Belle mine heist. The criminal masterminds behind Kanowna Belle simply stole a sewerage truck and filled it up withe gold-bearing concentrate. The value of the gold is not known. Now stealing concentrate is different from stealing ingots. Ingots would have gone through some sort of process to remove impurities. Concentrate on the other hand is just gold ore that has just been mined and still needs to go through some purification process. If it is high grade ore then chances are, there will be a reasonably large amount of gold, but the thieves would have to know more about the purification or smelting of gold ore to get what they are really after. Kalgoorlie has its own Gold Stealing Detection Unit who took on the task of investigating where the sewerage truck went, who was behind the operation and what they were going to do with all that gold. The fact that such a unit exists means, gold theft Kalgoorlie is a real issue that requires people with a set of special skills to deal with. People will go to incredible lengths to get their hands on the precious yellow metal.

The Volcker Rule and its Effects on the Precious Metal Industry

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Before moving on into the topic of how the Volcker rule affects the precious metal industry, it is crucial that the Volcker rule itself be understood first. The Volcker rule is basically a reformation act that restricts the banks in the United States from taking high risk investments, especially high risk investments that do not benefit the customers of the bank. In view of the major scandals involving banks using people’s money to make short term gains that saw profit flow into the banks but not to the customers, but when things go wrong, the customers bear the burden of the loss.

In other words banks are prohibited from investing in short term or long term hedge funds, speculative markets that are highly risky and it also prevents banks from investing in the precious metals industry (gold bullion / silver bullion). Banks are currently actually looking for loopholes in the legislation rather than comply to it, but according to the legislators the loopholes do not exist. How this would affect the precious metal industry is multi tiered, as some analyst say that banks are the biggest buyers and sellers in the precious metal commodity trade industry and that they are the main ‘market forces’ applied through hedge fund managers and their absence would create a huge void in demand and drive prices down. On the other hand there are those who believe that the absence of these speculative strong forces would provide stability to the prices of gold as most of the trading done by these market forces are for short term gains and in retrospect most of the gold bought by them are never held fopr more than a few days.

Looking into the average investor who looks towards the shiny yellow metal as a safe haven to secure wealth, the absence of these speculative forces will actually bring about the true essence of the gold value and allow the average investor to sleep peacefully knowing that there are no hedge fund managers trying to manipulate the gold market prices. Many have applauded this move, especially the savers, as many have seen what has happened in recent years to big financial institutions that were financially ruined and in the process ruined many other lives of individuals who had trusted these financial institutions to keep their life saving safe.

The reformation brought about by the Volcker rule is expected to bring confidence back into the precious metal industry as smaller investors will no longer have to contend with big players who use other people’s money to fill their coffers. Nevertheless, prior to this there have been numerous other ‘so called’ rules that were supposedly supposed to protect the small people, however in light of what transpired during the global financial meltdown and other similar situations, how long this rule lasts before it is overwhelmed or manipulated by the powers that be would not be long, and those who want to place themselves within the safe zone amidst a financial crisis would typically be the ‘Average Joe’ with a fistful of gold.

Golden Conflicts

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It is not new to the world when certain factions misuse natural resources to finance or advocate conflict which has become a common phenomenon over the last few decades: from crude oil in the Middle East, timber in Cambodia, blood diamonds in Sierra Leone and Angola and even gold in low income countries. Very often natural resources provide a means to finance as they are internationally tradable assets which are mobile and easy to dispose off. Without appropriate measures, these assets may find their way towards funding armed groups that are conditioned to overlook human rights and grossly neglect humanitarian laws.

The Democratic Republic of Congo for Instance was responsible for 0.8 % or 22 tonnes of newly mined gold, but because of the countries weak governance coupled with the fact that most of the gold mines are artisanal small scale mines, they are often subjected to the whims and fancies of armed groups who frequently extort them, therefore the possibility of the gold produced in the Democratic Republic of Congo getting into the gold supply chain is minimal. These are only some of the issues as incidences of forced labour by armed groups, low wages, adverse working conditions, negligent mining practices and conflicts continue to be highlighted and the only way to deter these incidences is by obstructing gold mined under these conditions to get into the supply chain.

However this is not an easy task as gold from independent small mines are usually melted down and mixed with gold from other sources (usually with recycled gold – 35 % of the annual gold supply comes from recycled gold) and sent off to end users through a complex transactions which make them virtually impossible to be traced back to its origins. It is largely due to the availability of ready buyers that these armed groups are brazen about their activities as once the gold artisanal and small scale mines reach a refinery, their origins cannot be traced and therefore refineries have become a strong element in the value chain of armed groups and establishing a relationship with a refinery that would accept their gold (knowingly or unknowingly) is all that they need.

Recently the World Gold Council has launched a ‘conflict free gold program’ which aims to stop or prevent gold from conflict zones or high risk areas from reaching refineries and subsequently end users as this would be an effective measure towards eliminating these conflicts and bring reprieve to those who bear the brunt of these armed groups.

However, it is undeniable that artisanal mining is a vital economic activity in some places and if it was not for the gold, the communities in these places would be left without nothing and based on the fact that a significant proportion of mining in these places are illegal and operate beyond government supervision it is prone to smuggling which is often backed by armed groups.

Proving that a gold batch is from these situations or sources is the first step, but a difficult one undeniably.

Canadian Gold Tales: The Canadian Wild West

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Towards the end of the nineteenth century around 100,000 people overpowered the Klondike area arranged within as far as possible searching for gold, is a noteworthy piece of American history. Presumably, a couple made their riches, yet most lost all that they had. The Klondike’s record is one of disturbance and obsession that passed on them to the region, and in addition brought the most exceedingly terrible out of a huge part of them. Gold fever held people all over the place all through the United Sates and when news of Klondike gold spread like crazy flame and people like George Carmack, Skagway criminal Soapy Smith and others, for instance, Mountie Sam Steele got to be enlivened.

Brutality, starvation and even the unforgiving atmosphere of the Yukon and were not satisfactory to keep mineworkers away. Stories of the Klondike has wound up central to Canadian history and also the gold business as it arrived that excavators started obtaining and offering cases instead of burrowing for the gold themselves as a result of the way that, if whenever there was a spot on the planet where burrowing was in every way that really matters unbelievable for individuals with picks, hammers and tomahawks – it was the Klondike. The masses extended so fundamentally (from 500 to 30,000 within months) that the immediately manufactured wooden structures as often as possible seethed to the ground and to compound matters unsanitary conditions killed various.

On the other hand, various don’t have the foggiest thought regarding exchange drivers behind the dashes for unheard of wealth of the Klondike, it was not on account of the interest of the significant metal alone, it was in like manner as a result of the mistake of the cash related structures in the US, banks were falling level all through the United States and various were about section 11 in the midst of that time, and when news of the gold disclosure went to these people, it was all in all the principle decision they expected to recoup their financial strength. Another component that empowered the Klondike dash for unfathomable riches was furthermore the high rate of unemployment that stretched out from San Francisco to Seattle. Each one of these segments was the key components that drove such countless prospect for gold in the Yukon.

However within a few years, gold had been found in Alaska and the scene was an extraordinary arrangement also obliging to prospect for gold in examination to the Klondike that enacted another move, the Klondike district was left for a time span, before people started mining the Klondike scope of and on. At whatever point a noteworthy gold piece was found in the Klondike and news spread, “littler than anticipated” undertakings for incredible riches consistently came about, however these downsized dashes for inconceivable riches when in doubt, did not last over a month preceding mineworkers left.