By Jan Harvey and Veronica Brown
A small footnote in the Bank of International Settlements’ latest annual statement has flagged up a potentially major development in the way the metal can be used as an active financial instrument.
But its ultimate impact on the bullion market is dependent on the identity of the counterparty in the swap — a topic still being hotly debated in the gold community in Europe.
The BIS noted in page 163 of its annual report, released in June, that its gold holdings included 346 tonnes of gold “which the bank held in connection with gold swap operations, under which the bank exchanges currencies for physical gold”.