< Previous | Contents | Next >

What is the Answer?

While the IMF papers referenced previously are not completely clear on how to correctly change the accounting for gold reserves, one thing is clear: there needs to be a change. With the amount of confusion surrounding central bank gold lending in the market (The World Gold Council uses GFMS for their market supply and demand statistics, yet both often quote different figures for gold loans. Another often-used set of statistics from Virtual Metals uses different loan figures), as well as the recent IMF presentations stating that accounting for loaned gold by central banks is not done appropriately, the question then becomes what to do about this situation?

The answer is simple – Blanchard and Company, Inc. believes it is imperative that central banks follow IMF suggestions and implement line item accounting for their gold reserves activity on a quarterly basis, if not monthly basis, and do so immediately. Level the playing field for all market participants, bring an end to proprietary information within the market for an exclusive few, and allow the bullion market to function in a fair and equitable manner, ridding itself of conspiracy theories that diminish its relevance and stability. By ending opaque transactions and accounting procedures, the gold market then becomes accessible to all participants and ends the “clubhouse” attitude that governs the London Exchange. The gold market has made great advances in the past few years not only in terms of price increases, but also in the availability of gold to purchase for all market participants and the transparency of information. It is time to continue those advances and make the last few steps to having a truly open and free marketplace for all those involved.

< Previous | Contents | Next >