Hong Kong recalls its gold reserves from UK

The Hong Kong government has announced that its gold reserves will be ‎recalled from the UK where they are currently stored, and transferred to a new ‎purpose built vault under the Hong Kong Airport.   Hong Kong is also expected to become a trading hub for ‎bullion.  It’s also likely that other Central Banks in the region will ‎consider transferring their gold bullion reserves to the new facility.‎

But the key line to take note of in this report is [emphasis added is ours]… ‎‎

“Central banks are increasingly aware of the importance of having gold ‎reserves at time of financial crisis and having it easily available at their own ‎disposal“‎.

This is just further evidence of lack of trust in the 2 major western financial ‎centres – the USA and UK – particularly when it comes to gold.  They have in ‎the past been the centre of much discussion on the subject of gold leasing ‎and gold price manipulation.   A whole other subject in ‎itself.‎

In April of this year the Dubai Multi Commodities Centre (DMCC) opened its ‎new state of the art vault which is likely to attract the gold reserves of the ‎central banks in the middle east region.  These too would be withdrawn from ‎the London Vaults.‎

Along with the custodial vaults in London, the Federal Reserve Bank of New ‎York is where many foreign central banks currently store their gold.  The ‎N.Y. Fed website states:

‎“The reasons why foreign governments store their gold at the Federal ‎Reserve Bank of New York can be summarized in three words: confidence, ‎convenience and centrality.‎
• Confidence results from the bank being part of the Federal Reserve ‎System, an agency of the U.S. government and the nation’s central ‎bank. The political stability and economic strength of the United States, ‎as well as the physical security provided by the bank’s vault are ‎important factors. “‎

It seems confidence is somewhat lacking at the moment, as while still ‎unproven there have been reports such as this one of Germany also demanding its ‎gold reserves back from the USA.  ‎

As we’ve reported previously Central Banks seem ‎reluctant to give up their gold and some are in fact buying more.  Now, it seems they are also concerned about where it is held.‎

If foreign central banks don’t trust the US and UK and want gold in their ‎possession perhaps you should too?  That’s why we always recommend a ‎good portion of your gold portfolio should be held in physical bullion in the ‎form of gold bars and coins and in your own possession.   Check out our “How to Buy and Invest in Gold” page‎ for some specific advice on this.

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