One week ago, the world was not exactly shocked to learn that after Germany and the Netherlands, one more country had unofficially joined the ranks of nations who have seen this all before and know how it ends, when reports emerged that Austria would repatriate 140 tons of gold from the Bank of England (appropriately immortalized in “this is what happens when you hand your gold over to The Bank of England for “safekeeping”.) As of today, it is official.
Earlier today the Austrian Central Bank confirmed the Kronen-Zeitung report, and said that by the year 2020, it would hold 50%, or 140 tons, of its gold domestically, up from 17% currently. This means that Austria will withdraw some 140 tons of gold from the BOE which holds 80% of Austria’s gold currently (and will soon hold only 30%) and send 92.4 tons back home to Vienna with another 47.6 tons being sent to Switzerland.
Which is also the biggest news: Austria is explicitly demonstrating a lack of confidence in the “pro-western” system of which the Bank of England is a critical cog, and instead opting for “neutral” Switzerland, which will hold nearly 50 tons of the gold formerly located at the Bank of England.
Why?
As AFP notes, the central bank said it took the decision after recommendations made by the Austrian Court of Audit in February, which warned of a “heightened concentration risk” linked to storing the majority of its reserves in Britain. At the time, the bank had argued the policy was warranted because London was a major international centre for the gold trade.”
Well, London still is a major international center, but in the past three months the bank surprisingly changed its mind after reviewing the court’s advice to diversify storage locations.
Vienna confirmed it would begin to gradually repatriate 92.4 tonnes this summer. A further 47.6 tonnes will be transferred from Britain to Switzerland.
From the Austrian Central Bank:
