Economically distressed Venezuela wants to swap some of its physical gold into cash. Caracas is ready to sell 40 metric tons in exchange for US dollars – at a discount. The Austrian National Bank (OeNB) should jump on this opportunity immediatley as it allows for getting rid of two thirds of the paper claims, it holds. It also would help the Bank to get away from its heavy reliance on London as a storage location. The quantity would not be big enough as to present a logistical problem.
According to press reports Venezuela is holding talks with a banking consortium consisting of Bank of America and Credit Suisse (inter allii). The bankers seemingly want to pay less than the present (so called) market price. OeNB could easily offer substantially more without incurring losses. It only would need so sell part of its paper gold for dollars, which should be an easy task. Of course the gold would have to be delivered/picked up physically and stored on Austrian soil.
According to a recent report from Austrias General Accounting Office/Rechnungshof OeNB only holds 12 per cent of its gold in Austria, apparently in the third district, close to Stadtpark. Rechnungshof (RH) claims, that OeNB owns 280 tons of “gold”, 62 of which are receivables.
But Rechnungshof’s auditors were only allowed to assure themselves of 33 tons of physical held in Austria. With London held stocks they had to content themselves with watching a so called inventory, performed by employees of the Bank of England and OeNB. It consisted of weighing 60 out of a total of 14.299 bars with a precision balance (0,42 per cent). OeNB had to identify the serial numbers of the bars it wanted to inspect beforehand (300 for the real sample of 60).
The german reading public should have a look at this farce here.
Despite this highly suspicious procedure RH accepted OeNB’s figures in the end. It set OeNB’s gold holdings to 218 tons physical and 60 tons “plus” non-physical (per 12-31- 2013).
Nobody in the larger public sphere in Austria has given a damn about it. The Austrian gold audit has ended in a complete failure of control and supervision.