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What happened to the Irish Gold?

We did a series of gold talks in Ireland earlier this year and one of the guests asked: ‘What happened to the Irish central bank gold?’

The Irish Tribune published this article in 2004 that explains the history if Irish gold reserves:

Central Bank's gold reserves lowest in Europe
By Conor Brophy

The Central Bank of Ireland holds less of its foreign reserves in gold than any other central bank in Europe according to figures published by the World Gold Council. Just 1.8% of the country's EUR 3.3bn foreign reserves are represented by the precious metal according to the figures, which detail the holdings of European central banks up to the end of December 2003.

Central Bank spokesman Neil Whoriskey said it had neither bought nor sold gold "in a long time" and the reserves were maintained at "almost a symbolic level". Many other European central banks still rely heavily on gold as a component of their foreign reserves. Germany holds over 45% of its reserves in gold and France 55%. Despite selling a large proportion of its own holdings in recent years the UK still owns 313 tonnes worth of the metal, or 8.8% of the total value of its foreign reserves.

The Currency Commission, the body which carried out the functions of the Central Bank until 1943, had bought up to 60 tonnes of gold in the lead-up to the Second World War, Whoriskey said, but the bank has since sold much of this holding and relies instead on foreign currency for the bulk of its reserves.

Most of the Irish gold reserves were sold between 1969 and 1970. Around 48 tonnes were sold over the course of that year and a further three to four tonnes in 1977. Since then, the reserves have been largely
untouched. One further tonne was sold in 1990. Half the 11 tonnes remaining were transferred to the European Central Bank at the end of 1998 as part of the requirements for joining the euro.

The 5.5 tonnes remaining are worth about 72m at the current price of $400 per troy ounce and have appreciated by more than 15% in the last year. The bank sometimes "lends" gold to financial institutions to speculate on commodity markets, Whoriskey said. "Occasionally, if the market conditions are right, we lend gold out and get a return on -that." he said.

Last week European Central Banks agreed to limit their combined sales of gold to 500 tonnes per year over the next five years. The agreement aims to keep the price of gold stable over that period.

It replaces a similar five-year accord between the banks which expired this year. Whoriskey said the Central Bank had no plans to either buy any more gold or to further dilute its reserves.
March 14, 2004

CELTICGOLD comment: This article was written in 2004, since then the UK sold nearly all of their gold and as said in the last newsletter Germany does not know how much gold is physically in its vaults.
Every central bank in the world has lent out gold – and it’s never come back. The lending out of Gold is called ‘The Gold Carry Trade’ and we will address this at length in the next newsletters knowledge section.

Interesting enough in this week’s news is that Venezuela officially asked the Bank of England to send 99 tons of their gold back to Venezuela. Venezuela has a total of 211 tons stored mostly in Europe and the USA. If other countries follow to repatriate all of their gold to their home countries this event could drive the price of gold much higher.

As the Central Banks in which the gold was officially stored don’t have it and need to re-buy it on the market. What we can learn from this story is that all of your core gold and silver positions should be owning the physical metal in storing it in the most secure way.

What happened to the German gold?