The Bank of the Netherlands - De Nederlandsche Bank (DNB) - said on September 2 that it had transferred 86 out of a total of 313 tons of gold reserves from the US and Canada to London (UK), in order to increase access and liquidity of this reserve asset block.
The move takes place in the context of increasing economic and geopolitical instability, including trade tensions between Canada and the US.
According to DNB, the adjustment of gold storage locations is aimed at strengthening the ability to respond in the event of a crisis, while improving the liquidity and trading capacity of gold reserves.
The Bank of the Netherlands believes that the amount of gold stored in New York (USA) and Ottawa (Canada) cannot be used as quickly and directly as gold stored in London in special situations.
DNB believes that increasing the proportion of gold reserves in London will strengthen the role of this precious metal as a "belief anchor". Gold is considered the last reserve because of its ability to hedge against extreme systemic risks.
DNB Governor Olaf Sleijpen said that the rearrangement has helped improve the trading capacity of gold reserves. DNB expects to never have to use this amount of gold in an emergency, but still needs to strengthen resilience and readiness.
Before the transfer, nearly 31% of DNB's gold reserves were kept domestically, about 18% in London, more than 31% in New York and nearly 20% in Ottawa.
After the rearrangement process, the proportion of gold reserves held in London increased to 32%. Meanwhile, the amount of gold stored in New York and Ottawa decreased to 18.5% at each location.
The process of moving 86 tons of gold was carried out in many different ways to limit risks.
According to DNB, the bank sold about 59 tons of gold being stored in New York, then bought back the corresponding amount of gold in London.
For the remaining more than 27 tons of gold, DNB carried out physical transportation from the US and Canada to gold depots in Zeist, Netherlands. At the same time, an equivalent amount of gold was transferred from the Netherlands to London.
The Bank of the Netherlands said that the combination of buying and selling on the market and transporting physical gold helps disperse risks related to a large-scale and complex gold rearrangement operation, while ensuring efficiency and cost control.
In November 2014, DNB attracted attention when bringing 112 tons of gold from New York back to the Netherlands.
At that time, the central bank said that the decision to repatriate gold was to rebalance the allocation of reserves in locations around the world, and at the same time strengthen public confidence in the financial system during the period of economic instability.
The continued restructuring of gold storage locations this time shows that DNB pays special attention to the ability to access, trade and use reserve assets in extreme market situations, instead of just focusing on holding gold as a value-preserving asset.
The article only updates information on the management and allocation of gold reserves of the Bank of the Netherlands and related market developments, not investment recommendations.
