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BIS Gold Swaps Increased Slightly In November

December 13, 2021

The recently released November statement of account of the Bank for International Settlements —

— contains information suggesting an increase of about 37 tonnes in the bank's gold swaps, from 414 tonnes in October to 451 tonnes in November. 

This compares to the record high estimated at 552 tonnes as of February 25 this year.

Once again it is shown that the BIS remains an active trader of significant volumes of gold swaps on a regular basis. The recent data suggests that there is no clear downward trend in the volume of swaps and hence it seems premature to claim that an exit from the swaps due to "Basel III" regulations is happening. 

The BIS rarely comments publicly on its gold banking activities, but its first use of gold swaps was considered important enough to cause the bank to give some background information to the Financial Times for an article published July 29, 2010, coinciding with publication of the bank's 2009/10 annual report.

The general manager of the BIS at the time, Jaime Caruana, said the gold swaps were "regular commercial activities" for the bank, and he confirmed that they were all carried out with commercial banks and so did not involve other central banks. Hence it is likely that the recent general level of gold swaps is the highest use of them by the BIS for at least 20 years. It also seems highly likely that the swaps are still all made with commercial banks, because the BIS annual report has never disclosed a gold swap between the BIS and a major central bank.

The swap transactions potentially create a mismatch at the BIS, which conceivably ends up being long unallocated gold (the gold held in BIS sight accounts at major central banks) and short allocated gold (the gold required to be returned to swap counterparties). This possible mismatch has not been reported by the BIS.

The gold banking activities of the BIS have been a regular part of the services it offers to central banks since the bank was established 90 years ago. The first annual report of the BIS explained these activities in some detail:

The use of gold swaps to take gold held by commercial banks and then deposit it in gold sight accounts held in the name of the BIS at major central banks doesn't appear to have ever been as large a part of the BIS' gold banking business as it has been in recent years.

For example, excluding the estimated 102 tonnes of gold held by the BIS for its own account, the volume of gold deposits in gold sight accounts held at major central banks for the BIS was 839 tonnes as of September 30, of which 414 tonnes or 49% was supplied by gold swaps from commercial banks

At March 31, 2010, excluding gold owned by the BIS, 1,706 tonnes of gold were held in gold sight accounts at major central banks in the name of the BIS, of which 346 tonnes or 20% were sourced from gold swaps from commercial banks. 

As can readily be seen, the BIS now operates a much smaller gold banking business and the role of gold swaps in this smaller business is far greater. 

If the BIS was adopting the level of disclosures made by publicly held companies, such as commercial banks, then some explanation of these changes probably would have been required by the accounting regulators. One imagines that this irony is not lost on those dealing with regulatory activities at the BIS. Presumably the shrinkage of the gold banking business shows that even central banks now prefer to hold their own gold or hold it in earmarked form -- that is, as allocated gold.

A review of Table B below highlights recent BIS activity with gold swaps, and despite the recent declines, the latest position estimated from the BIS monthly statements remains large.

No explanation for this continuing high level of swaps has been published by the BIS. Indeed, no comment on the bank's use of gold swaps has been offered since 2010. 

This gold is supplied by bullion banks via the swaps to the BIS. The gold is then deposited in BIS gold sight accounts (unallocated gold accounts) at major central banks such as the Federal Reserve. 

The BIS' use of gold swaps and derivatives has been extensive over the last 12 months, with the average level reported during that period still being the highest since August 2018 as highlighted in Table B below.

By contrast, in May 2019 the BIS was exposed to only 78 tonnes in swaps.

As can be seen in Table A below, the BIS has used gold swaps extensively since its financial year 2009-10. No use of swaps is reported in the annual reports for at least 10 years prior to the year ended March 2010.

The February 2021 estimate of the bank's gold swaps (552 tonnes) is higher than any level of swaps reported by the BIS at its March year-end since March 2010. The swaps level reported at March 2021 is the highest year-end level reported, as is clear from Table A.


Table A -- Swaps reported in BIS annual reports

March 2010: 346 tonnes.

March 2011: 409 tonnes.

March 2012: 355 tonnes.

March 2013: 404 tonnes.

March 2014: 236 tonnes.

March 2015: 47 tonnes.

March 2016: 0 tonnes.

March 2017: 438 tonnes.

March 2018: 361 tonnes.

March 2019: 175 tonnes

March 2020: 326 tonnes

March 2021: 490 tonnes


The table below reports the estimated swap levels since August 2018. It can be seen that the BIS is actively involved in trading gold swaps and other gold derivatives with changes from month to month reported in excess of 100 tonnes in this period.


Table B - Swaps estimated by GATA from BIS monthly statements of account

Month ..... Swaps
& year … in tonnes



Sep-21 ... /438

Aug-21 ..../464

Jul-21 .... /502

Jun-21 ..../471

May-21 ..../517

Apr-21 .... /472

Mar-21.... /490±

Feb-21 ...../552

Jan-21 .... /523

Dec-20 .... /545

Nov-20 .... /520

Oct-20 .... /519

Sep-20...../ 520

Aug-20...../ 484

Jul-20 ..... / 474

Jun-20 .... / 391

May-20 .... / 412

Apr-20 .... / 328

Mar-20 .... / 326*

Feb-20 .... / 326

Jan-20 .... / 320

Dec-19 .... / 313

Nov-19 .... / 250

Oct-19 .... / 186

Sep-19 .... / 128

Aug-19 .... / 162

Jul-19 ..... / 95

Jun-19 .... / 126

May-19 .... / 78

Apr-19 ..... / 88

Mar-19 .... / 175

Feb-19 .... / 303

Jan-19 .... / 247

Dec-18 .... / 275

Nov-18 .... / 308

Oct-18 .... / 372

Sep-18 .... / 238

Aug-18 .... / 370

± The estimate originally reported by GATA was 487 tonnes, but the BIS annual report states 490 tonnes, It is believed that slightly different gold prices account for the difference.

* The estimate originally reported by GATA was 332 tonnes, but the BIS annual report states 326 tonnes. It is believed that slightly different gold prices account for the difference.

GATA uses gold prices quoted by to estimate the level of gold swaps held by the BIS at month-ends.


As noted already, the BIS in recent times has refused to explain its activities in the gold market, nor for whom the bank is acting:

Despite this reticence the BIS is almost certainly acting on behalf of central banks in taking out these swaps, as they are the owners of the BIS and control its Board of Directors.

This refusal to explain prompts some observers to believe that the BIS acts as an agent for central banks intervening surreptitiously in the gold and currency markets, providing those central banks with access to gold as well as camouflage for their interventions.

One possibility is that the swaps provide a mechanism for bullion banks to return gold originally lent to them by central banks to cover possible shortfalls of gold. Some commentators on the gold market have suggested that a portion of the gold held by exchange-traded funds and managed by bullion banks is sourced directly from central banks.


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