I was thinking about the impact of a Grexit (Greek Exit) on the gold price and the possibility that Greece might dump its gold reserves to pay debts (and crash the market), but it appears half of its reserves are held offshore, possibly out of their control if they take such an emergency measure. And also, from the below article: "The gold price should in theory benefit more from the financial volatility of a Grexit than it would suffer from the fear of Greek gold sales. However, the case of the feared Cypriot gold sales in 2013 shows that gold market players can use these fears to their advantage in pushing the gold price around."
I don't think anywhere near 149 tons will actually turn up..... https://www.bullionstar.com/blogs/ronan-manly/spotlight-on-greeces-gold-reserves-and-grexit/ "Excluding this 986,000 oz (30.66 tonnes) IMF related claim on the Greek State, the Bank of Greece says it holds a total of 3.76 million ozs of gold (3,597,000 ozs + 163,000 ozs) which is roughly 117 tonnes. Excluding the scrap gold and gold coins, the figure is 3.597 million ozs, which is approximately 112 tonnes." I was pondering how much of it they may already have sold.....
Yeah, they may be selling on the quiet to avoid impacting the price (unlike what happened in Australia when we dumped some of our gold reserves).
I suspect the Hellenic Republic's national gold reserves are physically stored with either: Bank of England Gold Vault, Unknown Underground Location, London or Federal Reserve Bank of New York, 33 Liberty Street, New York The IMF's official position is the Helenic Republic has title to 4.359 million fine troy ounces of gold, if my math is correct thats ~135.58 metric tonnes of fine gold. Source: https://www.imf.org/external/np/sta/ir/IRProcessWeb/data/grc/eng/curgrc.htm If this Hellenic Republic's entire gold reserves were to be liquidated at today's spot prices, it'd be worth approximately 4,856,000,000. The Hellenic Republic public debts to creditors is in the order of 315,500,000,000. http://www.bloomberg.com/news/artic...s-third-debt-restructuring-who-s-on-the-hook- That is worth 1.53%, less than 2% of the total public debt owed to external creditors of the Hellenic Republic. From the creditor's point of view, any forced liquidation would be extremely unwise. Whom would still trust in the security of their national reserve gold deposits in London and New York? Throw the gold futures market into turmoil? Annihilate Greece's credibility, reducing her capacity for repayment? Forcing Greece into actual sovereign default, possibly precipitating the breakup of the Eurozone? Why startle the other 'chickens' in the 'coop' for such a paltry sum when there is a long game to be played? The Bundesbank of Germany wised up a few years ago and managed to repatriate a portion of their gold reserves to Frankfurt. We see that the "you can't hold it, you don't own it" rule still applies at the Reserve Bank level.
Portugal and Ireland who could ill afford it lent to their 'partner' greece because greece begged them to. Greek civil servants can retire up to ten years younger than in most other countries in the EU..... If greece wants to give their new sugar daddy in moscow bling instead of paying them back can see why the Portugese, Irish, Polish,Italian, Spanish etc could feel free to seize all greek private and public assets in their countries and liquidate them. Seems fair.
It would be far too expensive for Greece to exit the Eurozone... just think about all the debts they would have to pay off... even seizing all public and private assets in Greece would not suffice. No, most probably, after a lot of haggling on both sides and many headaches for Greeks, there will be a new deal with Brussels and renewed austerity measures.
If they exit, they simply won't pay all their debts. And foreign creditors cannot just seize assets in a sovereign country because that would be equivalent to declaring war.
If I were in the Greek government I'd do the following: - exit Eurozone - default completely on Germany, France, and Troika - they can use Greek bonds to wipe their a... If they like (Unless Greece still wants to drive BMW and drink champaigne, which I doubt) - keep good relationship with neighbors like Italy, Turkey, etc. don't default on the bonds in their possession even if they are more expensive after the switch to drachma - find a common ground and negotiate... Italy will be next anyway. - strike a deal with Putin: gas and oil in change of the right of passage for the South Stream gas pipeline, maybe allow them to place a military base or two in strategic positions ( I'd love to hear American's commentaries should that happen for real!) - maybe sell a small Island to Qatar or U.A.E for huge amount of cash - they'll love it - just to buy additional foreign goods for a while - eat only Kalamata olives until the economy restarts - still healthier than McDonalds - steer center of interests completely to the east - Russia China Middle East, maybe India. Now, that would be fun....... (Bonus hint: Tsipras was in Russia to see Putin last week)
That may be fun to watch as an outsider, but it wouldn't be fun for most Greeks. Eat only Kalamata olives until the economy restarts? Most people would starve (but I agree any food is healthier than McDonalds).
I doubt that things could be worse than what they are now for them if they do what I say. They will need to reset their economy anyway sooner or later, they might as well do it now instead of going through another round of austerity measures. I'm still amazed by the fact that there has not been a bank run yet..... Every Greek should put Euros under the mattress or they could wake up the next day with bank accounts denominated in drachmas. And yes, they should definitely keep some gold in their hands, they are exactly in one of those situations in which gold shines best.
Greeces State owns 112.5 tonnes. Global governments changed their interference on the gold market over 2008 to 2011 from 463.167 tonnes selling annually to 471.4 tonnes buying annually. That's a supply/demand change of 935 tonnes. The gold price during the selling period averaged to $357, and during the buying period $1480. That's a price change of $1123. So 935 tonnes correlates to 1123 price dollars, and thus we have 0.8326 tonnes per price dollar. So Greeces 112.5 tonnes correlates to 135 price dollars. If those would be sold on the market now then the gold price would drop from $1177 to $1042. Any further questions?
Want to break those figures down a bit pal. I'm afraid the devil is in the detail on this one. Clue. What form are the Greek gold reserves in? What makes you think they are available to be sold ? You assume honesty in a world where it is a scare and valuable item (sadly).
I don't assume honesty, I assume that trading people, including central bankers, act according to the information they get given, whether correct or not. What makes you think they won't ?
