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Eastern European Nations Buy and Repatriate Gold Due To Growing Risks To Euro and Dollar

Summary:
◆ Prudent leaders in Eastern European countries are repatriating their national gold reserves and diversifying into gold due to geopolitical risks and monetary risks posed to the dollar, euro and pound ◆ Slovakia has joined China, Russia and a host of countries buying gold or seeking to repatriate their gold from the Bank of England and the New York Federal Reserve ◆ “Brexit and the risk of a global economic crisis put Slovak gold stored in Britain in a dangerous situation …” ◆ Serbia, Poland and Hungary have boosted their safe haven gold bullion reserves to protect their foreign exchange holdings and hedge growing monetary and systemic risks ◆ Poland’s government completed the repatriation of 100 tons of gold bullion; 8,000 gold bars worth billion were moved

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Prudent leaders in Eastern European countries are repatriating their national gold reserves and diversifying into gold due to geopolitical risks and monetary risks posed to the dollar, euro and pound

◆ Slovakia has joined China, Russia and a host of countries buying gold or seeking to repatriate their gold from the Bank of England and the New York Federal Reserve

◆ “Brexit and the risk of a global economic crisis put Slovak gold stored in Britain in a dangerous situation …”

◆ Serbia, Poland and Hungary have boosted their safe haven gold bullion reserves to protect their foreign exchange holdings and hedge growing monetary and systemic risks

Poland’s government completed the repatriation of 100 tons of gold bullion; 8,000 gold bars worth $5 billion were moved by G4S from the Bank of England to the Polish central bank

via Bloomberg:

Gold is all that nationalist leaders in Europe’s east can talk about these days.

Just this week, Poland’s government touted its economic might after completing the repatriation of 100 tons of the metal.

Over in Hungary, anti-immigrant Prime Minister Viktor Orban has been ramping up holdings of the safe-haven asset to boost the security of his reserves.

The gold rush mirrors steps by Russia and China to diversify reserves exceeding $3 trillion away from the dollar amid flaring geopolitical tensions with the U.S. Motivations in Europe’s ex-communist wing, however, can vary.

Take the latest example. Former Slovak Premier Robert Fico, who has a shot at returning to power, urges parliament to compel the central bank into bringing home gold stocks stored in the U.K.

The reason? Sometimes your international partners can betray you, Fico said, citing a 1938 pact by France, Britain, Italy and Germany allowing Adolf Hitler to annex a chunk what was then Czechoslovakia, and — more recently — the Bank of England’s refusal to return Venezuela’s gold stock over political differences.

“You can hardly trust even the closest allies after the Munich Agreement,” Fico told reporters. “I guarantee that if something happens, we won’t see a single gram of this gold. Let’s do it as quickly as possible.”

His comments came despite the U.K. being one of Slovakia’s closest allies after the Soviet empire crumbled, helping ease the path to European Union and NATO.

Fico said Brexit and the risk of a global economic crisis put Slovak gold stored in Britain in a dangerous situation.

Instead, he said he wanted to demonstrate the strength of his nation’s $586 billion economy — the largest in the EU’s east. Poland has doubled its gold holdings in the past two years and now has the region’s biggest stockpile.

Hungary, though, has been an active buyer too. Gold reserves surged 10-fold last year, setting the clamor for the metal in the countries around it in motion.

Serbia’s strongman leader Aleksandar Vucic took note, ordering the central bank to boost reserves and prompting the purchase of nine tons in October. Vucic said last week that more should be bought because “we see in which direction the crisis in the world is moving.”

The biggest nation to emerge from the breakup of Yugoslavia still keeps some of its gold abroad, the central bank said by email. The region is buying more of the metal because of global uncertainty over trade and politics, Brexit and low interest rates, it said.

Romania had also sought to relocate some of its gold reserves from the U.K., but those plans were put on hold when the government behind them was ousted in October.

For the no-nonsense leaders that have come to dominate eastern Europe, the main benefit may be the message to voters that hefty holdings of the precious metal conveys.

“Gold is a symbol,” said Vuk Vukovic, a political economist in Zagreb. “When states purchase it, people everywhere see it as a sign of economic sovereignty.”

Eastern European Nations Buy and Repatriate Gold Due To Growing Risks To Euro and Dollar

Queen Elizabeth tours a gold vault during a visit to the Bank of England

Hong Kong Unrest Highlights Need for Physical Gold

GoldCore directors have been monitoring the political and economic situation in Hong Kong for the last year. It has clearly deteriorated in the last two weeks and we are now erring on the side of caution in terms of our client’s who store assets there.

We have emailed and phoned all GoldCore Secure Storage clients with assets in Hong Kong and strongly encouraged them to move their assets to Singapore.

GoldCore have also suspended trading of all gold and silver bars and coins in Hong Kong for the foreseeable future due to a fall in demand for assets stored there and the increasing risks.

Specifically we see the risks as follows:
– The scale and nature of violent protest has worsened in recent days
– A top police official warned this week that Hong Kong’s society “has been pushed to the brink of a total breakdown”
– Hong Kong has been downgraded and the property market and economy have slowed sharply and they are in a deepening recession
– Potential for a crack down by the Chinese government which may compromise the mobility, liquidity and marketability of assets
– There is speculation that currency controls may be imposed in the coming weeks or months
– We do not see the situation improving in the near term and indeed see it worsening which will impact Hong Kong politically and economically

We take the recent developments very seriously. We can not ignore the deteriorating political situation in recent days and the increasing medium and long term financial and economic risks.

Civil unrest is now destablising Hong Kong and political instability may compromise the liquidity and, in a worst case scenario, the move-ability and safety of assets. Already we have seen a deterioration in liquidity and premiums in Hong Kong given the political unrest and economic instability.

It is prudent to take steps to assuage concerns of clients and to manage the risks which we are concerned may materialise in the medium and long term.

It highlights the advantages of owning physical gold in terms of accessibility, portability and liquidity and the importance of owning gold in the safest jurisdictions.


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Mark O'Byrne
I founded GoldCore more than 10 years ago and it has been my passion and a huge part of my life ever since. I strongly believe that due to the significant macroeconomic and geopolitical risks of today, saving and investing a portion of one’s wealth in gold bullion is both wise and prudent.

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