Wednesday I was dismissive of the recall of Hong Kong's gold as significant, but it is another bit of evidence of a shift in central bank attitudes towards gold. Far more significant indicators include (see this MineWeb article):
- China's announcement that it had moved 454 tonnes of gold into its reserves since 2003
- Central Bank Gold Agreement (CBGA) quota being reduced from 500t to 400t a year
- Russia's Prime Minister stating that it should hold 10% of its reserve assets in gold
It points to a renewed appreciation of the role of gold in turbulent times. Recalls of gold like Hong Kong may also indicate a reassessment of counterparty risk. Moves to return gold are eminently sensible, of course: what is the point of a country having its gold out of its immediate physical control if everything goes to hell. That is really the whole point of having gold reserves. In a time of war (not that I'm suggesting that is where we are heading) you ain't going to be able to buy guns or food from another country with your funny paper money.