Romania is the latest country to want to repatriate their gold back from the Bank of England. The country’s ruling party has submitted a bill that the country keep 95% of its gold investments within the border. Romania has 103.6 tons of gold, 60% of that gold is in Romania and the rest is stored in the Bank of England.
The bill states the reason for the change in legislation as a cost saving measure. According to the government, keeping a large quantity of gold abroad costs more money than it would if the gold was stored in Romania itself instead of being stored elsewhere. Romania already has the highest amount of gold in central Europe. If this bill passes in the country’s legislature then Romania will be one if the growing number of countries repatriating the gold.
Last year, Hungary announced its decision to repatriate 3 tons of gold stored in foreign repositories. These actions are in line with the current international trends. In 2017, Germany successfully completed repatriating half of its gold from foreign reserve banks. The total amount of gold moved from the US, England and France is worth about $31 billion.
Australia also announced plans to repatriate half of its gold in 2015. Belgium and the Netherlands also launched their own plans to move gold back within its borders. In the US, individual states are also launching their own repatriation programs. Texas is one state that announced its repatriation plans.
Venezuela made headlines recently not just for its collapsing economy, but its efforts to get $1.2 billion worth of gold from the Bank of England has been met with resistance. The Bank of England denied Venezuela’s request because of the international sanctions that the country has been under. At the time, the bank stated that the delay was due to insurance issues and to ensure that gold repatriation does not end up being a way for the embattled Venezuelan government to launder money. Many speculated that the reasons had more to do with power and that President Maduro would be deposed in a coup. This coup, many believed, was being planned by western powers, particularly the US and the UK.
The repatriation of gold highlights the importance of having physical gold within reach. The security and stability of a country’s economy comes from the actual physical possession of the actual precious metals. A lot of countries are realising the importance of having their cold within their own borders and vaults. For the ordinary investor the large scale repatriation of gold could be an indication of geopolitical instabilities. When there are such instabilities, the price of gold usually goes up. Romania is but one of many countries who are moving their gold. It has affected the price of gold, but if the current trend continues and more gold is recalled from repositories like the Bank of England then we can safely assume that the future is bright for gold investors.
Sources:
https://af.reuters.com/article/commoditiesNews/idAFL5N226519
https://schiffgold.com/commentaries/central-banks-want-more-gold-so-should-you-022/