Bank of England's Supply "Reassurance"

While the Financial Times just implied gold buyers are less than sane, Dave Ramsden - Bank of England Deputy Governor of Markets and Banking reassured investors recently by saying:

"...There's been strong demand for delivery slots... ummm, we can meet that demand... ummm we, we all of our main... ummm... counterparties as it were, or better to say all of, all of those... ummm bodies who ship the gold have, you know, they've all got, ummm... the delivery slots they need over the next few weeks."

This was in response to a reporter's question, which was a softball toss, to say the least. She framed the question as "...how much gold has now left the Bank of England vaults in anticipation of tariffs…?". So, she is assuming that the reason for the rush of deliveries is purely based on a fear that gold itself will be tariffed?

Last week on Insights, we discussed the prospect of a tariff being placed on gold itself. This would be the U.S. essentially sanctioning itself and trying to prevent itself from receiving money. On the contrary, the U.S. has a vested interest in accumulating gold and even had a major hiccup in the past when returning Germany's gold took years.

Afterwards, headlines persisted, and Citi even came out and squashed the prospect of such a situation. Citi stated recently that gold is a financial asset, and they do not foresee it being tariffed. In the form of gold coins, it is even U.S. legal tender. This doesn’t mean that gold is immune to tariffs, but they were quick to point out how unlikely and nonsensical the idea is.

Aside from pinning the blame on a potential gold tariff, others in the media have been insulting the entire prospect of owning gold. Gillian Tett, chair of the editorial board for the Financial Times and U.S. editor-at-large, is one of them. In an opinion piece she just wrote, she heavily criticised gold buying, even to the point of writing:

"Welcome to a financial Alice-in-Wonderland world where buying bullion seems almost sane."

If it is insane to buy bullion, then all major central banks and hedge funds are insane. Gold's outperformance of the S&P500 last year must also be an illusion. This also means that gold derivatives are especially worthless since they are based on something that is insane to value. This is not just a random opinion piece; this is an FT editor referring to gold buyers as not sane and living in an alternate reality.

As time ticks on, more channels have asked whether the tariff story is the whole picture or if there is more under the surface, such as problems with the paper-to-gold ratio. Meanwhile, some channels continue to disregard bullion as a sensible investment and attribute its rise to speculative exuberance.