In January FT Alphaville's Izabella
noted that "Negative rates imply that banks are pawning gold in exchange for dollars. A move which happens to depress gold prices. But it’s always been difficult to establish who was pawning what and when, and how prevalent the practice really was."She quoted Goldman Sachs who thought
"this new demand for dollars was mostly from European banks using the gold market to source US dollar liquidity when their funding from the US money markets dried up, which created a significant amount of gold selling."It is with interest then that in updating
this post I noticed Scotiabank disclosed the following on page 37 of their
2011 Annual Report:
"The Bank had exposures to Italian banks of $976 million, primarily related to short-term precious metals trading and lending activities."