The Dutch have substantial gold reserves. Their reserves are bigger than those of the United Kingdom, Belgium, Portugal, Spain and Canada. According to recent data, the Dutch have 612 tons. Today, the Dutch central bank (De Nederlandsche Bank) published astonishing news. No less than 20% of the Dutch gold reserves were shipped secretly from the vaults of the New York Fed to the vault at Frederiksplein in Amsterdam. Why did the DNB make this decision at this very moment?

The first mystery: why do the Dutch, contrary to the Germans, repatriate all the gold they desire, and do so all at once?

Of course, Germany’s gold reserves are larger than those from the Netherlands. Germany’s 3,600 tons overshadow the Dutch gold reserves. Only the U.S. gold holdings are bigger.

Since the pressure on the German Bundesbank was mounting steadily, the Bundesbank decided to repatriate 150 tons of gold in an attempt to set minds at ease. However, the Bundesbank stated;  “we will do this step by step over the course of three years.” Because it is too much to be put on one plane all at once.

The Netherlands just proved Germany wrong. The big difference between the Netherlands and Germany is that the former did claim 122.5 tons of gold at the New York Fed all at once. Contrary to Germany, DNB arranged the transfer over the course of a couple of weeks. The Germans think they need years to achieve this. The Germans look foolish.

But that is not the end of the story. The Netherlands could have followed Germany’s path, but decided against it. What’s the hurry?

We can take DNB’s official motivation with a grain of salt. DNB claims it is making this radical move because it desires a better geographical distribution of its gold holdings. Like Germany’s, almost half of the Dutch gold reserve were stored in Manhattan, New York. But that doesn’t explain DNB’s sudden hurry to demand, contrary to Germany, one single shipment.

Additionally, a DNB spokesperson told newspaper De Telegraaf that it may have been desirable to store that much gold in New York during the Cold War, but that this is no longer the case.

On the other hand, the bank claims to make this move to strengthen the confidence that Dutch citizens have in the bank. However, this motive is not very plausible. Despite some modest publicity, the majority of Dutch citizens don’t care about their gold reserves. Perhaps Klaas Knot (DNB’s chairman) wants to avoid social unrest, considering the situation in countries such as Germany, Switzerland and Austria. But is this the real reason?

The main question is therefore: why now?

It could be a reaction to the German auditor who found malpractices during his visit to the vaults in New York.

In 2007, when the Germans wanted to see their gold, they were not even allowed to enter the vault. In 2011 they came for a second visit. This time, they were allowed to see more. One of the nine compartments was opened, and a number of gold bars were taken out of vault. These bars were measured and inspected.

But does DNB know more than we do? Did they perform an audit? Or were they refused entrance, like the Germans were? Are they skeptical about the U.S. and the Fed?

In exactly nine days, the Swiss referendum on the “save our gold” initiative will take place. On November 30th, the Swiss decide whether or not to impose strict requirements on its central bank. One of the demands is that all Swiss gold should be stored in Switzerland. None of it is allowed to be stored in New York London

DNB’s timing to publish this news is therefore highly inconvenient for the Swiss central bank. DNB’s disclosure increases the tensions of an already heated debate in Switzerland. “If even the Dutch are repatriating their gold, why we don’t we?,” must be on the minds of the Swiss.

One of the other requirements is that the Swiss central bank must keep 20% of its reserves in gold. However, the Swiss have pegged the franc to the euro which they do by buying euros. This scheme collapses when it is forced to keep a fixed percentage of its reserves in gold.

Next to the Germans and the Swiss, the Austrians are also worrying about their gold reserves.

In Austria the pressure on the central bank has increased. Only two years ago the Austrian central publically announced where its gold is stored. It turns out that Austria’s gold is primarily stored in London. Over 80% of its gold reserves are stored there. The rest is stored in Austria itself (17%) and Basel (3%). The Austrians also want to repatriate their gold.

The next question is; how much of that gold is lent out?

Belgium, for example, lent over one third of its gold in the past few years. Logically, this raises some questions. Is it prudent to speculate with the gold reserves of a country? Especially when they only yield 0.2% a year.

According to information from DNB, it has stopped lending out (“leasing”) gold since the 2008 crisis. This makes the Netherlands an exception. Lending out gold is still commonplace among central banks. The question is: how much? Can we extrapolate Belgium’s policy to other central banks? If so, then a third of the physical gold is being lent out, while they are reported as gold reserves on the balance sheets of central bank without any added remarks.

It is a unsatisfactory that central banks lend out gold while treating it on their balance sheets as if it were 100% physical allocated gold, as we do for our clients at GoldRepublic.