Not all central banks are transparent about their gold purchases. Among them is Singapore’s central bank, called the Monetary Authority of Singapore (MAS). It was founded in 1971, just before Richard Nixon abandoned the gold standard.
However, the country, anticipating that the price of gold would begin to rise, organized the purchase of gold even before the establishment of its central bank. It all happened like a James Bond scenario and remains to this day one of the most secretive gold acquisition operations in history.
After the 2 purchases, the country’s total reserves stand at 153.2 tonnes and have increased by 20% from this transaction alone, which is Singapore’s first in at least 2 decades. Thus, the country climbed one position in the top of the world’s largest gold holders, reaching 29th place, ahead of Brazil (129 tons), but behind the Philippines (157 tons).
Singapore increased its gold stockpile by 26.35 tonnes earlier this year, the data show. The transaction was carried out in 2 installments, in May and June. The Monetary Authority of Singapore described this in its July and August reports, and the data on purchases was only recently reported by the International Monetary Fund , so it was not reported by the World Gold Council and went largely unnoticed by the markets .
With this purchase, Singapore joins many other countries that have significantly increased their gold reserves in 2021. These include Thailand, Japan, Serbia, Hungary and Poland. Russia has also increased its gold purchases, mainly through its sovereign wealth fund, which has no interest in dollar assets.
Gold is the ultimate currency
It is not clear when the previous gold purchase from Singapore took place or if it was purchased immediately. However, from the data we can conclude that between 1968 and 2000, MAS bought another 27.4 tons of gold. This is known because before this date the country had 100 tons of gold, which it acquired as an action scenario.
Singapore's Gold Reserve - A Creation In The Spirit Of "James Bond"
The London Gold Pool was an organization established in the 1960s by 8 major central banks to sell gold when its price rose on international markets with the goal of maintaining parity at $35 per ounce. If the price of gold is allowed to rise, the Federal Reserve, which has less and less precious metal to back the dollar, could face insolvency because it will not have enough gold to pay its obligations to the other banks power plants to which it is obliged to sell gold against dollars.
Sometimes all that glitters really is gold
By the late 1960s, it was clear that the London gold fund was about to collapse. Has France started selling gold heavily? to the Federal Reserve in exchange for gold? and spectacularly left the agreement. Singapore’s finance minister (who was not part of the gold fund), Dr Goh KengSwee, commissioned a report on the future of the gold standard. It was prepared by the administration’s chief consultant, Nguyang Tong Daw, and according to the document, the gold standard was to be abolished.
The Secret Operation To Acquire Gold
However, there was a problem – South Africa was under embargo at the time, and Singapore could not officially buy gold from that country. Thus, Sui secretly met in his Washington hotel room with South African Finance Minister Nicholas Diederichts while the two were at a World Bank conference. The conversation was also attended by Dow, who, 5 decades later, described what happened in his book, ” A Mandarin and the Making of Public Policy “:
The finance minister of South Africa came and said: Before we talk, we have to turn on the TV very, very loudly.” Right in the heart of Washington!”. I agreed and turned up the volume as loud as I could.
The purpose was for the device to muffle the conversation in case the camera was eavesdropped. During the meeting, the finance ministers agreed that Singapore would buy 100 tons of gold at a price of $40 per ounce. The deal carried a 14 percent premium over the spot price of $35 an ounce at the time, but Sui agreed to it to hedge against a possible shock rally in the precious metal.
