Belgium Gold Repatriation

Good job Belgium! Take that Switzerland…

Belgium has 227 tonnes of gold, how much of that is stored in other countries?

It only has a limited amount of gold stored at the Belgium National Bank (BNB); the bulk of Belgium’s reserves is held at the Bank of England, a portion is held at the Bank of Canada, and another portion at the Bank for International Settlements (in Basel) which has been in the manipulation business lately. And I’m sure some of it is in the U.S at the Federal Reserve. Belgium has never disclosed where it held its gold.

Maybe, just maybe they are concerned about this trend down in the GLD physical gold reserves. And there should be a connection between GLD and the Bank of England. GLD’s gold inventory is vaulted in London. They should also be concerned about the LBMA.

The Bank of England is a custodian for central banks and the LBMA. So a repatriation of gold from the Bank of England, could mean some added pressure on the LBMA (if the gold of Belgium is not there). And the GOFO rates at the LBMA going negative are a sign of that.

Here are some additional numbers from a year ago:

The traded amount of “paper linked to gold” exceeds by far the actual supply of physical gold: the volume on the London Bullion Market Association (LBMA of which the RBI is a member) OTC market and the other major Futures and Options Exchanges was over 92 times that of the underlying Physical Market.

Now Belgium takes a bunch of physical gold from the Bank of England and the Federal Reserve, who knows what could happen.

https://youtube.googleapis.com/v/jR_E9Vnnrb8&source=uds

Ebola Alarm Right Next Door

What do you know, ebola alarm right next door where I live (Brasschaat, Belgium)…

http://nieuws.vtm.be/binnenland/112140-nieuw-ebola-alarm-kliniek-brasschaat

https://www.youtube.com/v/PtTIEmoMtQ8?version=3&f=user_uploads&c=google-webdrive-0&app=youtube_gdata

Belgium Housing Stagnation

Three months ago I reported that Belgium’s housing market was starting to decline. Statistics Belgium reported this month the actual numbers for the first half of the year 2014.My suspicion was correct.

Villa’s throughout Belgium, especially in the southern region, have fallen. Villas fell 0.3% year over year.
Also normal residence housing has stopped rising. Brussels had a year over year decline of 2.8% in the residential area.

Instead, people are now buying the cheaper alternatives: appartments and building grounds. These rose 1.7% and 3.7% respectively.

In the chart below you can see that the red and blue chart are starting to decline. I’d say the bubble is about to burst. We’ll see in a few months.

Housing prices Belgium

Belgium’s appetite for U.S. bonds is waning

Looks like Belgium has stopped buying U.S. treasuries.

Belgium Housing Bubble Starts to Pop

As I predicted a year ago, it is starting to happen. The declining home sales in 2012 are now starting to have its effects. The Belgium housing bubble shows signs of a pop. In Brasschaat (where I live), I indicated that many houses and especially villas were on sale.

Now the reports are out. We are seeing prices drop more than 20% this year around the Antwerp region. Brasschaat and Schilde were most affected.

Could this be the start of a declining housing market in Belgium, just like we saw in our neighbour country the Netherlands?

Who is Mysterious Belgium Buyer of U.S. Debt: Jim Rickards and Peter Schiff’s take

Jim Rickards says that the ECB could be buying the U.S. debt via Belgium with money from the U.S. Federal Reserve. The Federal Reserve would print U.S. dollars, gives them to the ECB, that goes through Euroclear and they buy the U.S. treasuries anonymously on the books of Belgium. Watch this extremely interesting video below.

Also Peter Schiff suspects, via his radio show, that it’s the ECB buying U.S. debt via Belgium. He doesn’t suspect it’s the Federal Reserve itself, because that would destroy their credibility of tapering QE.

What is clear is that this is not likely the government of Belgium, or private Belgian capital, that is doing the buying. The numbers are just too large. This is particularly true in the First Quarter of 2014 when the buying averaged a stunning $41.5 billion per month (January was the biggest month with $54 billion). In all likelihood, the only European buyer with a wallet that big would be the European Central Bank (ECB) itself.

The Effect of Russia Sanctions: Russia Targets Belgium Steel Industry

What is nice about this blog is that you get news from other parts of the world, outside the U.S, namely Belgium.

Apparently Russia is threatening to close down one of the European division of the major Russian steel giant NLMK ($7 billion market cap) if sanctions were to go through. We’re talking about 1000 jobs lost in Belgium due to these possible sanctions.

This is only one country, I can imagine that many other European countries will see an effect of the Russia sanctions.

And when efficiency is lost in the economy, inflation will arrive sooner than later.

Long Term GOFO Rate Hits New Low

If you really think that gold is going to crash, I need to point out one thing and that’s the GOFO rate.

Recently, the 12 month GOFO rate has hit a new low we have never seen since 1989.

Let’s zoom in to 2009-2014: We have a new solid low here.

So not only the short term GOFO rates (1 month to 3 months) are negative now, also the long term GOFO rates are hitting new lows. So there is a tremendous stress building in the gold market. Historically negative GOFO rates are bottoms in the gold price.

This makes me very bullish in gold at this moment. Because gold lease rates are now much higher than the interest rates/bond yields. This indicates to me that the bond market is about to collapse, bond yields will be going higher, because gold lease rates cannot be higher than the corresponding bond yields. Either bond yields will be going up, or gold has to go up. It’s one of the two.

On another note, we see that the Federal Reserve tapering, is actually just talk. Because some entity is buying U.S. bonds via Belgium at a rate of 30-40 billion USD a month, which is exactly how much tapering we have had. The Federal Reserve is throwing sand in our eyes, don’t be fooled. They are propping up the U.S. bond market, artificially lowering the bond yields below the gold lease rates.

U.S. debt held by Belgium (Billion USD)

Real Estate Prices in Eurozone Declining

Eurostat just released an update on the house prices in the Euro Area. I am actively following this to follow up on the Belgium housing market, which I think is in a bubble.

The latest release on housing prices can be found in this report.

The trend is obviously down since the crisis of 2008. So it is still not a good time to buy a house. Renting is a lot better. As a matter of fact, I just had a walk around my area with the dogs and I’ve seen so many homes for sale it’s not funny anymore. Belgium is the least affordable country in the Eurozone to buy a house.

Looks like Belgium is down 1.1% quarter over quarter and I expect it will get worse.

Why Belgium is Buying so Much U.S. Bonds

Interesting article that says that it isn’t actually Belgium that is buying the U.S. debt. Belgium is actually just an offshore account for foreigners to buy U.S. debt via the banking system.

For what I know, the Fed could even be buying its own U.S. bonds via Belgium.
If this is true, then the Fed isn’t tapering at all if you count the numbers…

Because why is base money supply (red chart) growing at an even higher pace?

Creditor Name: Belgium

Amount of U.S. Debt Owned (January 2013): $143.5 billion

Percent of U.S. Public Debt (January 2013): 1.24 percent

We know what you’re thinking: Belgium? Really? The gross domestic product (GDP) of this small European nation tucked between France, Germany and the Netherlands ranks No. 32 in the world, behind Nigeria and Malaysia [source: CIA World Factbook]. So why is Belgium one of the top 10 purchasers of U.S. debt?

The secret is something called “custodial bias” [source: U.S. Treasury]. Belgium has made a name for itself as one of Europe’s most vibrant international banking centers. Like Switzerland, bank accounts in Belgium historically offered a high degree of secrecy, although that changed in 2011 when the Belgian government began disclosing account information to improve tax transparency [source: Hyslop]. Still, Belgium offers big tax breaks for foreign companies that create Belgian subsidiaries and benefits for investors who choose Belgium for offshore accounts [source: Henley].

Belgium’s status as a tax haven makes it a popular place to buy U.S. debt, even if the investors aren’t from Belgium. The U.S. Treasury tracks purchases of U.S. debt by geographic origin, not the specific nationality of the buyer [source: U.S. Treasury]. This is where custodial bias distorts the debt figures. Belgium is a custodian (or holder) of U.S. debt from investors living in nearby France and Germany or as far away as China and Japan. How much of that debt is owned by actual Belgians is difficult to tell.

We’ll talk more about custodial bias with our next entry: teeny tiny Luxembourg.