EXHIBIT B 

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From: Ben Monaci <bmonaci@hgoldgroup.com>

To: jnmathys@sbcglobal.net <jnmathys@sbcglobal.net>

Sent: Wednesday, January 30, 2019, 05:02:06 PM CST

Subject: Additional Articles (The Hartford Gold Group)

Mr. Mathys,

Hear are additional articles to read and understand that it’s time now to minimize your loss of

principal and have full control of a portion of your wealth in a hard asset just like all Central

Banks.

Ben Monaci

Senior Director

The Hartford Gold Group

11900 W. Olympic Blvd. 7th Floor

Los Angeles, CA 90064

Direct: (323) 580-6048 or (800) 462-0071 Ext 242

Fax: (310)317-7233

Email: bmonaci@hgoldgroup.com

www.thehartfordgoldgroup.com

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America Is Headed For An Economic 

Collapse That Will Be Worse Than The 

Great Depression, Experts Warn

Student loan debt in particular is skyrocketing, experts warn.

The American economy is teetering and potentially headed toward a collapse 

that will be worse than the Great Depression, experts are warning.

As the total amount of household debt climbs to $21 trillion and continues to 

grow, a crisis is looming that could shatter the current economic recovery, the 

global research firm Elliott Wave International is warning. When combined 

with a global debt of $247 trillion, the conditions are ripe for an economic 

collapse, the firm warned in a note to investors.

“We think the major economies are on the cusp of this turning into the worst 

recession we have seen in 10 years,” wrote Murray Gunn, head of global 

research at Elliott Wave International (via the New York Post).

“Should the [US] economy start to shrink, and our analysis suggests that it will, 

the high nominal levels of debt will instantly become a very big issue.”

This downturn could be historic.

“We won’t be able to call it a recession, it’s going to be worse than the Great 

Depression,” economic commentator Peter Schiff told the New York Post. “The 

U.S. economy is in so much worse shape than it was a decade ago.”

The analysis noted that household debt is even higher now than it was in 2008, 

just as the Great Recession started.

Student loans outstanding have skyrocketed from $611 billion in 2008 to 

around $1.5 trillion today. 

Others have raised alarm about rising debt, specifically student loan debt. 

As CNBC noted, despite the record-low unemployment numbers and a strong 

economy, student loan debt continues to skyrocket and is now at an average of 

$30,000 at graduation, up from $10,000 in the early 1990s.

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“The country’s outstanding student loan balance is projected to swell to $2 

trillion by 2022, and experts say a large portion of it is unlikely to ever be 

repaid; nearly a quarter of student loan borrowers are currently in a state of 

delinquency or default,” the report noted. “Because of these loans, many 

Americans are unable to buy houses and cars, start businesses and families, 

save or invest.”

This has led several politicians to push for student loan reform, calling for new 

programs to lower interest rates and offer ways to forgive loans when certain 

conditions are met. Experts have warned that without relief, the “student loan 

bubble” could burst much like the way mortgage debt did leading up to the 

Great Recession.

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IMF Issues Dire Warning – ‘Great Depression’ 

Ahead? 

17, October 

– “Large challenges loom for the global economy to prevent a second Great

Depression” warn IMF

– Massive government debts and eroded fiscal buffers since 2008 suggest global

dominos await a single market crash

– 2008 crisis measures cast long, dark “terrifying” shadow

by William Pesek via Asia Times

Is another “Great Depression” on the horizon?

It would be easier to dismiss these words from Nouriel Roubini, Marc Faber or other doomand-gloom prognosticators. Coming from Christine Lagarde’s team, though, they take on a 

new dimension of scary.

The International Monetary Fund head isn’t known for breathlessness on the world stage. 

And yet the IMF sounded downright alarmist in its latest Global Financial Stability report, 

stating that “large challenges loom for the global economy to prevent a second Great 

Depression.”

Even some market bears were taken aback. “Why,” asks Michael Snyder of The Economic 

Collapse Blog would the IMF use this phrase “in a report that they know the entire world will 

read?”

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Perhaps because, unfortunately, the findings of other referees of global risks – including the 

Bank for International Settlements – hint at similar dislocations.

Ten years after the Lehman Brothers crisis, these worrisome warnings that will be explored 

in depth at this week’s annual IMF meeting in Bali. The tranquil setting, though, will offer few 

respites from cracks appearing in markets everywhere – from Italy to China to Southeast 

Asia, where currencies are cratering like it’s 1998 again.

Source: Wikipedia

Potential flashpoints and a long line of dominos

Italy is the current flashpoint – and the latest target of “domino effect” chatter in frothy world 

markets. China’s shadow-banking bubble, and the extreme opacity and regulations that 

enable it, also came in for criticism. And, of course, the 800-pound beast in any room where 

global investors gather these days: Donald Trump’s assault on world trade.

But the real worry is the health of foundations underpinning these and other risks.

As the BIS warned on Sept. 23, the global economy faces a potential “relapse” of the 

“Lehman shock” of 2008. “Things look rather fragile,” says BIS chief economist Claudio 

Borio. Equally worrying, he adds: “There’s little left in the medicine chest to nurse the 

patient back to health or care for him in case of a relapse.”

A similar connection of dangerous dots runs through the IMF’s latest report. The big 

problem, says Malhar Nabar, deputy chief of IMF research, is the one that investors tend to 

ignore or explain away: how much of the Lehman fallout is still with us.

“There are many countries, even today, that are operating below pre-crisis trends,” Nabar 

says. “And what’s interesting is not just countries that suffered banking crises in 2007-2008 

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but also other countries outside of that epicenter that were affected through trade links or 

through financial links.”

Increased inequality is one troubling side-effect. Yet Nabar highlights, “possible long-lasting 

effects of the crisis on potential growth” that might seem tangential to Wall Street’s crash – 

lower birth rates, lower fertility and even “some evidence of slower technology adoption.” All 

this, he says, “can affect productivity growth and potential growth going forward.”

There is no doubt that many of the official policy actions taken since 2008 “seemed to have 

helped limit the harm.” But the costs of those efforts are only beginning to get calculated.

2008 crisis measures cast long, dark shadow

Excessively loose monetary policies have exacerbated the widening inequality trends 

unfolding pre-Lehman crackup. At the same time, there’s been, in the words of the IMF, a 

“large accumulation of public debt and the erosion of fiscal buffers in many economies 

following the crisis point to the urgency of rebuilding defenses to prepare for the next 

downturn.”

Yet all the diplomatic speak in the world can’t sugarcoat the roughly $250 trillion crisis 

unfolding in slow motion. That’s the level to which the world’s debt burden ballooned since 

the Lehman crash. That’s 18 times China’s annual gross domestic product.

And with official rates from Washington to Tokyo still at ultra-low levels historically, there’s 

little ammunition to battle the next reckoning.

Italy’s debt woes are an obvious weak link. One reason: just as with US officials after 2008, 

Europe did more to treat the symptoms of its woes than address underlying causes.

So is China’s unbalanced economy, one being trolled by US President Donald Trump’s 

tariffs arms race. This year’s 6.4% drop in the yuan is raising eyebrows for good reason. For 

one thing, it coincides with a marked slowdown in exports, industrial production, fixed-asset 

investment and an 18% plunge in Shanghai stocks this year. For another, it raised the 

specter of sizable defaults on dollar debt, which would reverberate through the global 

economy. 

And therein lies Asia’s problem.

Asia’s exposure

In general, the region has journeyed a long way since the darkest days of 1997 and 1998. 

Financial systems are stronger and governments are more transparent. Currencies are 

more flexible. Foreign-exchange reserves have been rebuilt. That leaves advanced 

economies from South Korea to Singapore reasonably well equipped to withstand fresh 

turmoil. 

But there are cracks in the region’s developing markets, as the ferocity of currency plunges 

in India, Indonesia and the Philippines show. Investors may argue they’ve learned from past 

misstates, but still fall prey to herd mentalities.

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It’s an urgent wakeup call for India’s Narendra Modi, Indonesia’s Joko Widodo and Rodrigo 

Duterte of the Philippines to narrow current-account and budget deficits. Leaders also need 

to devise macroprudential firewalls against global contagion.

The problem for Asia: contagion could come as much from the West and its own backyard.

Trump’s fiscal incompetence – including a $1.5 trillion tax cut America didn’t need – could 

roil global rates and the dollar. A recent spike in 10-year yields to 3.2%, the highest in seven 

years, could be a bad omen. Trump, too, is publicly dueling with his hand-picked Federal 

Reserve chairman. And given Trump’s legal woes, the odds of new tariffs or even military 

action to distract voters can’t be ruled out.

Any new assault on China could devastate Japan’s reflation effort. True, epic Bank of Japan 

easing and a weaker yen boosted exports. It pushed Nikkei 225 index stocks to 27-year 

highs. Yet Asia’s No. 2 economy is in harm’s way if the US-China brawl trumps the region’s 

key growth engine.

Even before most policymakers and financiers arrive in Bali this week, the IMF is signaling 

that global growth has plateaued. It downgraded output to 3.7% from 3.9%.

That not the end of the world, per se. But with trade battles intensifying and dormant old 

devils re-emerging, all bets could soon be off.

That is a lot more than depressing: it’s terrifying.

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More cracks are appearing in the 

market for loans that helped cause the 

financial crisis • Leveraged loans are made to companies with weak balance sheets and poor credit profiles.

• They often are blamed for helping cause the financial crisis due to the high levels of corporate debt 

and opaque nature of the securities used to package them.

• Mutual funds for leveraged loans have seen huge outflows in recent months, with investors 

pulling16 percent of total assets since September's peak.

Jeff Cox | @JeffCoxCNBCcom

Published 1 Hour Ago Updated 19 Mins AgoCNBC.com

Michael Nagle | Bloomberg | Getty Images

Yellow "Caution" tape is displayed outside of the New York Stock Exchange.

Leveraged loans, which helped cause the last financial crisis and have drawn fear 

that they could be a spark in the next one, are showing further signs of cracking 

as investors flock from the market and volumes dry up.

Mutual funds that track the debt issued traditionally to companies with weak 

balance sheets and poor credit have seen $18 billion in outflows over the past 10 

weeks, including $949 million for the period ending Jan. 23, according to data 

Refinitiv's LPC team released Tuesday.

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For perspective, the funds have total assets now of $148 billion. The funds have 

seen investors pull 16 percent of assets since the space peaked in September at 

$175 billion.

Performance of corporate debt actually has been decent: As a group, bank loans 

have managed to eke out a 2.2 percent so far in 2019, according to Morningstar. 

The returns are positive though well below the performance of most other fund 

categories.

However, investors appear to be getting edgy after some high-profile warnings 

about potential danger spots.

Former Federal Reserve Chair Janet Yellen, for instance, said in December that 

the leveraged loan industry, which now boasts around $1.3 trillion in assets, is 

one area where risk-taking could exacerbate an economic downturn. Moody's 

Investors Service, which rates the debt, said covenant quality, or the protection 

banks and investors get for the loans, has reached historic lows. 

Big outflows 

As the warnings were being issued, both investors and companies looking for 

funding left the market.

Mutual fund outflows in December alone hit $15.4 billion in December, according 

to Refinitiv. The firm's LPC group surveyed market participants and found they 

expect issuance to be weak this year, with most looking for it to be in a range of 

$90 billion to $110 billion. That would be a massive dropoff from 2018, which 

saw $274 billion in issuance during the first half alone, according to 

LeveragedLoan.com.

The key risk point for the industry is securitization, or the bundling of the loans 

into offerings such as collateralized loan obligations.

Yellen mentioned that danger specifically, saying the CLO industry for leveraged 

loans looked a lot like the subprime mortgage offerings that led up to the 

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financial crisis. Wall Street sells CLOs to investors looking for yield; during the 

crisis, the securities became so opaque that investors had a hard time 

deciphering what they even held. The issues over securitization helped spark a 

lack of confidence that led to liquidity drying up in financial markets.

Refinitiv said CLO issuance hit a record $128 billion last year, though December 

saw the market sink to a two-year low.

One final issue hitting the industry has been the Federal Reserve. 

Higher interest rates make the products more attractive, but central bank 

officials in recent days have become more tepid about the pace of increases. The 

possibility that the Fed may enact any hikes this year is another problem for the 

industry, Refinitiv LPC said.

The firm said the appetite for issuance to Athenahealth and Dun & Bradstreet, 

which launched earlier this week, will provide signals for this year's market.

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What You Can Learn from Billionaires 

Who Invest in Gold

By Trevor Gerszt 

Friday October 19, 2018 01:18 PM

If you want to be successful in investing and accumulate enough money to live a 

comfortable retirement, sometimes it’s a good idea to take advice from those who 

have experience in the arena.

Learning about sound investments from others can help prevent you from making 

mistakes that you might otherwise make if you try to rely on your own abilities.

Here are a few successful billionaire investors who swear by investing in gold.

Ray Dalio

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Mr. Dalio is the founder of Bridgewater Associates, one of the world’s largest hedge 

funds. He has been a vocal advocate of holding gold, advocating that a balanced 

portfolio holds about 20 to 30 of its assets in gold. He is also quoted as saying that: 

“If you don’t own gold, you know neither history nor economics.” People who invest 

in gold understand that paper currencies aren’t ultimately worth the paper they’re 

printed on, and only gold can provide a solid financial backstop.

Stanley Druckenmiller

Mr. Druckenmiller is the founder and former president and chairman of Duquesne 

Capital Management, a hedge fund he founded in the early 1980s. The fund posted 

average annual returns of 30 percent before it was closed in 2010. Druckenmiller has 

been a vocal critic of Federal Reserve monetary policy and urges investors to get out 

of the stock markets and into gold. Even though he briefly sold gold after the 

Presidential in 2016, he started buying gold again. His rationale was that gold was 

down in price, so he smelled a good deal

David Einhorn

Mr. Einhorn is the chairman of hedge fund Greenlight Capital. He too is bullish on 

gold. His reasoning is that President Trump’s economic agenda has no core 

philosophy, which will lead to greater political and economic uncertainty. That helps 

boost demand for gold, which will be reflected in a higher gold price. He also believes 

that: “Gold remains a long-term position with a thesis that global fiscal and 

monetary policies remain very risky.”

Jim Rogers

There probably aren’t too many people who don’t know of Jim Rogers. Even if they 

don’t know his prowess as an investor, they may have heard of his best-selling books

Investment Biker or Adventure Capitalist, the chronicles of his round-the-world trips. 

Mr. Rogers has been a persistent critic of the Federal Reserve System, believing it to 

be one of the biggest threats to the world economy today. He has also preached the

benefits of gold and silver in a balanced investment portfolio for years. Currently he is 

looking for dips in the gold price to buy more gold to add to his portfolio.

Lord Jacob Rothschild

Lord Rothschild is a member of the well-known Rothschild banking family and the 

founder of RIT Capital Partners, an investment trust. The trust takes a critical eye 

towards the monetary policy actions undertaken by the world’s central banks, 

characterizing the current monetary policy stance as the greatest monetary experiment 

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in history. Accordingly, the trust sold off equities and used the proceeds to buy gold.

Given uncertainty in the economy going forward, the trust is focusing on wealth 

preservation, maximizing its ability to maintain wealth considering central bank 

policies that in the long run will only destroy wealth.

The Benefits of Investing in Gold

When you don’t have a lot of money, you want to make as much money as you can as 

fast as possible. Once you have a lot of money, you want to keep that money. That 

necessitates a difference in investment strategies. All these billionaires have a lot of 

money, and most of them manage investments for other people who have a lot of 

money.

They’re looking for investments that will be able to make money for them. Gold 

always rises in price over the long term and it often rises in price in the short term, 

particularly during times of financial crisis. That makes it a win-win for people 

looking for a sound investment. Gold also maintains its purchasing power over time. 

One ounce of gold a hundred years ago buys you roughly the same amount of goods it 

buys you today. You can’t say the same thing about paper currency. If you need a 

solid store of value, gold is what you want.

Gold helps to diversify an investment portfolio. So many investors think that if they 

invest in an index fund or hold a mix of small-cap stocks, large-cap stocks, 

international stocks, and various types of bonds, that their portfolio is well-diversified. 

Well, it’s not. Every single one of those assets is dependent on the health of financial 

markets. The reason these billionaires can maintain their wealth is because they invest 

across a broad range of assets. Gold and silver, other commodities, real estate, you 

name it – they’ve invested in it all at one time or another. Putting all your money into 

Wall Street’s favorites only works if Wall Street is healthy. A well-diversified 

portfolio will include a decent amount of non-financial assets, including gold.

If you’re looking for a store of value that will help diversify your portfolio, it’s 

important to remember that gold isn’t a get-rich-quick investment. Yes, its value will 

continue increasing over time, but ultimately gold is used for wealth preservation. 

That is what it excels in doing. And that is why the development of gold IRAs has 

been such a boon to investors looking to safeguard their retirement savings.

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Why the World’s Central Banks hold Gold – In their Own Words

Collectively, the central bank sector claims to hold the world’s largest above ground gold bar 

stockpile, some 33,800 tons of gold. Individually within this group, some central banks claim to 

be the top holders of gold bullion in the world, with individual holdings in the thousands of tons 

range.

This worldwide central bank group, also known as the official sector, spans central banks (such 

as the Deutsche Bundesbank), international monetary institutions (such as the Bank for 

international Settlements) and national monetary authorities (such as the Saudi Arabian 

Monetary Authority – SAMA). 

These institutions hold gold as one of their reserve assets. Any gold held by a central bank as 

a reserve asset is classified as monetary gold. In addition to monetary gold, central bank 

reserve assets include such things as foreign exchange assets (such as US Dollars) and IMF 

Special Drawing Rights (SDRs). In general, reserve assets held by central banks are managed 

according to the criteria of safety, liquidity and return. 

Given that central banks don’t generally divulge the gold that they lend, swap or otherwise use 

as collateral, the question as to whether the official sector holds 33,800 tons of gold, or far less 

than that amount, is debatable. But for the purposes of this discussion, the amount of gold that 

the central banking sector holds is not important.

This discussion focuses on why central banks hold gold. This discussion also uniquely draws 

on actual responses from many of the world’s largest central banks as to why, in their own 

words, they hold gold. While the common reasons for central banks holding gold range from 

store of value, to financial insurance, to asset diversification, we thought its best to let the actual 

gold holding central banks state their case.

Taking the list of official sector gold holders compiled by the World Gold Council (which 

uses IMF data sourced from the individual banks), the Top 40 gold holders on this list were 

identified. While most of the Top 40 gold holders are national central banks or equivalent, there 

are also a small number of international monetary institutions in the Top 40, namely, the Bank 

for International Settlements (BIS), the European Central Bank (ECB), and the International 

Monetary Fund (IMF). A similar question was sent out to each bank and institution. The question 

was:

“in the context that central banks hold gold as a reserve asset on their balance sheets, 

can Central Bank X clarify the main reasons why it continues to hold gold as a reserve 

asset?”

The central banks which responded to this question with constructive or definitive answers were 

as follows:

Germany

Germany’s Deutsche Bundesbank, which is most famous recently for repatriating gold from New 

York and Paris, but which still stores gold in London and New York, placed a particular 

emphasis on gold’s high liquidity, as well as gold’s powerful role in financial crises and 

emergencies:

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“The part of the Bundesbank’s gold reserves which is to remain abroad could be

activated in an emergency. Therefore, one part will remain in New York following 

completion of the relocation – the United States has the most important reserve currency 

in the world – and one part in London, the world’s largest trading center for gold.

In the event of a crisis, the gold could be pledged as collateral or sold at the storage site 

abroad, without having to be transported. In this way, the Bundesbank could raise 

liquidity in a foreign reserve currency. However, these are purely precautionary 

measures as we are not expecting this kind of contingency scenario at the current time.

Gold is a type of emergency reserve which can also be used in crisis situations when 

currencies come under pressure.”

Austria

In neighboring Austria, the Oesterreichische Nationalbank (OeNB), Austria’s central bank, also 

mentioned the liquidity characteristics of gold, its benefits in a crisis, and also gold’s 

diversification benefits. 

“Gold is an essential part within our strategy for crisis prevention and crisis handling 

and is held as liquidity reserve but is also a means to diversity our investments.” 

Switzerland

Staying in the region, Switzerland’s central bank, the Swiss National Bank (SNB) highlighted the 

diversification and risk optimization benefits of gold, responding that the National Bank holds 

gold because:

“As part of a good diversification of currency reserves, a certain proportion of gold can 

help reduce the balance sheet risk. The Swiss Federal Constitution, art. 99 stipulates that 

the SNB has to hold a part of its currency reserves in gold.

Article 99 of the Swiss Constitution in part says that “the Swiss National Bank shall create 

sufficient monetary reserves from its profits; a part of these reserves shall be held in gold“. 

Fritz Zurbrügg’s speech cited by the SNB, which was mostly a politically loaded SNB attack 

against the 2014 Swiss gold referendum more than anything else, says in part that gold 

reserves can be used in crisis management and that the SNB’s gold is “stored in multiple 

locations for reasons of risk diversification“. 

Poland

The Polish central bank, Narodowy Bank Polski (NBP), provided a very detailed answer to 

covering gold’s lack of credit risk and counterparty risk and its finite supply, as well as gold’s 

safe haven and diversification benefits: The NBP said that:

“Gold, due to its attributes is a quite specific asset, and traditionally has been an 

important component of central bank’s foreign reserves.

The main features which support the unprecedented role of gold at the same time 

constitute the rationale for holding gold within central bank’s reserves. These are: lack of 

credit risk, independence from any country’s economic policy, limited size of the 

resource, physical features such as durability and almost imperishability.

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Additionally, gold has been constantly perceived as a safe haven asset, and is 

particularly desirable in crisis times, when gold prices increase while other core assets’ 

prices have a downward tendency.” 

Sweden

Moving north to Sweden, the Swedish Riksbank, the world’s oldest central bank, responded to 

with an explanation that its holds gold for liquidity, foreign exchange intervention, and 

diversification reasons:

“In brief, gold is a financial asset that, like the currency reserve, aims to ensure that the 

Riksbank can carry out its tasks. The gold can, for example, be used to fund liquidity support or 

foreign exchange interventions.

The main reason why Sweden still has a gold reserve is because the value of gold does 

not normally follow the same pattern as the value of the currency reserve. Consequently, 

the combined value of the gold and currency reserve is more stable than the value of the 

gold reserve and the currency reserve separately.”

Greece

Elsewhere in Europe, the Bank of Greece, Greece’s central bank, holds gold because of its safe 

haven and high liquidity characteristics during crises, crises which notably the Bank of Greece 

has faced plenty of in the recent past:

“The two main reasons central banks, including the Bank of Greece (typically prudent-oriented 

organizations), choose to include gold as a reserve asset on their balance sheets, are: 1) its 

recognition as a safe haven asset during periods of markets’ unrest and 2) the ability of instant 

liquidation in case of emergency.”

Portugal

The Bank of Portugal, the Portuguese central bank, kept its answer generic, and seemed to 

speak on behalf of central banks in general, covering the main arguments why central banks as 

a group hold gold:

“Gold reserves are kept by Central Banks mostly for safety, liquidity, return and as a 

diversification strategy. Gold compares extremely favorably to other traditional reserve 

assets with high-quality and liquidity helping Central Banks to preserve capital, diversify 

portfolios, mitigate risks and on the medium/long-term Gold has consistently 

outperformed the average returns of other alternative financial assets.” 

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A Bank of England Gold Vault

UK Treasury

The United Kingdom’s official gold holdings are held in the name of HM Treasury, and not, as 

sometimes thought, in the name of the Bank of England. The Bank of England is custodian of 

the HM Treasury gold as well as custodian for the gold of many nations, including many of the 

central banks mentioned in this article. HM Treasury.

“The Government’s official holdings of international reserves comprise gold and foreign currency 

assets, and (IMF) Special Drawing Rights (SDRs).

HM Treasury appoints the Bank of England as its agent to carry out the day-to-day 

management of the international reserves. The Bank of England’s ‘Handbook on Foreign 

Exchange Reserves Management’ sets out the traditional reasons for countries holding gold in 

their foreign exchange reserves.”

Looking at this Bank of England Handbook, a section titled “The Role of Gold” sums up the UK’s 

traditional reasons for holding gold:

• the “war chest” argument – gold is seen as the ultimate asset to hold in an emergency 

and in the past has often appreciated in value in times of financial instability or 

uncertainty;

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• the ultimate store of value, inflation hedge and medium of exchanges – gold has 

traditionally kept its value against inflation and has always been accepted as a medium 

of exchange between countries;

• no default risk – gold is “nobody’s liability” and so cannot be frozen, repudiated or 

defaulted on;

• gold’s historical role in the international monetary system as the ultimate backing for 

domestic paper money.

While the BoE author (John Nugée) questions if gold is suitable for the reserve management 

strategies of all central banks, he concludes that:

“The traditional view of gold as the ultimate asset still carries weight, and gold also 

provides an excellent diversification for currency assets; over the very long run there is a 

significant negative correlation between gold and other assets and a portfolio containing 

gold will show lower volatility over several business cycles.

Moreover central banks can increasingly manage their gold holdings to enhance returns 

through gold lending, gold swaps, collateralized borrowing, and so on. “

Notably, apart from South Africa’s answer below, the Bank of England paper is the only 

reference to gold lending and gold swaps in all the correspondence and references generated 

by these central bank responses. But it is not surprising that the Bank of England mentions gold 

lending and gold swaps, since the Bank of England is the world’s center for these particular 

central bank activities.

Australia

Responding from Sydney, the Reserve Bank of Australia (RBA) views gold as financial 

insurance and to some extent as a form of asset diversification:

“The principal reason the Bank continues to hold some gold is as a contingency against 

unforeseen events. You may be aware that in 1997 the Bank sold 167 tons of gold, 

reducing its holdings from 247 tons to 80 tons after it was concluded that the gold 

holdings provided fewer diversification benefits than some other reserve assets.”

Romania

Romania’s central bank, the National Bank of Romania (BNR) advised consulting its 2016 

annual report:

From this annual report, there are a number of reasons stated as to what the National Bank of 

Romania holds gold as a reserve asset:

“The gold reserve is meant, inter alia, to enhance confidence in the stability of the 

Romanian financial system and of the leu, being particularly useful in times of 

heightened economic turmoil (domestically or abroad) or geopolitical tensions.

Unlike other asset types, gold has no solvency risk attached, because it is not “issued” 

by an authority (such as a government or a central bank).“ 

Philippines

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Bangko Sentral ng Pilipinas, the Central Bank of the Philippines, also highlighted the themes of 

gold as a safe haven asset and as a portfolio diversifier, as well as an inflation hedge:

“The BSP, like other central banks, holds gold as reserve asset for the following reasons:

Diversification. By diversifying its reserve assets to include gold, the BSP is in a better 

position to manage risks and promote stability since gold is not directly influenced by 

economic shocks and policies. Moreover, its supply and demand are independent from 

the factors affecting the value of other reserve assets components.

Security. Gold is a real asset and bears no counterparty or credit risk. In times of 

uncertainty, gold is considered a safe-haven asset.

Inflation hedge. When inflation and inflation expectations are high, gold is considered a 

hedge against accelerating asset prices. Central banks buy gold to protect their 

currencies’ purchasing power in the event of an inflation.

Moreover, since the Philippines is a gold-producing nation, the BSP can purchase gold 

from small-scale miners, refine and cast these into gold bars (good delivery bars) that 

would qualify as reserve asset. Therefore, it can build up its gold reserves without 

relying too much on external purchases that would have to be paid for in foreign 

exchange.”

South Africa

The Reserve Bank of South Africa (SARB) provided what is probably the most comprehensive 

answer of all the central banks polled, possibly a model text book answer. SARB said that:

• the SARB as a central bank can be viewed as a “traditional gold holder” which has inherited 

gold reserves as part of a legacy and has over time kept its level of gold reserves unchanged to 

support a broad country strategy. South Africa being one of the main gold producers in the 

world, it is appropriate for the SARB to hold part of its official reserves in gold to confirm the 

country’s confidence in the metal.

More in general and similar to many other central banks, the rationale for SARB [holding 

gold] remains:

• Gold acts as a store of value in times of crisis and is therefore seen as a safe-haven for 

capital preservation

• Gold acts as a hedge against inflation. In other words, the price of gold tends to increase 

as inflation rises

• Gold provides some diversification to official reserves – it’s rather low correlation with 

government bonds and money-market instruments

• Gold has an intrinsic value and as a result it is nobody’s liability. As a unique asset 

class, it is not influenced by a country’s economic policy and outlook

• Although short-term gold lending rates are currently very low, this has not always been 

the case and these rates may increase again, suggesting that it may not forever remain a 

non-income earning asset. In addition, when investing for longer time periods, gold 

loans earn positive, albeit low, returns when compared to other asset classes

• Gold reserves can be regarded as insurance against unlikely, but extremely damaging 

events, such as the collapse of financial systems or debt default by major sovereign 

nations

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Brazil

Banco Central do Brasil, the Brazilian central bank, referenced reserve diversification and store 

of value.

“The asset allocation of the Brazilian foreign reserves, including Gold, is a strategic 

decision of the Board of Governors. But, according to some Central Banks best 

practices, Gold as a commodity may be used as storage of value and to diversify their 

foreign reserves portfolio.”

Libya

While there is some skepticism as to how much gold the central bank of Libya actually has in 

the aftermath of its recent invasion, the Banque du Liban provided an interesting response on 

why it still holds gold, i.e. that its prevented by law from selling its gold holdings:

“When the LBP [Libyan Pound up to 1971] was very strong versus the USD in the early 

seventies ,Banque du Liban bought a large portion of its gold reserves what was very 

wise as the ounce price was around 42 USD.

Then after the turmoil that plunged the country into war and chaos and in order to 

preserve the reserves, the parliament issued a law preventing Banque du Liban from 

trading on gold and consequently from selling the existing reserves. The law is still in 

force and Banque du Liban is holding now the 15th largest gold reserves worldwide.” 

European Central Bank (ECB)

The ECB responded actually addressing the question and by citing references which not not 

address the question either. This deflection strategy is not unknown in ECB press conferences. 

The ECB said that:

“We would like to refer you to our related press release ECB and other central banks announce 

the fourth Central Bank Gold Agreement as well as to our web page Foreign reserves and own 

funds.”

The only reference the 4th central bank gold agreement (which was between the ECB and 

European central banks) makes to gold reserves is that “Gold remains an important element of 

global monetary reserves “, but does not say why. Interestingly, the ECB’s ‘Foreign Reserves 

and own Funds” page states that “The ECB’s foreign reserves [which include gold] ensure that 

the ECB has sufficient liquidity to conduct foreign exchange operations if needed.”

These “foreign exchange operations” are, according to the ECB, mainly foreign exchange 

interventions, which can be unilateral or concerted (ECB member banks together) and can be 

centralized (directed by the ECB) or decentralized (carried out by the member banks on behalf 

of the ECB). So, is ECB gold being used as liquidity in foreign exchange operations? The 

Swedish Riksbank mentioned this use of gold, so it might be an operational tactic of the ECB 

also.

A number of banks, although they responded, said that they could not comment on the reasons 

they hold gold. This secretive approach isn’t very logical and is even more surprising given that 

some of the banks which took this approach are all from otherwise progressive and advanced 

OECD economies.

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Spain

The Banco de España, which is a member of the ECB’s Eurosystem alongside such central 

banks as the Portuguese, German and Austrian central banks, seemed to be particularly 

secretive as to why it holds gold.

“We do not make public comments on the reserve assets policy of the Banco de Espana so 

unfortunately we cannot help you in your query.”

Singapore

Likewise, the Monetary Authority of Singapore (MAS), , responded that:

“As a matter of policy, we do not comment on our reserve composition. Hope you can 

understand.

Japan

Similarly, the Bank of Japan (BoJ) took a secretive approach:

“Regarding your inquiry on our gold asset, we cannot disclose any information other than the 

information published on our website due to our confidentiality policy.”

However, looking at the Bank of Japan website, there is nothing material on the site addressing 

why the BoJ continues to hold a very large amount of gold.

Bank for International Settlements (BIS)

The BIS, headquartered in Basel, Switzerland, is commonly known as the central banker’s 

central bank. The BIS is also infamously known for organizing and plotting gold price 

suppression and gold market interventions through its various Gold Pool cartels. As well as 

holding gold in its own name, the BIS holds gold on behalf of other central banks. Perennially 

secretive, it was not surprising that the BIS refused to answer, but at least they replied. The BIS 

said:

“We do not comment on specific accounts/holdings of central banks or of the BIS. Please see 

our latest Annual Report and the monthly financial statements on our website for details on gold. 

Further information can be gleaned from central banks directly and there is some discussion of 

gold reserves in BIS Paper 40 (Section 2) and BIS Paper 58.” 

While there is some discussion of gold in BIS Papers 40 and 58, there is no discussion for the 

reasons why central banks hold gold as a reserve asset.

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Bank for 

International Settlements (BIS) – The central bankers’ central bank

Survey Methodology

The cutoff point for this survey was the Top 42 gold holding central banks in the world, as this 

allowed the inclusion of Australia and Brazil, both of which are large gold holders and both of 

which are also large domestic gold producers. Between them, these 42 central banks and 

monetary institutions claim to hold 32,075 tons of gold, which is 95% of the 33,790 tons of gold 

claimed to be held by the 100 central banks on the World Gold Council list.

Of the central banks and institutions contacted, 21 replied with definitive responses. Arguably, 

this is quite a high response rate given that it was surveying a diverse cross-section of central 

banks from around the world on a subject which central banks are traditionally quite secretive 

about. Of the central banks in the Top 42 list, emails were sent to all of those that were 

contactable by email. In a few cases a web contact form was used.

Five central banks were not contactable as they did not have any obvious email address or web 

contact form. These banks were from Lebanon, Venezuela, Mexico, Taiwan and China. The 

Chinese People’s Bank of China is notoriously difficult to contact.

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Four central banks had a bounce back on the email addresses stated on their websites. These 

were the central banks of Algeria, Egypt, and Indonesia. None of the three banks contacted by 

web form responded. These were the central banks of India, Turkey, and Saudi Arabia.

Not surprisingly, banks from more developed and democratic countries have a more transparent 

means of being contacted and they maintain media and communications staff. Therefore, it is 

logical that these banks are more likely to have responded.

Of the 9 central banks and institutions which did not respond within a reasonable time-frame, 

they were then re-contacted, asking them had they had time to look at the query. Nearly all 

these banks still did not reply. These institutions were the US Treasury, and central banks from 

the Russia Federation, South Korea, Kuwait, Kazakhstan, Belgium, Netherlands, Thailand, and 

Italy.

Its notable that the US Treasury, which claims to have the largest official gold reserves in the 

world, 8133 tons of gold, did not respond as to why it supposedly holds the largest gold 

reserves in the world. These supposed US gold reserves are as large as the gold reserves of 

the next three countries combined (Germany, Italy and France).

The IMF, headquartered in Washington DC, sent a generic reply to say that they had received 

the query, but they never responded. The Central Bank of Iraq received the query, forwarded it 

to their operations department, but there was no subsequent response.

Some of these non-responding banks have ‘reasons we hold gold’ sections on their websites or 

in their annual reports, so for anyone interested, those information sources could be consulted.

Conclusion

In their own words, the reasons central banks hold gold in large quantities are many folds, 

however there are consistent themes in the central banks’ explanations. Many of the 

respondents cited gold’s ability to be mobilized in a crisis, that ‘gold holdings can be activated in 

an emergency’, that gold is an ‘emergency reserve in a crisis’, ‘a contingency against 

unforeseen events’, a form of ‘insurance’, or as the Bank of England says ‘a war chest’ and the 

‘ultimate asset to hold in an emergency’. As such, nearly all central banks referred to gold as a 

safe haven asset.

Many central banks mentioned gold’s high liquidity, and some referred to the ability to use their 

gold to raise liquidity in a foreign currency, even for foreign exchange intervention.

Gold’s role as a hedge against inflation was cited in several of the central bank answers, which 

explains why central banks look to the gold price as a barometer of inflation expectations.

Many of the banks also pointed out that because of the unique attributes of physical gold, such 

as limited supply and mined into existence, gold does not have any counterparty risk or credit 

risk, and because it is not issued by governments, it has no default risk.

The return generating potential of gold was also cited by a few central banks via the use of gold 

lending, gold swaps and the use of gold as collateral. Interestingly, very few of the banks that 

responded directly mentioned gold lending, although many of these central banks do engage in 

gold lending. This highlights the absolute secrecy surrounding all data relating to the gold 

lending market which is centered in London at the Bank of England and also through the Swiss 

National Bank in Berne and the Banque de France in Paris.

Many of the respondents also highlighted gold’s portfolio diversification benefits. Because its 

price is not affected by economic events in the same way as the prices of financial securities, 

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the gold price is not highly correlated with the prices of other assets. Gold therefore brings 

stability to a reserve asset portfolio.

With such widespread support among the world’s central banks for holding physical gold, as a 

safe haven, as an inflation hedge, and as a form of investment diversification, their enthusiasm 

for gold in 2019 and beyond looks as strong as it has ever been in any decade of the modern 

era.

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