Gold is the most maligned asset, if you listen to the Fed, the ECB, and other central banks. This was driven home again in a variety of ways, including what transpired before the Swiss gold referendum and Mario Draghi’s “all assets but gold” declaration. So I asked a man who knows, Fabrice Drouin Ristori, Founder and CEO of, why the heck central banks react toward gold in that bizarre manner.


WOLF: On November 30, the Swiss voted down the proposal presented in the “gold referendum.” Was there anything peculiar about the process?

FABRICE: The Swiss National Bank and most Swiss media campaigned for the NO side, which is quite unexpected in a democratic process. There are two lessons to be learned from this referendum: One, this campaign clearly shows that gold is the banking and financial system’s enemy #1 in Western countries, since a return to a gold standard would limit their money creating capacity, thus their power. And two, people in Western countries have lost awareness of what a monetary system based on true money is. The Swiss have now joined this category despite their long experience with the gold standard.


WOLF: Following the ECB’s decision to delay any QE till next year, Mario Draghi said that in terms of asset purchases, the ECB had discussed “all assets but gold.” Why would the ECB consider buying all assets – including “old bicycles,” as German politician Frank Schäffler had said so poignantly in July 2012 – but not gold?

FABRICE: The central bankers’ discourse is systematically anti-gold. Draghi’s announcement just confirms the fact that the ECB along with other Western central banks consider gold as their main enemy. In a gold-standard environment, they would lose the capacity of printing money, and they don’t want to give up this power.

Over the last few months, it has gotten quite difficult to purchase physical gold in large quantities, as proven by the backwardation phenomenon, when the Gold Forward Offer Rate is negative [GOFO is the interest rate at which participants are willing to lend gold on a swap against US dollars]. If the ECB were to buy physical gold in the markets it would create havoc on spot prices. And a rising gold price brings investors and economic agents to seriously question the stability of paper currencies. They might even abandon paper currencies in favor of tangible assets. To avoid that whole chain reaction, the ECB refuses to buy gold as part of its QE program.


WOLF: There have been a slew of countries trying to repatriate some of their gold, among them Venezuela, Germany, and the Netherlands. Seems easy enough, but some of these countries have a hard time repatriating their gold. What’s the deal?

FABRICE: Gold has been stored mainly in the United States and London in order to protect the gold reserves during times of conflicts – the Cold War, for example – and/or to improve the liquidity of their gold reserves by moving them closer to the large trading centers.


> Read the full interview here

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