Washington Agreement Gold

> Slovenia became a party to the agreement on 2 December 2006, just before the introduction of the euro as a currency. The signatory banks accounted for about 45% of the world`s gold reserves. In addition, a number of other major owners – including the United States, Japan, Australia, the IMF and the Bank for International Settlements – were either informally associated with the agreement or announced at other times that they would not sell gold. Central banks are committed to being stable market managers, especially when it comes to their own investment behaviour. The sudden and brutal fluctuations in the price of gold before the first CBGA show what a world without agreement could look like. The agreements have provided the gold market with much-needed transparency and a commitment from global central banks not to participate in uncoordinated wholesale gold sales. Gold had been used as silver for thousands of years until the gold standard of a Fiat monetary system was abandoned in 1971. Since then, gold has been used as an installation. Gold is often classified as a commodity; But it behaves more like a currency. Yellow metal is very weakly correlated with other raw materials and is less used in the industry.

Unlike national currencies, yellow metal is not linked to a given country. Gold is a global asset of monetary policy and its price reflects global sentiment, but it is mainly influenced by U.S. macroeconomic conditions. During this period, the signatories of this agreement agreed that the total amount of their “goldleasings” and the total amount of their use of gold futures and options will not exceed the amounts in force on the date of the signing of the previous agreement. This agreement will be reviewed after five years. > The United Kingdom signed the first agreement, but not the second after declaring that it had no intention of selling its gold reserves. Since 1999, the global gold market has grown considerably in terms of maturity, liquidity and investor base. The price of gold has increased five-fold over the same period.

The signatories have not sold a significant amount of gold for nearly a decade, and central banks and other official institutions in general have become net buyers of gold. The last extension of the agreement was in 2014. The central bank`s fourth gold deal is different from its predecessors because it does not limit gold sales. Instead, the signatories (expanded by the central banks of Estonia and Lithuania) agreed to “coordinate their gold transactions to avoid market disruptions.” They also found that they “currently have no plans to sell large quantities of gold.” As always, central banks stressed that “gold remains an important part of the world monetary reserve” and that the agreement will be “reviewed after five years.” While the removal of the quantitative cap for annual gold sales may seem worrisome, it means that official gold sales are generally over.

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