Is the RBA gold vault empty?

From unofficial statements made by various RBA staff, all of the gold is out on loan.

How did the RBA get into a position where the gold holding on their financial statements, stated to be 79.8 tonnes, doesn’t really physically exist?

As usual for central banks, in the past the RBA have been loaning their gold to fund things like mine development with the view that the lender would deliver the gold back to the bank at a later date.

If the gold price goes up, the lender is better off to repay the loan in cash rather than bullion.

For accounting reasons, the RBA still has almost 80 tonnes of gold, but it’s really only paper gold

Example:

In 1999, ABC mining needs $30 million to fund the development of their new mine.

The RBA lends ABC Mining $30 million worth of physical bullion from their vault (100,000 oz) at $300 per ounce plus interest (usually about 1.5%) for 5 years.

ABC Mining takes delivery of the bullion (100,000 oz) and sells it on the market at the spot price ($300/oz in 1999) to raise $30 million and fund their mine development.

In 2004 ABC Mining needs to repay the gold loan, but the spot price for gold has risen to $600 per ounce. Instead of delivering 100,000 oz of bullion back to the bank (value $60 million) they pay the loan out with cash, plus the interest.

The World Gold Council states that in countries around the world, the official gold holding of central banks is almost 30,000 tonnes of gold in reserve, but the question remains, how much is really there (physical gold not paper gold for accounting reasons)?

Gold Report Australia

NB: the gold price in the example has been estimated for ease of understanding