Rob Daamen, chairman of SPVG, the Dutch pension scheme that has been forced to sell most of its 13 per cent stake in gold by the Dutch central bank (DNB), has described the order as "weird", and questioned why it took the bank so long to notice the scheme's holding in bullion.
SPVG, a Dutch pension scheme with just over 1100 members, was told by DNB to sell when it submitted its latest recovery plan to DNB. When the scheme opposed the sale the governing body decided to go to court, which found in favour of DNB on 10 February 2011.
The pension scheme first bought the gold in 2008 and since then the price has gone up from 600 to 1000 Euros per ounce. The scheme now owns 34.6m Euros in gold, stacked away in Australia.
Daamen said that the scheme would do what the court has told it to do but that it would be appealing against the decision.
"It is weird how the bank was not there to tell us our investment was wrong when we made it in 2008," he said.
"They could have seen it long before when our investment percentage was also higher than three per cent. Instead they did not notice until we handed in a plan for recovery. This is when the bank noticed but they should have told us before, they should have noticed before. When fighting the case in court the reasoning of DNB to make us sell our gold just wasn't sufficient."
"We do not trust investments in equity that is why we go for government bonds, as we will have to do now," he added.
Most of the rest of the scheme's assets are invested in government bonds, mostly German and Dutch. Two per cent is invested in currency.
DNB claims that investment of such amounts in gold is too risky; the price of gold fluctuates too much for it to be classified as an investment and that it does not share the risk analysis of the pension scheme. The bank ordered the scheme to sell its gold within two months. It did not comply with the prudent-person rule with which pension schemes have to adhere in the interest of its members.
However, the scheme says the gold was kept as a security against the instability of the Euro and there is only one obligation the scheme has to consider; to pay members upon retirement. It has no risky investments such as equity and holds gold as a back-up against the dangers of a turbulent Euro market and rising inflation.
azeevalkink@wilmington.co.uk
