http://harveyorgan.blogspot.com/2013/01/discussion-on-german-repatriation-of.html
WEDNESDAY, JANUARY 16, 2013
Discussion on German repatriation of it's official gold reserves
Good evening Ladies and Gentlemen:
Gold closed down slightly to the tune of 70 cents to finish the comex session at $1682.70. Silver finished the day up 2 cents to $31.52. The bankers never like gold to advance for two consecutive days and thus everybody know that they would try and suppress these two metals. However both of these metals climbed back from deeply in the red to basically trade at par.
The big news event is the official release of the Bundesbank's repatriation of gold. What surprised most was the speed of repatriation: 7 years. Why so slow?
I believe that Germany knows full well that the gold is gone and that they are giving time to the USA to mine gold and sent it off to Germany.
The big question to Germany is this: If they retrieve only a tiny portion each year, what will stop major countries like the Netherlands, asking for it's metal right now and thus jumping queue ahead of Germany in repatriating gold reserves?
I will provide any discussions on this topic tonight as without a doubt this is the most important event of the decade. However before we get into these details ...................................................
Gold closed down slightly to the tune of 70 cents to finish the comex session at $1682.70. Silver finished the day up 2 cents to $31.52. The bankers never like gold to advance for two consecutive days and thus everybody know that they would try and suppress these two metals. However both of these metals climbed back from deeply in the red to basically trade at par.
The big news event is the official release of the Bundesbank's repatriation of gold. What surprised most was the speed of repatriation: 7 years. Why so slow?
I believe that Germany knows full well that the gold is gone and that they are giving time to the USA to mine gold and sent it off to Germany.
The big question to Germany is this: If they retrieve only a tiny portion each year, what will stop major countries like the Netherlands, asking for it's metal right now and thus jumping queue ahead of Germany in repatriating gold reserves?
I will provide any discussions on this topic tonight as without a doubt this is the most important event of the decade. However before we get into these details ...................................................
Let us now head over to the comex and assess trading today.
The total comex gold OI rose by 6935 contracts from 440,838 up to 447,773. It seems that the bankers supplied the necessary non backed paper. The non active delivery month of January saw it's OI rise by 1 contract from 95 up to 96. We had 0 notices filed yesterday so in essence we gained 1 contract or additional 100 oz of gold will stand for January. The next big active month is February which is 2 weeks away. Here the OI rose by 5295 contracts from 195,146 up to 200,441. The estimated volume today at the gold comex was fair at 167,333.. The confirmed volume yesterday also came in around the same ballpark at 174,043.
The total silver comex OI continues to hover around the 140,000 mark. Today the OI rests at 140,433 compared to yesterday's level of 140,255 for a gain of 178 contracts. The non active January contract month saw it's OI rise by 2 contracts from 43 up to 45. We had 9 delivery notices filed yesterday so again we gained 11 contracts or an additional 55,000 oz of silver will stand for January delivery.
The next big active contract month is March and here the OI fell by 286 contracts from 75,512 down to 75,226. The estimated volume at the silver comex today was extremely weak at 28,230. The confirmed volume yesterday was much better at 52,485.
The total comex gold OI rose by 6935 contracts from 440,838 up to 447,773. It seems that the bankers supplied the necessary non backed paper. The non active delivery month of January saw it's OI rise by 1 contract from 95 up to 96. We had 0 notices filed yesterday so in essence we gained 1 contract or additional 100 oz of gold will stand for January. The next big active month is February which is 2 weeks away. Here the OI rose by 5295 contracts from 195,146 up to 200,441. The estimated volume today at the gold comex was fair at 167,333.. The confirmed volume yesterday also came in around the same ballpark at 174,043.
The total silver comex OI continues to hover around the 140,000 mark. Today the OI rests at 140,433 compared to yesterday's level of 140,255 for a gain of 178 contracts. The non active January contract month saw it's OI rise by 2 contracts from 43 up to 45. We had 9 delivery notices filed yesterday so again we gained 11 contracts or an additional 55,000 oz of silver will stand for January delivery.
The next big active contract month is March and here the OI fell by 286 contracts from 75,512 down to 75,226. The estimated volume at the silver comex today was extremely weak at 28,230. The confirmed volume yesterday was much better at 52,485.
Jan 16.2013 The January contract month
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
289.75 (Brinks)
Deposits to the Dealer Inventory in oz
0 (nil)
Deposits to the Customer Inventory, in oz
3,279.3 (HSBC)
No of oz served (contracts) today
0 (nil)
No of oz to be served (notices)
96 (9,600 oz)
Total monthly oz gold served (contracts) so far this month
902 (90,200 oz)
Total accumulative withdrawal of gold from the Dealers inventory this month
17,799.16
Total accumulative withdrawal of gold from the Customer inventory this month
316,767.55 oz
****
January 16.2013: The January silver contract month
Silver
Ounces
Withdrawals from Dealers Inventory nil Withdrawals from Customer Inventory 20,980.98 oz (Brinks,Delaware) Deposits to the Dealer Inventory nil Deposits to the Customer Inventory 1,776,411.621 oz (CNT,HSBC,Scotia) No of oz served (contracts) 22 (110,000 oz) No of oz to be served (notices) 23 (115,000 oz) Total monthly oz silver served (contracts) 672 (3,360,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month 2,465,925.6 Total accumulative withdrawal of silver from the Customer inventory this month 3,198,585.7
*****
Today we finally get official release of the Bundesbank's plan to repatriate gold.
The 374 tonnes of gold stationed in Paris will be returned in stages as both Germany and France use the same currency, the Euro and thus the gold in France does not have any benefit. It could easily be returned by road to Frankfurt. They state that they are repatriating gold in case of systemic risk or currency crises.
The Bundesbank is set to retrieve a little over 300 tonnes of gold from the USA over a space of 7 years or approximately 32 tonnes per year. All of the entire English gold at the Bank of England is to be remain there and not one ounce is to be returned.
By 2020, approximately 50% of German reserves are held in Germany and 50% abroad with NY holding 37% of reserves and England 13%.
Bundesbank Repatriates Gold – Shows Importance Of Possession Or Allocated Storage
-- Posted Wednesday, 16 January 2013 | | Source: GoldSeek.com
Today’s AM fix was USD 1,679.75, EUR 1,262.78 and GBP 1,047.55 per ounce.
Yesterday’s AM fix was USD 1,681.00, EUR 1,257.67 and GBP 1,045.92 per ounce.
Cross Currency Table – (Bloomberg)
Gold climbed $10.50 or 0.63% in New York yesterday and closed at $1,678.90/oz. Silver surged to a high of $31.382 in Asia before it fell back to $31.02 in London, but it then rose to as high as $31.503 in New York and finished ended with a gain of 1.06%.
Gold was flat and close to a 2 week high it hit in the prior session, while platinum reversed early losses but was also trading sideways.
This morning, the Bundesbank presented a new management plan for Germany’s 270,000 gold bars, the world’s second largest gold holdings trailing only the United States.
Germany’s central bank will repatriate part of its $200 billion gold reserves stored in vaults in the Federal Reserve in New York and the Banque de France in Paris. It is believed that the Bundesbank may have repatriated the gold in order to be prepared for a systemic crisis and currency crises.
Germany's central bank plans to retrieve some 300 tonnes of gold stored in the vaults of the Federal Reserve as well as its 374 tonnes of gold with the Banque de France.
This is an important development as it shows how gold is reasserting itself as an important monetary asset. This could lead to a further increase in investment demand in the coming months - especially in western markets where investment demand has been tepid at best in recent months.
Then with the threat of the Soviet Union and East Germany during the Cold War, the Bundesbank was happy to leave their gold reserves in the Federal Reserve, BOE and in Paris. Now a more confident Germany but one which is very concerned about the euro crisis nonetheless wishes to store their gold reserves in Germany.The move comes about after the exertion of a lot of political pressure by the German people, press and politicians who are concerned about the eurozone debt crisis and continuing debasement of the euro.
XAU/EUR Exchange Rate, 2008-2013 – (Bloomberg)
Spiegel, a German weekly, reported last year that some in Germany had been campaigning for the repatriation of the country’s gold bars.Called the “Gold Action” initiative, the campaign warned that there is an acute danger that German gold could be expropriated as a result of the global financial and debt crisis, and activists are concerned that the German government – also the eurozone’s paymaster – could soon be forced to sell its gold to cover the costs of the crisis.
Besides the location of the gold, there were also concerns about the nature of the gold.
The German Court of Auditors told legislators that the gold had "never been verified physically" and ordered the Bundesbank to secure access to the storage sites. It called for repatriation of 150 tons over the next three years to test the quality and weight of the gold bars. It is said that Frankfurt has no register of the numbered gold bars according to TheTelegraph.
It shows a growing lack of trust in the U.S. Federal Reserve and a lack of trust amongst the central banks themselves. It is likely to lead to a further decline of trust in the U.S. dollar.
Significantly, the development is being picked up very widely in mainstream, non specialist financial press and media who rarely cover gold. Therefore, an entire new audience is realising how central banks increasingly value gold as a monetary reserve.
Yesterday, PIMCO (@PIMCO) co-founder and the largest bond manager in the world, Bill Gross tweeted:
His tweet was retweeted 276 times and favourited 31 times.Daily Telegraph News in the UK tweeted (@TelegraphNews )
"Extraordinary breakdown in trust between leading central banks" leads Bundesbank to pull gold from New York and Paris
The Telegraph’s tweet was retweeted 184 times and also favourited 31 times.
In recent years, besides Reuters, Bloomberg, CNBC , the FT and the Telegraph in the UK, gold rarely gets covered in the non specialist financial media such as The Guardian, The Times, BBC, Sky etc and rarely in the tabloid press.
Legendary gold trader Jim Sinclair said the Bundesbank’s move “sends a message about storing gold near you and taking delivery no matter who is holding it.”
He said it is a pivotal event in the gold market and the latest warning for investors that they should keep metal bars under their physical control, rather than relying on paper contracts.
Zero hedge commenting on the official release from the Bundesbank
Note the huge delay in repatriating the gold into Germany from France and the USA
(courtesy zero hedge)
Bundesbank Official Statement On Gold Repatriation
Submitted by Tyler Durden on 01/16/2013 08:29 -0500
When we first heard about it, we thought Handelsblatt had gotten something very wrong. The implications were just so staggering. Turns out the news was spot on. Here is the official announcement from the Bundesbank, which roundly refutes all the spin the Frankfurt bank spoon-fed the people in October and November when it repeated time after time that there is nothing wrong with keeping German gold in NY and Paris, and on the contrary, it was better for everyone involved.
From the Bundesbank:
By 2020, the Bundesbank intends to store half of Germany’s gold reserves in its own vaults in Germany. The other half will remain in storage at its partner central banks in New York and London. With this new storage plan, the Bundesbank is focusing on the two primary functions of the gold reserves: to build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centres abroad within a short space of time.
The following table shows the current and the envisaged future allocation of Germany’s gold reserves across the various storage locations:
31 December 2012 31 December 2020 Frankfurt am Main 31 % 50 % New York 45 % 37 % London 13 % 13 % Paris 11 % 0 %
To this end, the Bundesbank is planning a phased relocation of 300 tonnes of gold from New York to Frankfurt as well as an additional 374 tonnes from Paris to Frankfurt by 2020.
The withdrawal of the reserves from the storage location in Paris reflects the change in the framework conditions since the introduction of the euro. Given that France, like Germany, also has the euro as its national currency, the Bundesbank is no longer dependent on Paris as a financial centre in which to exchange gold for an international reserve currency should the need arise. As capacity has now become available in the Bundesbank’s own vaults in Germany, the gold stocks can now be relocated from Paris to Frankfurt.
* * *
So it took the Bundesbank over 10 years to figure out that "the Bundesbank is no longer dependent on Paris as a financial centre in which to exchange gold for an international reserve currency should the need arise."
Well, as long as it has nothing to do with the recent political schism between socialist beggar France and the only country left in Europe that is not an all out parasite, all is well.
Finally, compare the above statement with the following from November:
Remarks On German Gold Reserves:
Please let me also comment on the bizarre public discussion we are currently facing in Germany on the safety of our gold deposits outside Germany – a discussion which is driven by irrational fears.
In this context, I wish to warn against voluntarily adding fuel to the general sense of uncertainty among the German public in times like these by conducting a “phantom debate” on the safety of our gold reserves.
The arguments raised are not really convincing. And I am glad that this is common sense for most Germans. Following the statement by the President of the Federal Court of Auditors in Germany, the discussion is now likely to come to an end – and it should do so before it causes harm to the excellent relationship between the Bundesbank and the US Fed.
Let’s get back to facts and figures: I would like to remind you that our gold reserves are part of the German currency reserves. These were accumulated over time thanks, in part, to Germany’s economic boom in the 1950s and 1960s. Germany’s growing economic strength, especially its strong external position, resulted in rather large trade account surpluses, most of them acquired in US dollars. At that time, the International Monetary System, known as the Bretton Woods System, was dominated by the US currency. As long as this system was in force, which was up until 1971, the US Fed was obliged to exchange its currency for gold.
Any current account surplus thus resulted in an increase in Germany’s gold reserves. This gold was stored in US vaults for obvious reasons [ZH: sorry, we don't have an econ PhD: what are the "obvious reasons"?]. This was not only the case for the gold hold by the Bundesbank – it was, in fact, common practice. By the way: it was the only practical thing to do, since running a trade account deficit meant a decrease in gold stocks.
Thus, we are now looking back at sixty years not only of fruitful cooperation in many fields and international fora, but also of storing gold and trading via the New York Fed. As a matter of fact,it is sensible for us to do so in New York, as Frankfurt is not a gold trading venue.
Throughout these sixty years, we have never encountered the slightest problem, let alone had any doubts concerning the credibility of the Fed[ZH may, and likely will, soon provide a few historical facts which will cast some serious doubts on this claim. Very serious doubts]. And for this, Bill, I would like to thank you personally. I am also grateful for your uncomplicated cooperation in so many matters. The Bundesbank will remain the Fed’s trusted partner in future, and we will continue to take advantage of the Fed’s services by storing some of our currency reserves as gold in New York.
At the same time, you can be assured that we are confident that our gold is in safe hands with you. The days in which Hollywood Germans such as Gerd Fröbe, better known as Goldfinger, and East German terrorist Simon Gruber, masterminded gold heists in US vaults are long gone. Nobody can seriously imagine scenarios like these, which are reminiscent of a James Bond movie with Goldfinger playing the role of a US Fed accounting clerk.
While gold is important, we have to combat a crisis of confidence in the euro area. This is the task we need to concentrate on. And we will do so.
Until we don't, three months later, and decide to repatriate said gold after all...
Bundesbank gold repatriation is like De Gaulle lifting French gold from the US in the 70s says Jim Sinclair
By: Peter Cooper, Arabian Money
-- Posted Wednesday, 16 January 2013 | | Source: GoldSeek.com
Hugely successful veteran gold trader Jim Sinclair says that the Bundesbank’s plans to repatriate German gold from New York reminds him of a similar move by the French leader General De Gaulle in the 1970s that caused a major upset in financial markets at the time and was very positive for the gold price.
‘This sends a message about storing gold near you and taking delivery no matter who is holding it,’ he warned. ‘When France did this years ago it sent panic amongst the US financial leadership. History will look back on this salvo as being the beginning of the end of the US dollar as the reserve currency of choice.’
70’s precedent
Will it be any different this time? Possibly not. Gold market observers have been waiting for a big event to break gold out of its sideways trading range. This could indeed be it.
Germany calling
Gold bugs reckon this marks a crucial step down the road towards a de facto new gold standard and possibly a new gold-backed currency from the IMF. The Chinese authorities have previously indicated their enthusiasm for this type of development and have targeted increased gold imports.
With the Japanese trying desperately to reflate their economy with a weaker yen currency markets look anything but stable, and a renewed enthusiasm for gold and silver as the ultimate currencies could happen at anytime.
Sign-up for the ArabianMoney investment newsletter to get our views on how best to invest to capitalize on these events, with 50 per cent off for subscriptions before February 20th (subscribe here).
German Gold Hijinx
I guess it all depends on how you look at it. Either this is all on the up-and-up or it isn't. Either this is a purely political show or it isn't. Either the gold is really there to be repatriated or it isn't. It's up to you to decide.
Just three months ago, The Bundesbank labeled as "lunacy" the idea that German gold needed to be brought home. They announce today that they're doing it anyway, but in sizes nowhere near what had been speculated. Is this just a political trick to mollify the German hoi polloi? Probably. It certainly doesn't upset the status quo or shake the global banking system in the manner we'd all hoped.
However, you could also choose to look at it this way:
- In preparation for The Great Reset, the Germans do desire to repatriate as much gold as possible but they also don't wish to bring about The Reset any quicker than necessary.
- So, they bring home "their French gold" but only do so at the rate of 50 tonnnes/year. Why? If it's just sitting in a vault and collecting dust, why not ship it all home over the next few weeks? What's the big deal?
- And why leave "their English gold" untouched? Is it because all gold stored at the BoE can be leased, hypothecated and rehypothecated many times over, thereby making reclaiming it impossible?
- And why bring back just 300 tonnes of "their American gold", again over the next 8 years? It shouldn't be that big of a deal to pull up a few pallets of "barbarous relic" from below the streets of lower Manhattan, drive it over to JFK and load it onto an airplane bound for Frankfurt. Should it?
Hmmmm. Maybe, just maybe, their French gold is long gone and the Frenchy-French need some time to come up with new supply to pay them back? (http://www.reuters.com/article/2009/12/22/ozabs-mali-gold-idAFJOE5BL01520091222) Maybe the English gold has all been shipped to China and other points East, where it has been resmelted into kilo bars with official Chinese insignia? (http://www.tfmetalsreport.com/blog/3924/gonefor-good) And maybe, just maybe, the American gold is nothing but paper certificates and IOUs, no more valuable than claims on the GLD? (http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/10/25_James_Turk_-_The_Entire_German_Gold_Hoard_Is_Gone.html)
Ahhhhhh....what do I know? I'm just a Turd. A dope with a MacBook. I'm sure it's all just fine. Move along. Nothing to see here. All is well. Go back to sleep.
That's all for today. I need to go take a little boat ride with all my guns and ammunition. It'll probably take most of the day. More tomorrow.
GERMANY REACTS TO THE RETIRING TREASURY SECRETARY’S PARTING SHOT
I respectfully disagree with most of the explanations given today on the why of German actions in gold. My understanding is that the causal event of this notification actually came from the actions of the US Exchange Stabilization Fund and the long term plans to strengthen the euro.
I have published a chart from Patrick showing the extreme change in the ratio of gold to fiat currency presently being held in reserve by Euroland.
First you need to understand what the Exchange Stabilization Fund is and is not. It is an account at a major gold bank in the name of the Exchange Stabilization Fund. This fund can legally trade in gold and does. The President of the USA and the Secretary of the US Treasury run this fund. Those two managers by law are permitted to designate another manager if they wish. The fund can trade long or short, borrow or lend anything. Basically this is a an account that can legally do anything it wants whenever it wants in secret as the year end statement can easily be brought to only benign activates by warehousing all the trades.
Their broker is quite an expert in that strategy to wash year-end positions for clients.
What occurred as I am told is an act in Germany in reaction to a parting shot from the retiring Secretary of the US Treasury via the Exchange Stabilization Fund.
When gold traded at $1918 it was setting up for a challenge of a very important round number, $2000. The sell off was a product of long liquidation in an anticipation of $2000 in a fast market. Gold did fall on its own weight into the $1800 area, however the body block at $1800, $1775 and $1750 was a product of the Exchange Stabilization Fund operating as an account of a major Gold Bank. Seeing that, this gold bank went to the short side for the account of its hedge funds and not wholly owned trading arm. This gold bank issued a public statement that the gold market was dead as a doornail, finished and completed.
On the level of central banking there are no secrets. The long term plan for the currency war between the euro and the dollar is a derivation of the Free Gold Thesis. That means a significant change in the percentage of fiat currency versus gold at market value held by Euroland as reserves. This thesis has a target for cooperating Asian central banks for gold holdings at no less than 15% at market value. I question some of the thesis of Free Gold thinkers, but much of it has been in my writing for more than a decade on what the end game recovery will look like.
I am told that the parting shot to break gold's back by the Exchange Stabilization Fund was considered a direct attack on the Euro strategy for what the end game recovery will look like. The Free Gold thesis requires significantly higher gold prices to work and to elevate the euro back in reserve by choice category.
The German reaction was not political but rather a direct warning that they could demand return of their gold just like DeGaulle of France did in the 60s by making a direct and immediate demand for conversion of the US dollar holdings into Gold.
A major central bank will not insult another major central bank unless it is an act of financial war. It has not come to that yet, but it is not that far away. It is 2015 to 2017 and not 2020.
The reason that gold is relatively firm after the media leak and release on the night of the 14th is that I am not the only person who knows the real story. The price of gold will go to and beyond $3500. Gold will be market to market by the majority, if not all, major central banks. This will balance the balance sheet of the many and major debtor nations and will provide the platform for recovery after unwinding.
Respectfully,
Jim
Exchange Stabilization Fund
From Wikipedia, the free encyclopedia
The Exchange Stabilization Fund (ESF) is an emergency reserve fund of the United States Treasury Department, normally used for foreign exchange intervention. This arrangement (as opposed to having the central bank intervene directly) allows the US government to influence currency exchange rates without affecting domestic money supply.
As of October 2009, the fund held assets worth $105 billion, including $58.1 billion in special drawing rights (SDR) from the International Monetary Fund.[1]
Background
The U.S. Exchange Stabilization Fund was established at the Treasury Department by a provision in the Gold Reserve Act of January 31, 1934. 31 U.S.C. § 5117. It was intended as a response to Britain's Exchange Equalisation Account.[2] The fund began operations in April 1934, financed by $2 billion of the $2.8 billion paper profit the government realized from raising the price of gold to $35 an ounce from $20.67. The act authorized the ESF to use its capital to deal in gold and foreign exchange to stabilize the exchange value of the dollar. The ESF as originally designed was part of the executive branch not subject to legislative oversight.
The Gold Reserve Act authorized the ESF to use such assets as were not needed for exchange market stabilization to deal in government securities. The Fund had no statutory authority, however, to engage in other activities that it began to undertake.[citation needed] The principal such extraneous activity it devoted itself to was lending dollars to politically favored governments.
In 1938-40, the director of the Division of Monetary Research, Harry Dexter White, worked on a proposal for loans to Latin America and participated in plans for an Inter-American Bank, which did not materialize. The plan for an Inter-American Bank, however, inspired White's first draft of the subsequent plans for the International Monetary Fund and the World Bank that White prepared in 1941 at Secretary of the U.S. Treasury Henry Morgenthau's direction.
And finally these commentaries from GATA.
The big question: why take 7 years to repatriate the gold. I would guess that the gold is simply not there and that it will take 7 years for the USA and France to provide this gold.
Now that Germany is asking for it's metal, don't you think other nations that store their gold in the USA and England will ask for their gold back.
Please study carefully, the report from Boehringer:
(courtesy GATA)
To recover just a small part of Germany's gold, Bundesbank will need 7 years
Submitted by cpowell on Wed, 2013-01-16 13:56. Section: Daily Dispatches
9:14a ET Wednesday, January 16, 2013
Dear Friend of GATA and Gold:
The Deutsche Bundesbank's plan announced today to repatriate some of Germany's gold reserves from the Federal Reserve Bank of New York is so incomplete and slow as to increase, not diminish, doubt that all the gold is really available.
Venezuela last year managed to repatriate all its gold from the Bank of England in a matter of months, but apparently the Bundesbank will need seven years to retrieve only a small fraction of its gold from the New York Fed.
Bundesbank board member Carl-Ludwig Thiele's comment today, defending such a minimal repatriation, seems silly. "If I hold gold in my own vaults, I have to check it myself," Thiele said, according to the Reuters story appended here. So, Herr Thiele, if you keep it somewhere else you don't have to check it?
Appended are the Reuters story on the Bundesbank's announcement, the full text of the Bundesbank's statement, and an incisive response from Peter Boehringer on behalf of Germany's Repatriate Our Gold campaign and the German Precious Metals Association, who notes the need for a full audit of Germany's gold that guards against impairment of the reserves through leases and swaps.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Germany's Bundesbank Brings Gold Reserves Home
By Eva Kuehnen
Reuters
Wednesday, January 16, 2013
FRANKFURT -- Germany's Bundesbank plans to bring home some of its gold reserves stored in the United States' and French central banks, bowing to government pressure to unwind a Cold War-era ploy that secured the national treasure.
Germany amassed gold reserves in the post-war era thanks to rapid economic expansion that saw growing exports to the United States, where its dollar claims were turned into gold under the Bretton Woods agreement that Germany joined in 1952.
As the Cold War set in, Germany kept its gold reserves put, keeping them out of reach of the Soviet empire. But government officials have grown uneasy about the storage set-up and have called for the Bundesbank to inspect the bars.
The Bundesbank now wants to change the arrangement too, even though it has said it does not see a need to count the bars or check their gold content itself and considers written assurances from the other central banks as sufficient.
With the end of the Cold War it was no longer necessary to keep Germany's gold reserves "as far to the west and as far from the Iron Curtain as possible," Bundesbank board member Carl-Ludwig Thiele told reporters on Wednesday.
The German Federal Court of Auditors, which oversees the government's financial management, called last October for an official inspection of the gold reserves stored at foreign central banks, because they have never been fully checked.
"To hold gold as a central bank creates confidence," Thiele said. "If I hold gold in my own vaults, I have to check it myself," he said, adding that "a complete shift is not appropriate."
Beginning this year, the Bundesbank plans to transfer 300 tonnes of gold from the Federal Reserve in New York and all of its gold stored at the Banque de France in Paris, 374 tonnes, to Frankfurt.
By 2020, it wants to hold half of the nearly 3,400 tonnes of gold valued at almost 138 billion euros -- only the United States holds more -- in Frankfurt, where it stores about a third of its reserves. The rest is kept at the Federal Reserve, the Banque de France, and the Bank of England.
The Bundesbank gained more space in its vaults after the transition to the euro from the deutschmark.
It did not want to disclose how much the gold transfers would cost and how the gold would be transported.
Before German reunification in 1990, 98 percent of Germany's gold was stored abroad. The Bundesbank then started to bring its gold home and in 2000 transferred 931 tonnes from the Bank of England to Germany. It will continue to hold about 13 percent of its gold reserves in London, even after 2020.
With the introduction of the euro, the Bundesbank sees no need to hold any reserves at the Banque de France as it will no longer need them for exchange for foreign currency.
"This is above all a historical anomaly which is now being corrected," said David Marsh, chairman of think tank OMFIF, which issued a report this month in which it foresaw growing importance for gold due to uncertainty stemming from the rise of China's renminbi as an alternative to the dollar.
* * *
Deutsche Bundesbank's New Storage Plan
for Germany's Gold Reserves
A Statement by the Deutsche Bundesbank
Wednesday, January 16, 2013
By 2020 the Bundesbank intends to store half of Germany's gold reserves in its own vaults in Germany. The other half will remain in storage at its partner central banks in New York and London. With this new storage plan, the Bundesbank is focusing on the two primary functions of the gold reserves: to build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centres abroad within a short space of time.
The following table shows the current and the envisaged future allocation of Germany's gold reserves across the various storage locations:
...................... 31 December 2012 .... 31 December 2020
Frankfurt am Main ........ 31% ................... 50%
New York ......................45% ................... 37%
London ......................... 13% ................... 13%
Paris ............................. 11% ................... 0%
To this end, the Bundesbank is planning a phased relocation of 300 tonnes of gold from New York to Frankfurt as well as an additional 374 tonnes from Paris to Frankfurt by 2020.
The withdrawal of the reserves from the storage location in Paris reflects the change in the framework conditions since the introduction of the euro. Given that France, like Germany, also has the euro as its national currency, the Bundesbank is no longer dependent on Paris as a financial centre in which to exchange gold for an international reserve currency should the need arise. As capacity has now become available in the Bundesbank's own vaults in Germany, the gold stocks can now be relocated from Paris to Frankfurt.
* * *
Statement by Peter Boehringer
on behalf of
Repatriate Our Gold
and the German Precious Metals Association
Wednesday, January 16, 2013
We welcome the Bundesbank's announcement to repatriate significant portions of Germany's gold held abroad.
All reasons cited in the past for this storage had either been false or at least outdated since 1990 (with the end of the Cold War and the theoretical military threat to the Bundesbank's domestic gold vaults).
We are also satisfied that propaganda arguments (e.g. "chauvinistic/nationalistic demands for repatriation," "repatriation too expensive," "absurd debate questioning the integrity of US/UK central banks," etc.) have not been repeated at the Bundesbank's press conference today. Actually, by announcing some repatriation, the Bundesbank has implicitly acknowledged our point of view of gold as real money and integral part of a nation's monetary reserves.
But we do not approve of the speed and volume of the planned repatriation.
The Bundesbank has just announced that it will repatriate only 675 tonnes by 2020 by then bringing the total of German gold held in Germany to approximately 50 percent (1,700 tonnes) of total German gold reserves. The Banque de France will allegedly be given up as a Bundesbank storage facility (374 tonnes) and up to 300 of 1,535 tonnes will be repatriated from the New York Fed.
In our view, there is a lot of room for speeding up and increasing the volumes for this repatriation.
In addition, the Repatriate our Gold campaign insists on proper and independent physical and full audits of the Bundesbank's own vaults in Germany. This includes the publishing of bar number lists, which has been overdue for years. These gold bar number lists are important to prove or disprove multiple ownership of specific bars which could have come about through gold loans. This is one more reason to audit and repatriate all gold bars -- as an incomplete audit and incomplete lists would not fulfill this important purpose.
To quote from the statement of purpose of the Repatriate Our Gold campaign:
"Gold has been natural money for thousands of years. It has been used throughout history either as physical coinage or as the solid cornerstone for stable paper currencies. Up until 1913 most Western societies prospered and grew steadily and naturally under a monetary standard with at least partial gold backing. The gradual abandonment of the gold backing throughout the 20th century and the ultimate delinkage of all currencies from gold in 1971 is the fundamental cause of the ongoing inflation (the U.S. dollar has lost 98 percent of its purchasing power since 1913) as well as the main reason for the global financial crises since 2007. We believe it is essential to re-introduce a partial gold backing for the world's monetary system. And to back future national currencies, the gold needs to be physically present in the respective country. Gold needs to be re-monetized -- at least on a voluntary basis as a means of payment the people are free to choose at any time.
"We therefore campaign for:
"-- Independent, full, neutral, and physical audits of the gold hoards of the world's central banks.
"-- The repatriation of all central bank gold; that is, the physical transport into the respective ownership countries."
end
And this from Mexico Mike, a GATA supporter:
Exactly what I have been telling you over the years:
(courtesy Mexico Mike/GATA)
Germany and its gold
With all the chatter about the German gold and demands for repatriation, I wonder why more of the media commentary is not asking the obvious questions. I mean right off the bat the question is, why does a rich country like Germany need to hold its gold somewhere else? Is there a problem with its own custodial capabilities? I think not and this begs the question why this situation has developed at all.Theoretically if I have $8000 in the bank, and you ask me to hold $1000 in safe keeping for you, then it should be an easy transaction for me to give you back your money anytime you wish. Where is the problem? Well, if I have spent my $8000 and also spent your money, then we have a problem indeed. This concept that Germany has asked for its gold back in instalments over several years is a clue that they know the gold is long gone.
Or, more to the point, the gold is not gone. Every bar is neatly stacked in various vaults and depositories. However, it has been sold and resold, and swapped and pledged, so many times to so many different parties, that the legitimate ownership of that gold is now in question. I believe the players involved have now come to the point where a priority is being established on who gets final claim of ownership as the game of musical chairs is coming to an end.
What if MF Global was in fact a trial balloon? What if it was collapsed and brought to light specifically to measure the intensity of the outrage from the public over such a scam? And the end result of course was a few sound bites of political showmanship and not much else. So now considering that the GLD ETF is one of the largest documented inventories of physical bullion, does anyone think it will go any other way than another MF Global scenario when the big players step up to the front of the line to get custody of the real bullion? Do people believe that countries will be denied access to their bullion held in US vaults but the inventory controlled by the GLD on behalf of small time investors will be secure? When the hedge funds and pension funds and any other players foolish enough to buy the paper variety are left with nothing to show for it, the purpose of the exercise will become clear.I am becoming convinced that the gold remains stacked in neat piles in Fort Knox and elsewhere, exactly as it has always been assumed for decades prior to all of this circus. However what has changed is that enormous volumes of gold have been resold many times over to various owners. And if there was ever a real audit completed that documented the physical bar serial numbers, many owners would suddenly have proof that these same gold bars are being pledged multiple times. That is when the real frenzy would develop. The game can continue as long as the inventory of gold remains opaque and all of the paper claims against it remain confidential.
So to see Germany reinforcing its claim to the bullion, and doing so in a way that provides an outlet without bringing the entire scam down immediately, is just another sign that GATA has been right all along. The Chinese have this figured out too, and they are happy to unload soon to be worthless paper money for gold, and TAKE DELIVERY of that gold, thank you very much. The shills running the commodity exchanges know that claims of ownership for more gold change hands every day than than the world produces in a year, but as long as only a small amount of real bullion is actually removed from the system, the scam can go on.Germany appears to be concerned the demand is getting close to the point that it will swamp the paper con game. This nonsense cannot go on forever. And Germany has put the system on notice that when the final accounting is done, it expects to be one of the 'owners' of that gold that actually gets to see its gold bullion delivered to them. The same way that the smaller investors were played as suckers when the rules were changed to let MF Global steal all the money, so too will the holders of paper gold be left with nothing and no recourse to do a damn thing about it.
This is a warning shot in my opinion. The gold window may be closing as a means for individuals to opt out of the criminal investment charade. When people figure out that all of the paper gold is not backed by any claim of ownership, every last ounce of gold bullion in the world will be snatched up so quickly that it will become impossible to buy any at any price shortly after. The myth of abundant stockpiles of gold or silver will be discredited so fast that people will not be able to react on the other side of this event horizon.This is not the end of the manipulation, but perhaps we are nearing the beginning of the end.
Cheers!
MexicoMike
Keith Barron and Stephen Leeb on the Bundesbank's strange gold move:
(courtesy Jim Sinclair/Barron/Lee/Kingworldnews)
Barron, and Leeb on the Bundesbank's strange gold move
At King World News, mining entrepreneur Keith Barron joins those who believe that most of Germany's gold has departed into the market through secret leases:
Also at King World News, fund manager Stephen Leeb agrees that the gold is gone but adds that the United States and China both want the gold price restrained at the moment, the U.S. because it is just about out of gold and China because it wants to get a lot more before the price explodes:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
No sooner than I wrote that other nations will ask for their repatriation of gold back, it seems that Holland saw through the German armour, as the Netherlands CDU party will ask for it's gold back. The Dutch have official reserves of 612 tonnes mostly held at the Federal Research Bank of NY, with a lesser amounts at the Bank of Canada and the Bank of England.
(courtesy zero hedge)
All Aboard The Gold Repatriation Train: First Germany, Next: The Netherlands?
Submitted by Tyler Durden on 01/16/2013 14:57 -0500
While moustachioed managers, contrary to the far better insight of their superiors, and mainstream spivs are trying to talk down Germany's somewhat stunning shift in thinking - i.e. to repatriate its gold - as nothing but political pandering (or cost-saving); it seems, just as we predicted, the rest of the world are seeing this crack-in-the-confidence-armor the same way we have suggested. As we noted here, the first party to defect from the prisoner's dilemma of all the bulk of global gold being held by the Fed, defects best (then the second, or even the third perhaps) and sure enough, via RTL, we see the Dutch CDA party has requested that Holland's gold supply be repatriated. Who next?
The Dutch government says it has 612 tonnes of gold - with a value of around E24 billion - and is thereby in the top 10 of countries with gold reserves. The bulk of the Dutch gold reserves is in America and, to a lesser extent, in Canada and the United Kingdom. The rest, about 10 percent, is in Amsterdam.
end
Ounces
| |
Withdrawals from Dealers Inventory in oz
|
nil
|
Withdrawals from Customer Inventory in oz
|
289.75 (Brinks)
|
Deposits to the Dealer Inventory in oz
|
0 (nil)
|
Deposits to the Customer Inventory, in oz
| 3,279.3 (HSBC) |
No of oz served (contracts) today
|
0 (nil)
|
No of oz to be served (notices)
|
96 (9,600 oz)
|
Total monthly oz gold served (contracts) so far this month
|
902 (90,200 oz)
|
Total accumulative withdrawal of gold from the Dealers inventory this month
|
17,799.16
|
Total accumulative withdrawal of gold from the Customer inventory this month
| 316,767.55 oz |
****
January 16.2013: The January silver contract month
| Silver |
Ounces
|
| Withdrawals from Dealers Inventory | nil |
| Withdrawals from Customer Inventory | 20,980.98 oz (Brinks,Delaware) |
| Deposits to the Dealer Inventory | nil |
| Deposits to the Customer Inventory | 1,776,411.621 oz (CNT,HSBC,Scotia) |
| No of oz served (contracts) | 22 (110,000 oz) |
| No of oz to be served (notices) | 23 (115,000 oz) |
| Total monthly oz silver served (contracts) | 672 (3,360,000 oz) |
| Total accumulative withdrawal of silver from the Dealers inventory this month | 2,465,925.6 |
| Total accumulative withdrawal of silver from the Customer inventory this month | 3,198,585.7 |
*****
Today we finally get official release of the Bundesbank's plan to repatriate gold.
The 374 tonnes of gold stationed in Paris will be returned in stages as both Germany and France use the same currency, the Euro and thus the gold in France does not have any benefit. It could easily be returned by road to Frankfurt. They state that they are repatriating gold in case of systemic risk or currency crises.
The Bundesbank is set to retrieve a little over 300 tonnes of gold from the USA over a space of 7 years or approximately 32 tonnes per year. All of the entire English gold at the Bank of England is to be remain there and not one ounce is to be returned.
By 2020, approximately 50% of German reserves are held in Germany and 50% abroad with NY holding 37% of reserves and England 13%.
-- Posted Wednesday, 16 January 2013 | | Source: GoldSeek.com
Today’s AM fix was USD 1,679.75, EUR 1,262.78 and GBP 1,047.55 per ounce.
Yesterday’s AM fix was USD 1,681.00, EUR 1,257.67 and GBP 1,045.92 per ounce.
Cross Currency Table – (Bloomberg)
Gold climbed $10.50 or 0.63% in New York yesterday and closed at $1,678.90/oz. Silver surged to a high of $31.382 in Asia before it fell back to $31.02 in London, but it then rose to as high as $31.503 in New York and finished ended with a gain of 1.06%. Gold was flat and close to a 2 week high it hit in the prior session, while platinum reversed early losses but was also trading sideways.
Yesterday, in a speech that showed him as perhaps the most dovish of the central bank's 19 policymakers, Minneapolis Federal Reserve President Narayana Kocherlakota said the Fed "should provide more monetary accommodation" by targeting a 5.5% unemployment level.
These comments in defiance with his hawkish peers, showed a case for argument that the U.S. central bank's accommodative policies are appropriate and may even need to be eased further.
U.S. American Eagle gold and silver coin sales have been exceptionally strong in January, building on a late 2012 rally as collectors and some store of wealth buyers scramble to purchase newly minted 2013 coins and investors seek safe haven from U.S. economic uncertainty.
This morning, the Bundesbank presented a new management plan for Germany’s 270,000 gold bars, the world’s second largest gold holdings trailing only the United States. Germany’s central bank will repatriate part of its $200 billion gold reserves stored in vaults in the Federal Reserve in New York and the Banque de France in Paris. It is believed that the Bundesbank may have repatriated the gold in order to be prepared for a systemic crisis and currency crises. Germany's central bank plans to retrieve some 300 tonnes of gold stored in the vaults of the Federal Reserve as well as its 374 tonnes of gold with the Banque de France.
This is an important development as it shows how gold is reasserting itself as an important monetary asset. This could lead to a further increase in investment demand in the coming months - especially in western markets where investment demand has been tepid at best in recent months.
Storing German gold reserves outside Germany was a legacy of World War II when the allies allowed Germany to have a new currency but took possession of their gold reserves.
Then with the threat of the Soviet Union and East Germany during the Cold War, the Bundesbank was happy to leave their gold reserves in the Federal Reserve, BOE and in Paris. Now a more confident Germany but one which is very concerned about the euro crisis nonetheless wishes to store their gold reserves in Germany.The move comes about after the exertion of a lot of political pressure by the German people, press and politicians who are concerned about the eurozone debt crisis and continuing debasement of the euro.
XAU/EUR Exchange Rate, 2008-2013 – (Bloomberg)
Spiegel, a German weekly, reported last year that some in Germany had been campaigning for the repatriation of the country’s gold bars.Called the “Gold Action” initiative, the campaign warned that there is an acute danger that German gold could be expropriated as a result of the global financial and debt crisis, and activists are concerned that the German government – also the eurozone’s paymaster – could soon be forced to sell its gold to cover the costs of the crisis.
Besides the location of the gold, there were also concerns about the nature of the gold.
The German Court of Auditors told legislators that the gold had "never been verified physically" and ordered the Bundesbank to secure access to the storage sites. It called for repatriation of 150 tons over the next three years to test the quality and weight of the gold bars. It is said that Frankfurt has no register of the numbered gold bars according to TheTelegraph.
This suggests that the German gold reserves were not allocated. Ordinarily, central bank monetary reserves are held in an allocated format.
The incident is reminiscent of General De Gaulle’s move in 1968 when he took delivery of French gold reserves from America which hastened an end to the London Gold Pool and to America moving from a fixed gold price of $35/oz and to the 1970’s gold market when gold rose 24 times.
It shows a growing lack of trust in the U.S. Federal Reserve and a lack of trust amongst the central banks themselves. It is likely to lead to a further decline of trust in the U.S. dollar.
Significantly, the development is being picked up very widely in mainstream, non specialist financial press and media who rarely cover gold. Therefore, an entire new audience is realising how central banks increasingly value gold as a monetary reserve.
It is close to going viral on Twitter and on the internet.
Yesterday, PIMCO (@PIMCO) co-founder and the largest bond manager in the world, Bill Gross tweeted:
“ Report claims Germany moving gold from NY/Paris back to Frankfurt. Central banks don’t trust each other? “
His tweet was retweeted 276 times and favourited 31 times.Daily Telegraph News in the UK tweeted (@TelegraphNews )
"Extraordinary breakdown in trust between leading central banks" leads Bundesbank to pull gold from New York and Paris
The Telegraph’s tweet was retweeted 184 times and also favourited 31 times. In recent years, besides Reuters, Bloomberg, CNBC , the FT and the Telegraph in the UK, gold rarely gets covered in the non specialist financial media such as The Guardian, The Times, BBC, Sky etc and rarely in the tabloid press.
We view this as a contrarian indicator and believe that as gold continues its journey from the fringe to the mainstream in the coming years - it will be covered in all business and financial media as frequently as stocks, the FTSE, the S&P 500 (etc.), are today. You may even see gold prices quoted on the BBC and CNN and Jeremy Paxman and Piers Morgan talking about currency wars and gold.Finally, the move shows that possession remains nine-tenths of the law and the vital importance of owning physical gold in the safest way possible.
Legendary gold trader Jim Sinclair said the Bundesbank’s move “sends a message about storing gold near you and taking delivery no matter who is holding it.” He said it is a pivotal event in the gold market and the latest warning for investors that they should keep metal bars under their physical control, rather than relying on paper contracts.
"This sends a message about storing gold near you and taking delivery no matter who is holding it. When France did this years ago it sent panic amongst the U.S. financial leadership. History will look back on this salvo as being the beginning of the end of the U.S .dollar as the reserve currency of choice," he said.
The Bundesbank’s gold repatriation shows the vital importance of either taking possession of physical gold or storing bullion in an allocated format with the strongest, non financial and non banking counter parties in the world. Allocated storage should be sought in locations where there is little risk of expropriation or nationalisation.
*****
Zero hedge commenting on the official release from the Bundesbank
Note the huge delay in repatriating the gold into Germany from France and the USA
(courtesy zero hedge)
Bundesbank Official Statement On Gold Repatriation
When we first heard about it, we thought Handelsblatt had gotten something very wrong. The implications were just so staggering. Turns out the news was spot on. Here is the official announcement from the Bundesbank, which roundly refutes all the spin the Frankfurt bank spoon-fed the people in October and November when it repeated time after time that there is nothing wrong with keeping German gold in NY and Paris, and on the contrary, it was better for everyone involved.
From the Bundesbank:
By 2020, the Bundesbank intends to store half of Germany’s gold reserves in its own vaults in Germany. The other half will remain in storage at its partner central banks in New York and London. With this new storage plan, the Bundesbank is focusing on the two primary functions of the gold reserves: to build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centres abroad within a short space of time.
The following table shows the current and the envisaged future allocation of Germany’s gold reserves across the various storage locations:
To this end, the Bundesbank is planning a phased relocation of 300 tonnes of gold from New York to Frankfurt as well as an additional 374 tonnes from Paris to Frankfurt by 2020.
The withdrawal of the reserves from the storage location in Paris reflects the change in the framework conditions since the introduction of the euro. Given that France, like Germany, also has the euro as its national currency, the Bundesbank is no longer dependent on Paris as a financial centre in which to exchange gold for an international reserve currency should the need arise. As capacity has now become available in the Bundesbank’s own vaults in Germany, the gold stocks can now be relocated from Paris to Frankfurt.
* * *
So it took the Bundesbank over 10 years to figure out that "the Bundesbank is no longer dependent on Paris as a financial centre in which to exchange gold for an international reserve currency should the need arise."
Well, as long as it has nothing to do with the recent political schism between socialist beggar France and the only country left in Europe that is not an all out parasite, all is well.
Finally, compare the above statement with the following from November:
With the Japanese trying desperately to reflate their economy with a weaker yen currency markets look anything but stable, and a renewed enthusiasm for gold and silver as the ultimate currencies could happen at anytime. Sign-up for the ArabianMoney investment newsletter to get our views on how best to invest to capitalize on these events, with 50 per cent off for subscriptions before February 20th (subscribe here). German Gold Hijinx
I guess it all depends on how you look at it. Either this is all on the up-and-up or it isn't. Either this is a purely political show or it isn't. Either the gold is really there to be repatriated or it isn't. It's up to you to decide.
Just three months ago, The Bundesbank labeled as "lunacy" the idea that German gold needed to be brought home. They announce today that they're doing it anyway, but in sizes nowhere near what had been speculated. Is this just a political trick to mollify the German hoi polloi? Probably. It certainly doesn't upset the status quo or shake the global banking system in the manner we'd all hoped.
However, you could also choose to look at it this way:
Hmmmm. Maybe, just maybe, their French gold is long gone and the Frenchy-French need some time to come up with new supply to pay them back? (http://www.reuters.com/article/2009/12/22/ozabs-mali-gold-idAFJOE5BL01520091222) Maybe the English gold has all been shipped to China and other points East, where it has been resmelted into kilo bars with official Chinese insignia? (http://www.tfmetalsreport.com/blog/3924/gonefor-good) And maybe, just maybe, the American gold is nothing but paper certificates and IOUs, no more valuable than claims on the GLD? (http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/10/25_James_Turk_-_The_Entire_German_Gold_Hoard_Is_Gone.html)
Ahhhhhh....what do I know? I'm just a Turd. A dope with a MacBook. I'm sure it's all just fine. Move along. Nothing to see here. All is well. Go back to sleep.
That's all for today. I need to go take a little boat ride with all my guns and ammunition. It'll probably take most of the day. More tomorrow.
GERMANY REACTS TO THE RETIRING TREASURY SECRETARY’S PARTING SHOT
I respectfully disagree with most of the explanations given today on the why of German actions in gold. My understanding is that the causal event of this notification actually came from the actions of the US Exchange Stabilization Fund and the long term plans to strengthen the euro.
I have published a chart from Patrick showing the extreme change in the ratio of gold to fiat currency presently being held in reserve by Euroland.
First you need to understand what the Exchange Stabilization Fund is and is not. It is an account at a major gold bank in the name of the Exchange Stabilization Fund. This fund can legally trade in gold and does. The President of the USA and the Secretary of the US Treasury run this fund. Those two managers by law are permitted to designate another manager if they wish. The fund can trade long or short, borrow or lend anything. Basically this is a an account that can legally do anything it wants whenever it wants in secret as the year end statement can easily be brought to only benign activates by warehousing all the trades.
Their broker is quite an expert in that strategy to wash year-end positions for clients.
What occurred as I am told is an act in Germany in reaction to a parting shot from the retiring Secretary of the US Treasury via the Exchange Stabilization Fund.
When gold traded at $1918 it was setting up for a challenge of a very important round number, $2000. The sell off was a product of long liquidation in an anticipation of $2000 in a fast market. Gold did fall on its own weight into the $1800 area, however the body block at $1800, $1775 and $1750 was a product of the Exchange Stabilization Fund operating as an account of a major Gold Bank. Seeing that, this gold bank went to the short side for the account of its hedge funds and not wholly owned trading arm. This gold bank issued a public statement that the gold market was dead as a doornail, finished and completed.
On the level of central banking there are no secrets. The long term plan for the currency war between the euro and the dollar is a derivation of the Free Gold Thesis. That means a significant change in the percentage of fiat currency versus gold at market value held by Euroland as reserves. This thesis has a target for cooperating Asian central banks for gold holdings at no less than 15% at market value. I question some of the thesis of Free Gold thinkers, but much of it has been in my writing for more than a decade on what the end game recovery will look like.
I am told that the parting shot to break gold's back by the Exchange Stabilization Fund was considered a direct attack on the Euro strategy for what the end game recovery will look like. The Free Gold thesis requires significantly higher gold prices to work and to elevate the euro back in reserve by choice category.
The German reaction was not political but rather a direct warning that they could demand return of their gold just like DeGaulle of France did in the 60s by making a direct and immediate demand for conversion of the US dollar holdings into Gold.
A major central bank will not insult another major central bank unless it is an act of financial war. It has not come to that yet, but it is not that far away. It is 2015 to 2017 and not 2020.
The reason that gold is relatively firm after the media leak and release on the night of the 14th is that I am not the only person who knows the real story. The price of gold will go to and beyond $3500. Gold will be market to market by the majority, if not all, major central banks. This will balance the balance sheet of the many and major debtor nations and will provide the platform for recovery after unwinding.
Respectfully,
Jim
Exchange Stabilization Fund
From Wikipedia, the free encyclopedia
The Exchange Stabilization Fund (ESF) is an emergency reserve fund of the United States Treasury Department, normally used for foreign exchange intervention. This arrangement (as opposed to having the central bank intervene directly) allows the US government to influence currency exchange rates without affecting domestic money supply.
As of October 2009, the fund held assets worth $105 billion, including $58.1 billion in special drawing rights (SDR) from the International Monetary Fund.[1]
Background
The U.S. Exchange Stabilization Fund was established at the Treasury Department by a provision in the Gold Reserve Act of January 31, 1934. 31 U.S.C. § 5117. It was intended as a response to Britain's Exchange Equalisation Account.[2] The fund began operations in April 1934, financed by $2 billion of the $2.8 billion paper profit the government realized from raising the price of gold to $35 an ounce from $20.67. The act authorized the ESF to use its capital to deal in gold and foreign exchange to stabilize the exchange value of the dollar. The ESF as originally designed was part of the executive branch not subject to legislative oversight.
The Gold Reserve Act authorized the ESF to use such assets as were not needed for exchange market stabilization to deal in government securities. The Fund had no statutory authority, however, to engage in other activities that it began to undertake.[citation needed] The principal such extraneous activity it devoted itself to was lending dollars to politically favored governments.
In 1938-40, the director of the Division of Monetary Research, Harry Dexter White, worked on a proposal for loans to Latin America and participated in plans for an Inter-American Bank, which did not materialize. The plan for an Inter-American Bank, however, inspired White's first draft of the subsequent plans for the International Monetary Fund and the World Bank that White prepared in 1941 at Secretary of the U.S. Treasury Henry Morgenthau's direction.
And finally these commentaries from GATA.
The big question: why take 7 years to repatriate the gold. I would guess that the gold is simply not there and that it will take 7 years for the USA and France to provide this gold.
Now that Germany is asking for it's metal, don't you think other nations that store their gold in the USA and England will ask for their gold back.
(courtesy GATA) To recover just a small part of Germany's gold, Bundesbank will need 7 years
Submitted by cpowell on Wed, 2013-01-16 13:56. Section: Daily Dispatches
With the end of the Cold War it was no longer necessary to keep Germany's gold reserves "as far to the west and as far from the Iron Curtain as possible," Bundesbank board member Carl-Ludwig Thiele told reporters on Wednesday.
9:14a ET Wednesday, January 16, 2013
Dear Friend of GATA and Gold:
The Deutsche Bundesbank's plan announced today to repatriate some of Germany's gold reserves from the Federal Reserve Bank of New York is so incomplete and slow as to increase, not diminish, doubt that all the gold is really available.
Venezuela last year managed to repatriate all its gold from the Bank of England in a matter of months, but apparently the Bundesbank will need seven years to retrieve only a small fraction of its gold from the New York Fed.
Bundesbank board member Carl-Ludwig Thiele's comment today, defending such a minimal repatriation, seems silly. "If I hold gold in my own vaults, I have to check it myself," Thiele said, according to the Reuters story appended here. So, Herr Thiele, if you keep it somewhere else you don't have to check it?
Appended are the Reuters story on the Bundesbank's announcement, the full text of the Bundesbank's statement, and an incisive response from Peter Boehringer on behalf of Germany's Repatriate Our Gold campaign and the German Precious Metals Association, who notes the need for a full audit of Germany's gold that guards against impairment of the reserves through leases and swaps.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Germany's Bundesbank Brings Gold Reserves Home
By Eva Kuehnen
Reuters Wednesday, January 16, 2013
FRANKFURT -- Germany's Bundesbank plans to bring home some of its gold reserves stored in the United States' and French central banks, bowing to government pressure to unwind a Cold War-era ploy that secured the national treasure.
Germany amassed gold reserves in the post-war era thanks to rapid economic expansion that saw growing exports to the United States, where its dollar claims were turned into gold under the Bretton Woods agreement that Germany joined in 1952.
As the Cold War set in, Germany kept its gold reserves put, keeping them out of reach of the Soviet empire. But government officials have grown uneasy about the storage set-up and have called for the Bundesbank to inspect the bars.
The Bundesbank now wants to change the arrangement too, even though it has said it does not see a need to count the bars or check their gold content itself and considers written assurances from the other central banks as sufficient.
The German Federal Court of Auditors, which oversees the government's financial management, called last October for an official inspection of the gold reserves stored at foreign central banks, because they have never been fully checked.
"To hold gold as a central bank creates confidence," Thiele said. "If I hold gold in my own vaults, I have to check it myself," he said, adding that "a complete shift is not appropriate."
Beginning this year, the Bundesbank plans to transfer 300 tonnes of gold from the Federal Reserve in New York and all of its gold stored at the Banque de France in Paris, 374 tonnes, to Frankfurt.
By 2020, it wants to hold half of the nearly 3,400 tonnes of gold valued at almost 138 billion euros -- only the United States holds more -- in Frankfurt, where it stores about a third of its reserves. The rest is kept at the Federal Reserve, the Banque de France, and the Bank of England.
The Bundesbank gained more space in its vaults after the transition to the euro from the deutschmark.
It did not want to disclose how much the gold transfers would cost and how the gold would be transported.
Before German reunification in 1990, 98 percent of Germany's gold was stored abroad. The Bundesbank then started to bring its gold home and in 2000 transferred 931 tonnes from the Bank of England to Germany. It will continue to hold about 13 percent of its gold reserves in London, even after 2020.
With the introduction of the euro, the Bundesbank sees no need to hold any reserves at the Banque de France as it will no longer need them for exchange for foreign currency.
"This is above all a historical anomaly which is now being corrected," said David Marsh, chairman of think tank OMFIF, which issued a report this month in which it foresaw growing importance for gold due to uncertainty stemming from the rise of China's renminbi as an alternative to the dollar.
* * *
Deutsche Bundesbank's New Storage Plan
for Germany's Gold Reserves
A Statement by the Deutsche Bundesbank
Wednesday, January 16, 2013
By 2020 the Bundesbank intends to store half of Germany's gold reserves in its own vaults in Germany. The other half will remain in storage at its partner central banks in New York and London. With this new storage plan, the Bundesbank is focusing on the two primary functions of the gold reserves: to build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centres abroad within a short space of time.
The following table shows the current and the envisaged future allocation of Germany's gold reserves across the various storage locations:
...................... 31 December 2012 .... 31 December 2020
Frankfurt am Main ........ 31% ................... 50% New York ......................45% ................... 37% London ......................... 13% ................... 13% Paris ............................. 11% ................... 0%
To this end, the Bundesbank is planning a phased relocation of 300 tonnes of gold from New York to Frankfurt as well as an additional 374 tonnes from Paris to Frankfurt by 2020.
The withdrawal of the reserves from the storage location in Paris reflects the change in the framework conditions since the introduction of the euro. Given that France, like Germany, also has the euro as its national currency, the Bundesbank is no longer dependent on Paris as a financial centre in which to exchange gold for an international reserve currency should the need arise. As capacity has now become available in the Bundesbank's own vaults in Germany, the gold stocks can now be relocated from Paris to Frankfurt.
* * *
Statement by Peter Boehringer
on behalf of Repatriate Our Gold and the German Precious Metals Association
Wednesday, January 16, 2013
We welcome the Bundesbank's announcement to repatriate significant portions of Germany's gold held abroad.
All reasons cited in the past for this storage had either been false or at least outdated since 1990 (with the end of the Cold War and the theoretical military threat to the Bundesbank's domestic gold vaults).
We are also satisfied that propaganda arguments (e.g. "chauvinistic/nationalistic demands for repatriation," "repatriation too expensive," "absurd debate questioning the integrity of US/UK central banks," etc.) have not been repeated at the Bundesbank's press conference today. Actually, by announcing some repatriation, the Bundesbank has implicitly acknowledged our point of view of gold as real money and integral part of a nation's monetary reserves.
But we do not approve of the speed and volume of the planned repatriation.
The Bundesbank has just announced that it will repatriate only 675 tonnes by 2020 by then bringing the total of German gold held in Germany to approximately 50 percent (1,700 tonnes) of total German gold reserves. The Banque de France will allegedly be given up as a Bundesbank storage facility (374 tonnes) and up to 300 of 1,535 tonnes will be repatriated from the New York Fed.
In our view, there is a lot of room for speeding up and increasing the volumes for this repatriation.
In addition, the Repatriate our Gold campaign insists on proper and independent physical and full audits of the Bundesbank's own vaults in Germany. This includes the publishing of bar number lists, which has been overdue for years. These gold bar number lists are important to prove or disprove multiple ownership of specific bars which could have come about through gold loans. This is one more reason to audit and repatriate all gold bars -- as an incomplete audit and incomplete lists would not fulfill this important purpose.
To quote from the statement of purpose of the Repatriate Our Gold campaign:
"Gold has been natural money for thousands of years. It has been used throughout history either as physical coinage or as the solid cornerstone for stable paper currencies. Up until 1913 most Western societies prospered and grew steadily and naturally under a monetary standard with at least partial gold backing. The gradual abandonment of the gold backing throughout the 20th century and the ultimate delinkage of all currencies from gold in 1971 is the fundamental cause of the ongoing inflation (the U.S. dollar has lost 98 percent of its purchasing power since 1913) as well as the main reason for the global financial crises since 2007. We believe it is essential to re-introduce a partial gold backing for the world's monetary system. And to back future national currencies, the gold needs to be physically present in the respective country. Gold needs to be re-monetized -- at least on a voluntary basis as a means of payment the people are free to choose at any time.
"We therefore campaign for:
"-- Independent, full, neutral, and physical audits of the gold hoards of the world's central banks.
"-- The repatriation of all central bank gold; that is, the physical transport into the respective ownership countries."
end
And this from Mexico Mike, a GATA supporter:
Exactly what I have been telling you over the years:
(courtesy Mexico Mike/GATA)
Germany and its gold
With all the chatter about the German gold and demands for repatriation, I wonder why more of the media commentary is not asking the obvious questions. I mean right off the bat the question is, why does a rich country like Germany need to hold its gold somewhere else? Is there a problem with its own custodial capabilities? I think not and this begs the question why this situation has developed at all.Theoretically if I have $8000 in the bank, and you ask me to hold $1000 in safe keeping for you, then it should be an easy transaction for me to give you back your money anytime you wish. Where is the problem? Well, if I have spent my $8000 and also spent your money, then we have a problem indeed. This concept that Germany has asked for its gold back in instalments over several years is a clue that they know the gold is long gone. Or, more to the point, the gold is not gone. Every bar is neatly stacked in various vaults and depositories. However, it has been sold and resold, and swapped and pledged, so many times to so many different parties, that the legitimate ownership of that gold is now in question. I believe the players involved have now come to the point where a priority is being established on who gets final claim of ownership as the game of musical chairs is coming to an end. What if MF Global was in fact a trial balloon? What if it was collapsed and brought to light specifically to measure the intensity of the outrage from the public over such a scam? And the end result of course was a few sound bites of political showmanship and not much else. So now considering that the GLD ETF is one of the largest documented inventories of physical bullion, does anyone think it will go any other way than another MF Global scenario when the big players step up to the front of the line to get custody of the real bullion? Do people believe that countries will be denied access to their bullion held in US vaults but the inventory controlled by the GLD on behalf of small time investors will be secure? When the hedge funds and pension funds and any other players foolish enough to buy the paper variety are left with nothing to show for it, the purpose of the exercise will become clear.I am becoming convinced that the gold remains stacked in neat piles in Fort Knox and elsewhere, exactly as it has always been assumed for decades prior to all of this circus. However what has changed is that enormous volumes of gold have been resold many times over to various owners. And if there was ever a real audit completed that documented the physical bar serial numbers, many owners would suddenly have proof that these same gold bars are being pledged multiple times. That is when the real frenzy would develop. The game can continue as long as the inventory of gold remains opaque and all of the paper claims against it remain confidential. So to see Germany reinforcing its claim to the bullion, and doing so in a way that provides an outlet without bringing the entire scam down immediately, is just another sign that GATA has been right all along. The Chinese have this figured out too, and they are happy to unload soon to be worthless paper money for gold, and TAKE DELIVERY of that gold, thank you very much. The shills running the commodity exchanges know that claims of ownership for more gold change hands every day than than the world produces in a year, but as long as only a small amount of real bullion is actually removed from the system, the scam can go on.Germany appears to be concerned the demand is getting close to the point that it will swamp the paper con game. This nonsense cannot go on forever. And Germany has put the system on notice that when the final accounting is done, it expects to be one of the 'owners' of that gold that actually gets to see its gold bullion delivered to them. The same way that the smaller investors were played as suckers when the rules were changed to let MF Global steal all the money, so too will the holders of paper gold be left with nothing and no recourse to do a damn thing about it. This is a warning shot in my opinion. The gold window may be closing as a means for individuals to opt out of the criminal investment charade. When people figure out that all of the paper gold is not backed by any claim of ownership, every last ounce of gold bullion in the world will be snatched up so quickly that it will become impossible to buy any at any price shortly after. The myth of abundant stockpiles of gold or silver will be discredited so fast that people will not be able to react on the other side of this event horizon.This is not the end of the manipulation, but perhaps we are nearing the beginning of the end. Cheers! MexicoMike
Keith Barron and Stephen Leeb on the Bundesbank's strange gold move:
(courtesy Jim Sinclair/Barron/Lee/Kingworldnews)
Barron, and Leeb on the Bundesbank's strange gold move
At King World News, mining entrepreneur Keith Barron joins those who believe that most of Germany's gold has departed into the market through secret leases:
Also at King World News, fund manager Stephen Leeb agrees that the gold is gone but adds that the United States and China both want the gold price restrained at the moment, the U.S. because it is just about out of gold and China because it wants to get a lot more before the price explodes:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
No sooner than I wrote that other nations will ask for their repatriation of gold back, it seems that Holland saw through the German armour, as the Netherlands CDU party will ask for it's gold back. The Dutch have official reserves of 612 tonnes mostly held at the Federal Research Bank of NY, with a lesser amounts at the Bank of Canada and the Bank of England.
(courtesy zero hedge)
All Aboard The Gold Repatriation Train: First Germany, Next: The Netherlands?
While moustachioed managers, contrary to the far better insight of their superiors, and mainstream spivs are trying to talk down Germany's somewhat stunning shift in thinking - i.e. to repatriate its gold - as nothing but political pandering (or cost-saving); it seems, just as we predicted, the rest of the world are seeing this crack-in-the-confidence-armor the same way we have suggested. As we noted here, the first party to defect from the prisoner's dilemma of all the bulk of global gold being held by the Fed, defects best (then the second, or even the third perhaps) and sure enough, via RTL, we see the Dutch CDA party has requested that Holland's gold supply be repatriated. Who next?
The Dutch government says it has 612 tonnes of gold - with a value of around E24 billion - and is thereby in the top 10 of countries with gold reserves. The bulk of the Dutch gold reserves is in America and, to a lesser extent, in Canada and the United Kingdom. The rest, about 10 percent, is in Amsterdam.
end
|
No comments:
Post a Comment