German Gold Repatriation
Trust No Longer Exists
The big news last week was the initial announcement by Germany that they would be repatriating their gold back to Germany, and the political rhetoric that followed...
In what could be a watershed moment for the price, provenance, and future of physical gold, not to mention the “stability” of the entire monetary regime based on rock solid, undisputed “faith and credit” in paper money, German Handelsblatt reports in an exclusive that the long suffering German gold, all official 3,396 tons of it, is about to be moved.
Specifically, it is about to be partially moved out of the New York Fed, where the majority, or 45% of it is currently stored, as well as the entirety of the 11% of German gold held with the Banque de France, and repatriated back home to Buba in Frankfurt.
Andreas Dobret, member of the Executive Board of the German Bundesbank, dismissed suggestions that the gold would be repatriated as “a discussion which is driven by irrational fears,” adding, “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.”
Since a significant proportion of that gold is now being moved out of the New York Fed, are we to assume this “trust” no longer exists?
A month prior to Dobret's statement — which was made directly to the New York Fed’s Bill Dudley — the Bundesbank stated it would “continue to keep gold at international gold trading centers” because that gold could be “pledged with the Federal Reserve Bank as collateral against US dollar-denominated liquidity.”
When Venezuelan President Hugo Chavez ordered the repatriation of 85% of the country’s bullion reserves from European Banks, most of which was held with the Bank of England, the move was dismissed as “unnecessary and expensive,” with others accusing Chavez of acting out of paranoia.
The reaction to Germany’s decision to do almost precisely the same thing is likely to be more muted so as not to start a stampede of other countries seeking to mimic the Bundesbank’s actions.
Germany is the second-largest gold holder in the world.
“This is a momentous development, one which may signify that the regime of mutual assured and very much telegraphed — because if the central banks don’t have faith in one another, why should anyone else? —
trust in central banks by other central banks is ending.”
— Zero Hedge
In the end, the criminals always turn against each other. This could be a sign this process is already under way.
I would have to agree with this assessment by Zero Hedge, especially on the heels of the “gold is money” announcement two months ago regarding the Basel III accord, which should have gone into effect as of the first of the month.
(I haven’t seen any official announcement regarding this, but I would expect we should get clarification on this within the next few weeks.)
Taking into account the timing of these two events — how close they are in proximity to one another — appears to be very bullish for gold.
Yet our gold price for the moment seems to be caught in a very boring but tight trading range with little in the way of news to drive us significantly one way or the other.
However, this can change rather quickly.
As I try to keep a balanced perspective on where precious metals prices are headed, I often do a quick “T” account analysis, listing the reasons why precious metals prices are going higher on the left side of the “T,” and lower on the right side of the “T”.
I try to think of everything I can for each case, and then look at which argument is more compelling at any particular juncture...
At the moment, the odds are stacked in gold’s favor for moving higher in the bigger picture — but lower in the short term, due to governmental interference, which appears to be excessive as of late. (When this happens, it is usually a sign precious metals will soon go higher).
To think the government intervenes in the precious metals markets should come as no surprise, as they lie about and manipulate just about every piece of economic and financial data they report.
I don’t speak much about government rigging of markets because, in the end, anyone who tries to manage a market always loses.
But it is important to understand this is part of the process of being an investor in an asset that is basically despised by government.
When you are running a fraudulent fiat currency scam, a rising gold price exposes the fraud and signals investors and citizens to protect themselves from government devaluation by owning the yellow metal.
Politicians typically hate gold or the thought of backing a currency with gold because it keeps them accountable to the people. (Ah, what a concept! Keeping these pricks accountable to us and not their bankster puppeteers!)
Matt Taibbi, the reporter from Rolling Stone Magazine who recently wrote a scathing commentary on the 2008 government bailout lies, said the following:
But the most appalling part is the lying. The public has been lied to so shamelessly and so often in the course of the past four years that the failure to tell the truth to the general populace has become a kind of baked-in, official feature of the financial rescue. Money wasn't the only thing the government gave Wall Street – it also conferred the right to hide the truth from the rest of us. And it was all done in the name of helping regular people and creating jobs. "It is," says former bailout Inspector General Neil Barofsky, "the ultimate bait-and-switch."
The bailout deceptions came early, late and in between. There were lies told in the first moments of their inception, and others still being told four years later. The lies, in fact, were the most important mechanisms of the bailout. The only reason investors haven't run screaming from an obviously corrupt financial marketplace is because the government has gone to such extraordinary lengths to sell the narrative that the problems of 2008 have been fixed. Investors may not actually believe the lie, but they are impressed by how totally committed the government has been, from the very beginning, to selling it.
It’s all just a pile of lies and grand deceptions to keep the people in the dark.
Until next time,
for Wealth Daily
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