Germany Starts a Central Bank Run
The Bundesbank Starts a Run on Gold
For decades, half of Germany's gold has been stored deep below the Federal Reserve Bank of New York.
Yesterday Germany demanded it be sent back to the Fatherland.
According to the Huffington Post:
The Bundesbank's overall reserves of 3,400 tons are worth about $200 billion at current market rates.
The central bank now plans to bring back to Germany some of the 1,500 tons of gold stored in the vaults of the Federal Reserve in New York, and all of the 450 tons currently stashed with the Bank of France in Paris.
Most of Germany's reserves have been stored abroad since the Cold War over fears of a Soviet invasion.
But the central bank came under pressure last year when Germany's independent Federal Auditors' Office concluded it failed to properly oversee its gold reserves. The auditor suggested the central bank should carry out regular inspections of the gold held abroad to verify its book value or change the reserves' management.
The auditors' report stunned Germany, where the Bundesbank routinely tops polls of the nation's most trusted institutions. The central bank was taken aback and maintained it didn't see the need for more scrutiny in overseeing the reserves, saying "there is no doubt about the integrity of the foreign storage sites.
The Germans want their gold back because there are very real questions about whether the U.S. still has it.
Here is the report from the well-respected German magazine Spiegel, published October 30, 2012:
Tourists are allowed to venture below street level to see the vault. After descending in an elevator, they stand in front of an enormous steel cylinder that pivots like a door in a 140-ton steel-and-concrete frame. But not even the owners are allowed to view their own gold. According to the Federal Audit Office report, the Fed explained that "in the interest of security and of the control process" no "viewings" are possible.
Finally, in 2007, "following numerous inquiries," Bundesbank staff members were allowed to see the facility, but they reportedly only made it to the anteroom of the German reserves.
In fact, auditors from the Bundesbank made a second visit in May 2011. This time one of the nine compartments was also opened, in which the German gold bars are densely stacked. A few were pulled out and weighed. But this part of the report has been blacked out — out of consideration for the Federal Reserve Bank of New York.
Back on June 24, 2011, Ron Paul called a Congressional hearing to ask federal officials about his bill to audit and inventory all of the gold reserves at Fort Knox, West Point, and Denver.
According to the Treasury's last audit in September of 2010, there are 9,300 tonnes of gold in reserves.
During the hearing, Paul suggested the Federal Reserve of New York, which has 5% of the U.S. gold reserves, has the ability to secretly sell or swap gold with other countries without anyone knowing...
"The Fed is pretty secret, you know," said Paul. "Congress doesn't have much say on what's going on over there. They do a lot of hiding."
Stuff's Getting Real
Last year Venezuela repatriated 160 tonnes of gold that were held abroad, mostly in Europe...
But that was laughed off by Wall Street because we all know President-for-life Hugo Chavez is a nutcase. The fact that he doesn't trust the global financial markets is something most people can scoff at.
The Bundesbank, however, is a different story. It's the Tom Brady of central banks. Everything it does is close to perfection.
The very fact that it is calling in its gold is monumental in terms of questioning the “full faith and credit” of the United States Treasury.
The Germans are the fist real actor in this game of musical chairs.
What will the butt-to-chair ratio be when the music stops?
There is a limited amount of gold in the world. It is finite.
When France, China, Russia, India, Chile, Israel, and Japan call in their gold, there will be a public failure to produce the goods.
Which central bank will wait to be last?
The Germans just made the first move in a global central bank-fueled bank run on gold...
This could end badly.
for Wealth Daily
Perform an assayed public audit of all the Treasury's claimed 8,100 tons of gold and net of swaps, loans & sales.
As of 12/31/2012 the U.S. Treasury claims to hold 261 million ounces of gold at Denver, Fort Knox, West Point and at the Federal Reserve Bank of New York. This bullion was last subjected to a full physical audit in 1953. The gold bars need to be assayed and weighed. Once the gold is verified the paper trail must be audited to determine who really owns the gold; i.e. how much has been loaned to bankers and dealers and sold or swapped to non-Treasury entities including foreign governments. The audit must include professional auditors outside of the Mint, Treasury, GAO, Inspector General, and Federal Reserve system.
P.P.S. In 2012, the Class A Board of Directors for the Federal Bank of New York was Jamie Dimon CEO of JPMorgan.
P.P.P.S. From Wikipedia:
Stephen Friedman resigned as Chair of the Federal Reserve Bank of New York on May 7, 2009, effective immediately. Friedman, former CEO of Goldman Sachs and then-chairman of Stone Point Capital, LLC, Greenwich, Conn., was criticized for seemingly benefiting from his role as Chair of the New York Fed branch due to the US Government's aid to Goldman Sachs in recent months. He had "remain[ed] on the board of Goldman even as he was supposedly regulating [Goldman]; in order to rectify the problem, he applied for, and got, a conflict of interest waiver from the government."
The Best Free Investment You'll Ever Make
After getting your report, you’ll begin receiving the Wealth Daily e-Letter, delivered to your inbox daily.