What Germany’s Gold Repatriation Means for Global Gold Market

goldrepatriationGuest Post

Venezuela, Switzerland, Libya, Netherlands, Iran…

The announcement by the Bundesbank, the central bank of Germany, saying that it would repatriate 300 metric tons of gold held by the New York Federal Reserve raised many concerns. First, Fed attorney Scott Alvarez told Congressman Ron Paul, R-TX, during a House Subcommittee meeting in June 2011, that the Federal Reserve does not and has not held any gold bullion since 1934.  Second, it appears overall trust in the United States and the global monetary system in general is waning faster than the value of the U.S. dollar.  Germany also plans to repatriate all of its 374 metric tons of gold stored at the Banque de France in Paris. It is unclear what effect the Bundesbank’s move will have on the price of gold, but history tells us to prepare for a spike.

 

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The move by the Bundesbank is not unprecedented; in fact, it has become somewhat of the rule as opposed to the exception. Venezuela President Hugo Chavez, in August 2011, ordered his country’s central bank to repatriate 85 percent of its gold reserves back to Caracas. Chavez said the move was made to safeguard the country against global economic instability. The final shipment arrived last January. Four Swiss parliament members, citing similar concerns, presented what they called a “Gold Initiative” last March. The legislation, if made into law, would bring all of Switzerland’s gold reserves back to the country and force the Swiss National Bank to reveal the secret location where the gold was stored. The Netherlands has also recently discussed repatriating all of its gold held in foreign vaults.

Libya and Iran made similar moves to repatriate their assets. Tehran is now enduring financial sanctions imposed by the United States, and Libya is re-building after NATO military operations in the country in 2011.

Physical Gold vs. Gold Certificates

Many countries “own” gold, but most of them store it somewhere outside of their own borders. Germany, for instance, has a certificate (or several of them), which says they can redeem it anytime to the New York Fed and get their gold back. But some analysts believe the Federal Reserve may only have enough physical gold in its possession to accommodate a handful of countries demanding their gold back. Global economic instability is prompting more countries to repatriate, as currencies continue to be debased due to the very liberal printing policies of the central banks. This same strategy of possessing physical gold as opposed to paper is used by investors as well. Instead of buying gold exchange-traded funds, they are now turning to distributors, such as US Money Reserve, to buy gold bullion.

What This Means for Gold Prices

If history is any indicator, the price of gold will likely continue an upward trend. Since 2009, when the global financial crisis and when countries began talking about or actually repatriating their bullion, the price of gold more than doubled from about $900 an ounce to $1889.70 by mid-2011. Some have argued that the Bundesbank’s move is more a geo-political one, as it is no longer necessary to store their gold as far away as possible from the now-defunct Soviet Union. But public outrage in Germany over a lack of real audits, seems to be more of the driving force.

 

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Comments

  1. Here’s an interesting bit of news out of the CFTC…
     
    CFTC Charges CME Group’s New York Mercantile Exchange and Two Former Employees with Disclosing Material Nonpublic Information about Customer Trades

    http://www.cftc.gov/PressRoom/PressReleases/pr6519-13
     
    Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today filed an enforcement action charging the New York Mercantile Exchange, Inc. (CME NYMEX), which is owned and operated by the CME Group, and two former CME NYMEX employees, William Byrnes and Christopher Curtin, with violating the Commodity Exchange Act and CFTC Regulations through the repeated disclosures of material nonpublic customer information over of period of two and one-half years to an outside commodity broker who was not authorized to receive the information.
     
    We’ll see how this plays out but it looks like “business as usual” at the COMEX is Ending! This bodes well for the criminals at the CME to be brought down with JP Morgan in the silver scandal.

     
    Again, this topic was touched upon in this week’s Road Trip…
     

    Friday Road Trip 2/22/2013 (Members)

    http://www.roadtoroota.com/members/1113.cfm

     
    More on this next week.
     
    Bix Weir
     
    Anyone?

  2. The fed hasn’t had any gold reserves…. yeah China has it all by now.

  3. It means the game of musical chairs is getting much closer to stopping when countries repatriate the sold-out, leased out, multiple-titled gold.     It also means countries who don’t do this soon will never get their gold back!    And it also means the USA has a LOT LESS than they say they do.    They will probably have NONE if they return the other countries’ gold.    People who think gold’s price is headed below $1500 for anything more than a short time are dumber than the guys in Dumb and Dumber.
    The truth is there are very few physical sellers, mostly older people selling some for bills, dumbasses getting inheritances and blowing it, or desperate people in pawnshops.   
    How can silver price drop when there are more buyers than sellers, and supply is not enough to meet demand?  I dunno, ask Blythe Masters and Jamie Dimon and the assclows at the CFTC that wouldn’t know illegal if it walked up and smacked them in the mouth with a dick.   They have less law enforcement skills and ability than most mall cops or school crossing guards.    They need to be in jail along with the people they are failing to prosecute.   It’s CRIMINAL, not civil.   STEALING people’s money is a crime.    If some asshole steals a TV he goes to jail for several years, if JPM and TBTFs and the Fed steal billions of dollars it is nothing to those deadbeats.

    • Get used to it.  Nothing will change until the judicial system gets a makeover.  Maybe in 2016.  If not, we’re all toast….maybe sooner. 

    • This is the old 2-sets of rules game.  One set of rules for the ruled and a 2nd and MUCH more lenient set for the rulers.  Nice, if one can get it and those who make the rules CAN!
       

  4. “Many countries “own” gold, but most of them store it somewhere outside of their own borders.”
     
    Sounds as if these countries did not trust their own citizens and feared a revolution and the capture of the national gold hoard… by its owners.  Yeah, some probably feared the Russians or the Germans at various times as well.  They were known to be grabby back in the day.

  5. A measly 300 tons over 7 years. Doesn’r mean much.

  6. http://preciousmetalspete.blogspot.co.uk/
     
    Tuesday, 19 February 2013


    Gold Price Crusaders: More Misdirection
     
    The eternally blowing-its-own-trumpet GATA is obsessed at staking an unjust claim that GATA, exclusively, valiantly and tirelessly goes to battle against the Central Banks in a brave quest to uncover their price suppression practices. (We’ll ignore for a moment that there have been fewer acts of greater futility in the entire history of mankind)

    The claim is that once these have been uncovered, that direct admissions have been supplied, then the forces sustaining Central Bank privilege will simply evaporate, and the control of global economic and political systems will gently and serenely pass from the hands of those private individuals and corporations who own the BIS and its CB organized thievery.

    Yes, that’s right, brave journalism of the nag-nag-nag GATA kind is going to prise control from those who control the system! It’s just a simple matter of nagging until one day the CBs admit to intervening to suppress the paper gold Comex price. Forget that such admissions have been made. Forget that we all know precisely how the BIS, CBs, ESF, BBs, (and the rest of those running the show) operate their theft. It’s old-hat. Very old-hat! It has long been a matter of much public-record that the ESF, CBs, and Bullion banks manipulate and suppress the public price of gold via their artillery of swaps, leases, ETFs, options, futures and the whole gamut of derivative tools. This confession has been out there in the public arena for decades!!!

    In that case, what possible purpose can GATA’s self-proclaimed crusader zeal (to uncover a truth already uncovered and confessed) actually be about? Since the purpose they claim to have is wholly redundant, what is their real purpose?

    GATA would have you believe that once the price suppression fraud is ‘revealed’ and defeated, the price of gold will soar to its true market value.

    The one thing they never mention (and I think we can legitimately draw our own inferences why this might be) is that it is not as simple as they suggest. The public price of ‘gold’ will not soar! It will collapse! The public (Comex and LBMA) ‘gold’ price will -in breathtaking speed- charge towards zero. Trading will be halted as the public gold price sinks below $200.

    None of those currently reveling in their self-assigned ‘expert’ status will tell you this. They have newsletters to sell; mining company advertising revenue to attract; redundant crusades to fund with your money.

    And because they all have their own hidden agenda, they are all keeping the truth from you. Sinclair’s mining company will never reap the rewards of the Gold Bullion revaluation. He knows it! He knows that no mining company will reap any windfall as Gold Bullion is re-priced to true value. He will never tell you what awaits mining companies in that day.

    Only holders of Gold Bullion will benefit in that day, for the enactment of the above collapse in the public gold price is the very process which forces the true value of Gold Bullion into the light. We have long known it. And those who matter, those who determined this outcome, those who benefit from this outcome, those who hold Gold Bullion, have long known it, too.

    Moreover, it’s close; far closer than you would ever believe. Now watch the price of paper gold burn.

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