While Bernanke spent his afternoon today outlining why the gold standard can never work (never mind the fact that it worked perfectly for 2 centuries in America), the Bundesbank has just shattered the remaining confidence in the fractional bullion banking system, announcing that it will repatriate a portion of its gold reserves from the NY Federal Reserve, and ALL 374 tons of its gold held at the Bank of France!
In the months that followed Hugo Chavez’ 110 ton gold repatriation request in the summer of 2011, gold exploded nearly $400 as the bullion banks panicked. As the Bundesbank’s official gold holdings held at the Fed and the Bank of France dwarf Venezuela’s 110 tons, don’t be surprised if the price of physical gold goes super-nova as Germany’s repatriation request plays out, as paper gold rehypothecated 100 times over must suddenly be conjured up in physical form.
The Handelsblatt reports that Germany wants its gold back from the allies, and that 374 tons of gold will be repatriated from the Bank of France, as well as a portion of the gold held on deposit at the NY Fed:
The Bundesbank has developed a new concept as to where she should continue storing her gold reserves. According to information of the Handelsblatt, this approach which will be announced next Wednesday will repatriate the domestic gold, and store less gold in New York, and will hold no more gold in Paris.
Currently, the gold of the Bundesbank outsourced their claims to New York, London, Paris and Frankfurt. In the American Federal Reserve the Bundesbank stores 45 percent of the total 3,396 tonnes of gold, in the Bank of England in London, 13 percent, in the Bank of France in Paris eleven percent and 31 percent at its headquarters in Frankfurt. This distribution is about to change.
While the Bundesbank does not specify the amount of gold it will repatriate from the NY Fed, 11% of its total 3,396 tons of reserves held at the Bank of France amounts to 373.56 tons, or 12+ million ounces of physical gold held at the Bank of France.
In other news, a tungsten shortage was announced this evening.
It appears that the game of musical chairs known as the fractional/rehypothecation bullion banking system is nearly over, as the German Bundesbank has officially had a come to Jesus moment regarding The Doc’s favorite phrase:
If You Don’t Hold It, You Don’t Own It!