Where is the German Gold?

Almost a year ago, the German government put in a formal request to reclaim (repatriate) a portion of their gold reserves held outside of Germany. Reports on the progress of this initiative have raised quite a few questions.

Here's the first report, from ZeroHedge and released on Christmas Eve: http://www.zerohedge.com/news/2013-12-24/year-later-bundesbank-has-repatriated-only-37-tons-gold-700-total

At the time the plan was announced, many in the gold community made note that it would take over 8 years for Germany to reclaim this portion of its foreign reserves. Seven hundred metric tonnes...though a lot of gold...should simply be sitting in New York, London and Paris vaults, collecting dust. Why not just brush it off, certify that the bars numbers match up and then ship that shiny stuff back to Germany. No big deal and certainly not something that should take eight years to accomplish.

Now news comes that, in the first year of the plan, Germany only received back 37.5 metric tonnes of their gold. This is only 5% of the total repatriation amount. At this rate, it will take twenty years, not eight, to reclaim the gold.

Further muddying the waters are reports that this gold came exclusively from the vaults of the Federal Reserve Bank of New York (FRBNY). If that was the case, then the gold returned should have been a simple transfer. The Germans deposited the gold there decades ago. It is being shipped back to them now. Problem is, it wasn't a simple transfer!

Apparently, The Bundesbank took the unusual step of having "its" bars assayed, melted and recast into London Good Delivery form before taking delivery. Now, why would they do that? And why would they do this in the U.S. and not in Frankfurt? These bars should simply be the same bars that were deposited decades ago. Do they not trust the FRBNY? Are these not the same bars?

Perhaps, instead, there's another explanation. This idea was first spelled out on the GATA site earlier this week and I urge you to read through this post now: http://www.gata.org/node/13458

In summary, it goes like this:

  • The original German gold held in the U.S. is gone. Leased, sold and rehypothecated many times over.
  • Germany now wants its gold back. The U.S. balks and promises to only return roughly 40 mts/year for eight years. (By the way, why didn't France return any gold in 2013? Germany's looking for 374 metric tonnes from them and, in 2013, it got zilch, zero and nada.)
  • Pressed to come up with gold to ship back to Germany, the U.S. scours it's vaults.
  • The U.S. takes some of it's 1930s-confiscated "coin melt" gold, assayed at 90% purity, and recasts it into 99.5% purity London bars and ships them off to Frankfurt.
  • The Bundesbank books in these new bars, apparently date-stamped "2013", as a "return of German gold" and now awaits the other 95% of their "order".

Hmmm. OK, then. First year done. Whew! Now, from which vault will the U.S. find gold for Germany in 2014? And how about the reserves allegedly held in Paris? When will those be returned? You'd think they could just drive that over in a convoy of guarded trucks. From Paris to Frankfurt is only about a 500km drive. You could do that in under a day. What's the big deal?

(Could it be that there is no German gold in Paris? Coincidentally, it's almost the exact same distance from Paris to Basel, Switzerland. Hmmmm. Maybe the Germans should look for their gold there, instead??)

Anyway, this entire farce just keeps getting sillier by the day. Today, there are reports from Germany that indicate the Bundesbank is quickly backtracking and attempting to retract the "U.S. remelting of bars" story. (http://www.gata.org/node/13472) OK, right. Whatever you say. And don't forget about this fun chart, created for us last year by our pal, Ned Naylor-Leyland:

2014 is going to a consequential year in gold and silver. This German gold story only adds intrigue and fuel for the fire.

TF

78 Comments

Sebi's picture

Focus article

Per request of the mayor of Turdville I repost the translation of this article, published in the German magazine Focus: http://www.focus.de/finanzen/news/vermutung-wo-sind-goldreserven-verschwoerer-vermuten-leere-goldtresore-bei-us-zentralbank-fed-8_id_3519983.html

Where is our gold? Conspiracy theorists suspect empty gold vaults in the US

37 tons got repatriated in 2013. Everybody cheered, however that turned out to have been premature: the goal was 50 tons. Why does it take so long? Experts (my emphasis) have an unsettling suspicion.

The article goes on to say that the 37 tons are only worth about a billion Euro, a drop in the bucket compared to our official holdings of 3.4k tons, which equates to about 1200 Euro per citizen in gold (fun fact added by myself: so the Bundesbank holds a little over an ounce per citizen)

Does the gold only exist on paper?

Why is it so difficult to load up a plane and send it over to Germany? There are several conspiracy theories. Some are saying that the Fed only has a fraction of our 1.500 tons, they hold in our name, left in stock. They’ve supposedly least the rest. Some speculate that the whole gold is gone. (they go on to quote James Turk via King World News … I kid you not!)

Are the USA using German gold for trading?

Case in point: they did not ship the original bars back to Germany.  The bars they shipped had a 2013 stamp. According to Peter Boehringer (German precious metal association) this is proof that the Americans have used the German gold to trade/lease it. Which, “they would have not been allowed to do, because they were supposed to simply store it for us”. Because of that he asks the Bundesbank to release inventory lists with all bar numbers.  

They also quote a market analyst named Dimitri Speck who said “it’s about securing the dollar standard”.

Obviously, there is evidence that there is manipulation in gold like with Libor. The UK as well as the German regulators are currently looking into this.

The first random samples of the gold bars undertaken by the Bundesbank following a request by the German treasury (something like that, the US has no “Rechnungshof” as far as I know) do not support those suspicions. During the first physical inventory in Paris and NY, there have been no issues according to Jens Weidmann at the end of 2013. A prelude to this physical inventory was a huge debate about whether the gold is still there or whether it’s just paper claims.

They go on to quote Weidmann: it’s not about trust, it’s about a restructuring of the physical gold holdings.

Why is the Bundesbank storing reserves abroad?

According to the Bundesbank: in order to have it available as another currency reserve on short notice. Gold stored in Germany could not be traded in for foreign currency if there is an emergency.

(That’s the gist of the first half of the article. It’s not a literal translation but a “localized” transliteration for our American Turdites :)

FriendOfTheDevil's picture

OK I'll settle...

2nd ...

Patiently waiting the death of one paradigm,

... And the rise of another

- Friend

ivars's picture

Not spamming, just thinking these charts may prove useful

Wanted to repost these 2 charts..to let them sink in..The enormously of time scales over which human behavior follow similar patterns. I hope you do not mind. I have not seen such overlay in such way anywhere, though many talked about analogies.

The 200 year overlay of silver content in denarius over gold content in USD I used to identify the years in the 800 year long Roman Empire/Western empire overlay. I liked the analogy between French revolution and Nero which it revealed, and the following years of Vespasian ( Napoleon by analogy). 5NKRQ3C.png

http://en.wikipedia.org/wiki/Vespasian

I found it possible to chart a general course of Empire with money debasement development using ROMAN empire as history by placing the after FED related debasement and today as reference line over 100 years:

Of course, the dates are approximate and the future predictions as (in) valid as usual. The interesting thing is, though, that Western Empire is not Dead yet, its looking for another revival with different governance and money. 

Reset in this picture is either GOLD based USD or similar IMPROVEMENT of Western currency- after 20 years of uncertainty and wrangling with  this issue from 2011-2033.  Time of big uncertainty and instability. After that, WWIII or what else? Could cause total hyperinflation for a brief period of time as war is financed by printing-as chart indicates. Could be something else. 

History teaches that empires do not disappear overnight without a good fight. Neither will the USA and Western Empire in General. 

Mudsharkbytes's picture

All this 2nd &

3rd, strike that, 4th stuff is getting monotonous. 

But there's such a thing as tradition, and who am I to buck it?

ancientmoney's picture

German gold gone . . . no big deal . . .

So, the Fed leased out Germany's gold--so what, no big deal.

When Germany asked for their gold back, it would be easy for the Fed to use the gold it holds for 59 other nations, if not its own, right?  Plenty of gold:

"The gold is in "safe-keeping" on behalf of more than 60 sovereign countries and a few organizations. Close to 98 per cent of the gold bullion stored in the NY Fed's lower Manhattan vaults, according to the Fed, belongs to central banks of foreign countries."  http://rt.com/op-edge/gold-manhattan-new-york-594/

After all, those other 59 countries likely have plenty of "good delivery" bars ready to ship to Germany--and, anyway, how would those countries ever know?  They have full faith and trust that the Fed is 100% honest, right?

silver2013's picture

Lets figure out why they r

Lets figure out why they r tapering and noone expected it first. Next we can discuss germany. Pm r getting hurt and noone knows why. Just saying..

Mickey's picture

this is the biggest game of musical chairs, ever.

why's my gold? I know exactly where.

Patrancus's picture

German gold

wasn't it sent to Hugo in Venezuela? or maybe its in Fort Knox, or maybe still down in the hold of the WTC,  I suppose anyone's guess, I read something today that says China is dumping their gold, maybe thare dumping German gold. WTFK's

Mad5Hatter's picture

German Gold?

Gold is Fungible ..... So where is the Story?   SEVEN YEARS man .....

If the storage agreement had in it a clause that said the US would not sell it, and you can prove the gold got is not the gold given, then you have BREACH. Its all about trust which is not a breach. It would seems 1) must show obligation not dispose of ALLOCATED german gold, and 2) that the gold given is not the gold given back, and thus the breach and tailspin of trust, and it all blows up.

Problem of just paying them off in FRNs, is that, it would show that the gold aint there, and bundesbank would buy LONG comex LBMA gold positions to recapture, and that would blow up the fiat world, thus, THE ACCOMMODATING GERMANS, in on the gang rape of all the people world wide.

Seven Years = The gold aint there and US defaulted once again.

Move along, nothing new.

===

There are liberals, conservatives, libertarians, but ALL THREE are intellectually corrupt, and here is why:

1) Liberals are not progressive, but retrogressive, and totalitarian socialization has failed, (because it does not fully exploit our innate devils and angles. Liberal = marix commie epic fail.

2) Conservatives are not, when they compromise on trashing the constitution, and enabling the retrogressives. Duplicitous SOBs

3) Libertarians have no concept of necessary controls, just platitude, for if any goes, so does civilization. Pie in the Sky Dreamers

The trick is maximum FREEDOM, within a limited government, and we HAD a Constitution which was suppose to preserve our freedom, ... until the liberals and conservatives trashed it, with the libertarians off in la la land.

Patrancus's picture

Historic definition

that I learned in series 7 was:

Rehypothecation -- The hypothecation again of collateral already hypothecated. Rehypothecation, except by consent of the owner of the collateral, is illegal. When a customer deposits with a broker securities instead of money as margin he hypothecates the securities with the broker. In effect he obtains a loan on them. The margin represents the loan. He signs an agreement with the broker whereby the broker is permitted to rehypothecate the securities is permitted to use them as collateral in obtaining a loan for himself. If the broker defaults on the loan he has obtained on the securities and the securities are sold to satisfy the loan the owner of the securities (the broker's customer) cannot recover the securities. He is without recourse except that he may proceed against the broker to recover the difference between the value of the securities and what he may owe the broker in margin or otherwise. Also, when stocks (or bonds ) are bought on margin the broker's customer gives the broker the right to hypothecate them. This is necessary as the customer is the real owner of the securities they are bought for his account and risk. 

Wars the gold?
ag1969's picture

What is all the fuss about?

Can't we just send them 374 tons of these.  I mean, for God's sake Germany, look at all of these security features!  I bet your shitty old gold bars didn't have a raised inkwell!  And that 3D Security ribbon, that is some high tech stuff!

Manslavedave's picture

German

Germany has about as much of a chance reclaiming their gold as my generation has in collecting social security.............. Anybody know if a private individual can buy SDR's(Special Drawing Rights) from the IMF as an alternate to the U.S dollar???

¤'s picture

Interesting to see...

...the 10 UST barely react to the FOMC minutes when just about everything else did.

They have a vise-like grip on it for now and the trend or line of demarcation seems to clearly be that 3.0%  

This is interesting to watch and it's an indication of something at this point. Big forces and pools of digitized money at work it appears that have it capped right where they want it...for now.

Iceberg Slim's picture

As this German Gold Story continues to develop...

it just makes me want to stack even more....china style.

ivars's picture

Quote:This is interesting to

Quote:
This is interesting to watch and it's an indication of something at this point. Big forces and pools of digitized money at work it appears that have it capped right where they want it...for now.

 

Just wait for NFP. That will be a statistics miracle. I think 6,8% unemployment rate is minimum. 6,7% also likely. In any event , it will be below ( above in jobs added ) expectations. I have learned lately that with objective ( full taper) at hand, USG and FED are very effective and fast in creating necessary number background. It is very good learning to observe how they manage communication to both not crash the stock market too early and keep the surprise moment at the same time placing "hard" numbers under taper action like bricks.

BTW its also nothing new, it is exactly how politicians communicate. There is no message without an aim. Truth does not matter, as Obama proved. Lying and asking forgiveness works better. Always.

Dagney Taggart's picture

D

E

F

A

U

L

T

kiss

PS. I love palladium.kisskiss

Louie's picture

Jewish gold from WWII?

Any chance that the reason why the Germans want the bars melted is because it was from the 3rd Reich?  

Could it be that the Germans don't want any other parties laying claim to the gold?  Any chance that those gold bars have an eagle and swastika on them?  

Or maybe the gold was delivered in sacks?  Unrefined jewelry and dental gold?

I would not put it past JPM to have stored this for the Germans for the past 50 years.   

JY896's picture

Additional translated content from WiWo

Wirschafts Woche: What happened to our gold reserves?

This is a purebred mainstream source. While acknowledging concerns and 'conspiracy theories', its function is to marginalize them and any concerns related to the whole affair. At least it summarizes the PR objectives of this particular charade for us neatly:

"Why the return a total of seven years should take not even ten percent of German gold reserves, remains, however, controversial. However, the Bundesbank references demand on two factors that were crucial for the less than ambitious schedule. On one hand the complex logistics: transport should be stretched over a longer period on the one hand to provide the necessary safe capacities and on the other hand to increase the security of transport. On the other hand was connected to the time corridor until 2020 also a clear signal: despite the debt crisis in the euro zone and the United States there is no pressure to act. Finally the German gold be sure to fully trusted partners in custody."

It is reassuring to see that the comments are UNANIMOUSLY and very strongly skeptical (to say the least). BS meters at full tilt, the readers assume the gold is gone.

Here's one even better: Die Welt laments that the decline in fiat price of gold has cost the Central Banks nearly half a $TRILLION in losses, with Germany losing $50B. Such an outdated, barbaric metal this 'gold' stuff is. Thankfully many/most readers there know better (tougher to get comments to translate on that page).

There you have it. Nothing to see here, nothing to worry about. These are NOT the droids you are looking for. If anything, we should have sold all the gold long ago. Move along.

Louie's picture

Coin Melt Bars?

Is there any reputable source saying that 90% bars are exiting the US vaults?  I have heard rumors about corroded bars coming out, but I have not seen anything convincing. 

Any links where the evidence could be "confirmed"?

Sebi's picture

German Gold from 3rd Reich?

Nope, that's not the case. Also: Germany lost the war. Do you really think the allies let them keep the gold they stole during the war?

The gold that Germany accumulated was a result of its export surplus. Germany exported like crazy in the few decades after the war, converting the surplus into gold. So afaik most of the German gold in New York never came from Germany. They bought it using their surplus of foreign reserves acquired via trade.

Turd Ferguson's picture

Just speculation

MODERATOR

Which is...as always...all we have.

The main question remains: Why re-assay and recast the bars if they are your original bars? If you want to convert them into LGD bars, why not do that yourself, after you've gotten them back? Why have the U.S. do this pre-delivery?

Response to: Coin Melt Bars?
Turd Ferguson's picture

Btw

MODERATOR

Nice little Globex rally post the FOMC minutes.

$1213 remains a key support level for the rest of this week and going forward:

tyberious's picture

Currency Watch: Triffin’s

Currency Watch: Triffin’s Dilemma

Chuck Butler, President, Everbank World Markets

In the 1960s, the Belgian-American economist Robert Triffin pointed out something that I would like to bring into the sunlight today, and which soon will be a popular topic around the water cooler, if I'm correct.

Triffin observed that when a national currency also serves as a world reserve currency, a dilemma arises: the issuing country must choose between "store of value" and "reserve status." A country whose currency has reserve status must be willing to supply the world with sufficient currency to meet world demand for foreign exchange reserves, and thus dilute the "store of value." Meeting this demand will also be reflected in fundamental imbalances in payments, specifically the current account.

I will focus on the dilution of the dollar's value since Nixon severed its gold backing in August 1971.

As I explained in my February 2012 World Money Analyst article, the dollar has completed four alternating weak/strong trends since 1971, shown in the chart above. The current weak trend in the dollar began 11 years ago; could this one be the trend to end all trends?

A History of Reserve Currencies

Prior to the current US dollar stint, the currencies of five countries each held world reserve status for an average of 95 years. This data goes back 563 years, folks, so we're not just looking at a single example. Here's the list and approximate time frames:

As you can see, the US dollar has held reserve currency status for 88 years… just seven years shy of the average of 95 years. Of course, the 95-year figure is just a historical average; the actual time till expiration of reserve status could be longer… or shorter!

I found the graphic below on the Casey Research site and thought that it played well with my point here.

Notice that the sand that represents the time the dollar has left is moving through the hourglass right before our eyes. To borrow and adapt a line from a soap opera, "Like sands through the hourglass, so are the days of the dollar's life."

I travel and talk to people throughout the US, Canada, Mexico, and Panama. Wherever I stop, I try to explain what deficit spending and debt has done to the US dollar's value, and how regardless of what country they live in, they should not have 100% of their investment portfolio allocated to their home currency.

For over 3 years, I have warned that the US dollar's term as the world's reserve currency will expire by the end of this decade. That message, it turns out, aligns well with the historical average that dates the end of the dollar's reign as 2020.

And now, the US must deal with another debt ceiling debacle. I truly believe that the US will eventually relinquish its reserve currency status in order to avoid an outright default.

So, if the dollar loses its reserve status, what will that mean to dollar holders? Gloom, despair, and agony come to mind. It took the UK over 50 years to recover from their loss of the reserve status.

Remember, the country with the reserve currency gets to receive loans at discounted borrowing costs.

Also, commodities are priced in the reserve currency, meaning central banks around the world must hold the currency in their reserves to facilitate trade. When these benefits are lost, a country's economy becomes stagnant at best, and the value of the currency is depreciated, mainly because the world's central banks no longer need to hold it.

What's Next?

I am frequently asked which currency will replace the dollar as the reserve currency. I respond that the real concern is not speculating about the next currency king, but about the consequences of the dollar's lost status!

When pressed, I speculate that it will be the Chinese renminbi. China was the first country to state as its goal the replacement of the dollar standard. Since making that claim, China has taken multiple steps toward making its currency, the renminbi or yuan (same currency), eligible to become the next global reserve currency. China still has a long way to go but has moved quickly.

I also believe that whenever China allows the renminbi/yuan exchange rate to float against world currencies, which is essential to gaining reserve status, it will issue the currency with partial gold backing. That would render its currency the most attractive in the world and spark global demand and wide distribution!

The euro was once considered the dollar's main challenger. That was before the markets woke up and realized that Greece, Spain, Italy, and Portugal can't pay their debts, and that their debt shouldn't be issued at the same yield as German debt. The euro may one day rebound to once again be a challenger, but not before China moves to the head of the class.

Another alternative could be that the reserve currency becomes a basket of currencies with each the "king of the hill" in their respective regions. But that wouldn't save the dollar from a loss of value that would follow its lost status.

I write a daily newsletter called A Pfennig for Your Thoughts in which I always remind readers to have at least 15% to 20% of their portfolio allocated outside of the dollar in select foreign currencies and precious metals. One day, when the dollar gives up its reserve status in order to stave off a debt default, non-dollar holders will be thankful they heeded that advice.

Chuck Butler is president of EverBank World Markets. EverBank is an FDIC-insured US-based bank specializing in WorldCurrency® Certificates of Deposit and deposit accounts denominated in select global currencies. Contact: www.EverBank.com

treefrog's picture

where did it go?

around the necks of millions of south asian women.   ...at least  a large portion of it.

Sebi's picture

Recast bars - theory

Did it say anywhere into what format those bars have been recast that the Germans received? 400oz?

What if the bars got recast into 1kg bars ... you know, to have a little change at hand when the Chinese come forward with their new standard?! The Germans use the metric system as well after all.

Dagney Taggart's picture

Mali

Obviously the Chinese beat the Americans to the vault.wink

I wonder who's next? Turkey?

Turd Ferguson's picture

Apparently the stated desire

MODERATOR

Apparently the stated desire was to have them recast into LGD bars of the 400 oz variety.

http://www.lbma.org.uk/pages/index.cfm?page_id=27

ag1969's picture

Hey Louie, LMAO

If that is Nazi Gold, then the legal owners are probably in the USA anyway... well you know ... Operation Paperclip and all. 

bookers126's picture

Why Have US Re-Cast the Bars

Maybe the Germans studied some of their bars sitting in the US vault and were quite surprised to find out that the bars 

had been tampered with (cored and re-filled with TUNGSTEN or lead) or maybe they saw the bars had been repeatedly shaved down to the size of a toothpicks.  The Germans simply said give us real bars, we don't care where you get if from or how much you have to pay - start delivery ASAP or we go public. 

This seems to answer the question.

Kansascrude's picture

Its not NAZI gold that was all confiscated after WW2

No doubt in my mind that it isn't the original gold....come on no way.  This is was done to hide the leasing sale trail.  If its still there and in original form.  SHOW US THE MONEY (Au that is)  Heck my guess is they can't even show a little bit of it.....

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