German Gold Hijinx

Wed, Jan 16, 2013 - 11:54am

I guess it all depends on how you look at it. Either this is all on the up-and-up or it isn't. Either this is a purely political show or it isn't. Either the gold is really there to be repatriated or it isn't. It's up to you to decide.

Just three months ago, The Bundesbank labeled as "lunacy" the idea that German gold needed to be brought home. They announce today that they're doing it anyway, but in sizes nowhere near what had been speculated. Is this just a political trick to mollify the German hoi polloi? Probably. It certainly doesn't upset the status quo or shake the global banking system in the manner we'd all hoped.

However, you could also choose to look at it this way:

  • In preparation for The Great Reset, the Germans do desire to repatriate as much gold as possible but they also don't wish to bring about The Reset any quicker than necessary.
  • So, they bring home "their French gold" but only do so at the rate of 50 tonnnes/year. Why? If it's just sitting in a vault and collecting dust, why not ship it all home over the next few weeks? What's the big deal?
  • And why leave "their English gold" untouched? Is it because all gold stored at the BoE can be leased, hypothecated and rehypothecated many times over, thereby making reclaiming it impossible?
  • And why bring back just 300 tonnes of "their American gold", again over the next 8 years? It shouldn't be that big of a deal to pull up a few pallets of "barbarous relic" from below the streets of lower Manhattan, drive it over to JFK and load it onto an airplane bound for Frankfurt. Should it?

Hmmmm. Maybe, just maybe, their French gold is long gone and the Frenchy-French need some time to come up with new supply to pay them back? ( Maybe the English gold has all been shipped to China and other points East, where it has been resmelted into kilo bars with official Chinese insignia? ( And maybe, just maybe, the American gold is nothing but paper certificates and IOUs, no more valuable than claims on the GLD? (

Ahhhhhh....what do I know? I'm just a Turd. A dope with a MacBook. I'm sure it's all just fine. Move along. Nothing to see here. All is well. Go back to sleep.

Anyway, it has been a few days so we need to update the charts. Let's start with gold. Take a look at these two, daily charts. You can clearly see the price double bottom. This also coincides with an open interest bottom in late December. In the big picture, me likes what me sees.

Now check out this 8-hour chart. Besides all of the horizontal and diagonal resistance lines I've drawn, gold will likley run into some tough sledding near the 50 and 100-day MAs. The fifty for the Feb13 contract is currently near $1697 and the 100 is near $1718. Taking it all into consideration, the "all clear" for a rally can't truly be sounded until gold gets up and through about $1710-1715, maybe in a week or two. Until then, I just plan to keep stacking physical. I'm not going to buy any more options just yet.

As you might expect, silver has a somewhat similar picture. It came down in late December and then double-bottomed just below $30 about two weeks ago. Since then, it has seen a steady progression higher. Now it just needs to follow through. It is finding resistance near the highs of 1/2/13 (31.50) and it needs to break that level to draw in more buyers. Once through there, expect slowdowns near the 50-day, currently at $32.01, and the 100-day near $32.60.

That's all for today. I need to go take a little boat ride with all my guns and ammunition. It'll probably take most of the day. More tomorrow...


About the Author

turd [at] tfmetalsreport [dot] com ()


Jan 17, 2013 - 10:55am

Before or After ?

Is the rebound pop happening before or after the afternoon London PM fix?

fast mover Wizdum
Jan 17, 2013 - 10:57am
Jan 17, 2013 - 11:01am

It does not look strong

at this level

Jan 17, 2013 - 11:06am

German gold

It was mooted upthread, that Germany's gold (earned through currency FX surpluses on trade) was denominated in gold as a preference, at a time when there was a fixed price for gold in dollars.

This suggests a scenario, where Germany never had physical possession of this gold in the first place, but was accruing 'paper gold' as their trade surpluses grew, in the financial clearing centres of London and New York.

This is an interesting perspective;

a) it means that CB physical gold holdings are double / triple / quadruple counted, to the extent that they originate in this fashion. They were all claims on the Fed's own stack.

b) it becomes clear why the Fed still values gold at $42; that is what it will pay out on any claim, as compensation!

Am I onto something new here, or am I just slow?

Jan 17, 2013 - 11:09am

Italy's gold

Somebody queried earlier why Italy would have so much gold.

Italy was the world hub for fractional banking, before it moved to London. Recall the Italian city states (Florence, Venice etc); great trading hubs, and not short of a bob or two.

Unlike German gold, I would expect this to be the physical variety; and separate from the Vatican's gold.

Jan 17, 2013 - 11:12am

Spain's gold

Also physical in the first instance; plundered from the America's.

Still kept in Spain, or housed elsewhere? Don't know.

Jan 17, 2013 - 11:18am

Classic bullish price action in gold


An outside reversal day on the daily in progress...

Jan 17, 2013 - 11:24am

Some have compared the German

Some have compared the German move to France’s withdrawal of gold from the US under President de Gaulle. However, let us remind that in that time, under the gold-exchange standard, France was only requesting the gold payment of its accumulated dollar-balances.

Although in the nineteen-sixties it was already highly politically-incorrect not to be happy with paper settlements, the German move seems to be ending this decades-long subservience. We have seemingly reached the stage described by Jacques Rueff in his book "The monetary sin of the West", written in 1971:

"Creditor countries cannot fail to realize one day that through the accumulation of dollar balances they are the ones who pay for the tangible assets acquired in their own territory by U.S. citizens or corporations, at least so long as they cannot secure repatriation of their holdings invested in the United States. Thus the United States is buying factories, businesses, and corporations, and even financing some of its foreign aid and prestige expenditures at the expense of these creditor countries. It is unthinkable that the United States, a proud and generous nation, will not in the end be disgusted by practices that permit it to live at the expense of its suppliers and the recipients of its aid. I am convinced that if this goes on, Westerners will finally open their eyes, become aware of the effects of an unprecedented system of spoliation, and demand that an end be put to it."

(page 190-191, emphasis is mine)

As previously very well shown by GL, the German move is sure not an isolated move, but a concerted one. It indicates that the world, and not just Germany, now demand that an end be put to this "unprecedented system of spoliation".

J. Rueff was battling to get gold re-evaluated to basically 70 USD, which would have allowed the US to pay its debts without exhausting its gold reserve. Today, as pointed out by Santa, the ECB is also in the picture, with gold on its balance sheet marked to market, needing also a substantial re-evaluation for sanitation purpose.

Jan 17, 2013 - 11:25am

A sleepy Dr Jerome...

I took a quick look at metals this morning while in my illness-induced stupor and began discussing with my wife if we should make another purchase or save our dry powder. No conclusion. Shower, a few chores and once back at the computer... woo hoo! I love seeing action like this even if I didn't take advantage this morning.

I hope you traders made some money both ways!

Prize Fighter
Jan 17, 2013 - 11:27am

Puck, the coin flip conundrum

Puck, the coin flip conundrum reminds me of another one presented to me in a freshman engineering course called, the Monty Hall Paradox.

"Suppose you're on a game show, and you're given the choice of three doors: Behind one door is a car; behind the others, goats. You pick a door, say No. 1, and the host, who knows what's behind the doors, opens another door, say No. 3, which has a goat. He then says to you, "Do you want to pick door No. 2?" Is it to your advantage to switch your choice?"

It's not just a great riddle but a great story. Many learned doctors and mathematicians have failed to get this correct but all were proven wrong by a little old lady who wrote into Readers Digest. At least that's how I remember the story as I haven't read thru this link but it should explain the history and solution. I think you'll really enjoy it.

Our professor didn't let on to the right answer but wanted us to debate it out amongst ourselves. I, like most of our class, was adamant that a 50/50 shot wasn't improved by changing your choice between two sides. Prof had to force or ask for a volunteer to argue the other side of "obvious" which was that yes, your odds do increase by changing your choice. We thought it was hilarious and just an exercise in critical thought. Wrong.

Our sheepish volunteer, who didn't believe what he was championing, began and I took the other side. After 30 minutes I and the entire class were still in arm-folded mode and my counterpart was on the verge of throwing in the towel and joining us. We were stuck at how one can argue a 50 percent choice was more valuable than the other 50 percent choice. Through encouragement from the professor (which was a huge red flag to me that I was going to be on the wrong side of history here) he reminded his volunteer that it wasn't a 50/50 choice but a 33/33/33 choice which now appeared to be 50/50.

Somewhere in that we surprised ourselves by figuring out it actually increased your odds to change. The lesson wasn't math but the trouble with absolutes and common sense. Oh the humility. One of my worst and best days.

Jan 17, 2013 - 11:28am

PIMCO conference call

Just got off a conference call with Bill Gross and Mohamed El Erian.

9 pages of handwritten notes, some interesting comments by them( I think Ivars will like Gross's view on inflation time line)

I will try to get a post up by late evening on summary of call, similar to my call last week with Eric Sprott.

this working for a living is getting in the way of posting :-)


Keep Stacking My Friends

Jan 17, 2013 - 11:31am

@ Larry

Looking at the kitco hui chart which has a 45 min delay, the HUI is still down for the day.

I think it is how it ends the day, which is the signal.

We'll watch this one with interest!

Jan 17, 2013 - 11:37am

@Byz, re: signals

Yes, victims is right. Maybe LIEsman could simply clue them in to the head shine thing. That would be subtle. :)

Looking at the moves today, the criminals may have been victimized by their own swords. Love it when that happens.

Bill of Rights
Jan 17, 2013 - 11:37am
The Green Manalishi
Jan 17, 2013 - 11:40am

OK, what does this mean?

SLV Adds Record 572 Tons Of Silver In One Day, More Than In All Of 2012 Submitted by Tyler Durden on 01/17/2013 11:34 -0500

Technically the addition of 572 tons, or a massive 18,378,092 ounces of physical silver, to the SLV ETF, in one day is not a record, as it excludes one amount which however was a year end rebalance at the end of 2007 offset promptly on the next day, but it certainly is the biggest one day addition of physical silver to SLV in ordinary course operations. It is also more silver added to the ETF in all of 2012, when just 544 tons were added in the entire year. This was driven by the creation of some 19,000,000 shares of SLV overnight which brought the total to 356.8 million shares. And since there has been no move in the price of silver, which certainly would have soared had this amount been purchased in the open market we can only assume this has to do with in kind basket creation taking place. Whether this was due to arbitrage, or simply the need to create inventory we don't know: we are confident however, that SLV custodian, money laundering expert extraordinaire HSBC, will have no comment. Just as there is no comment why in the days following the epic May 1, 2011 take down of silver, a nearly just as large 522 tons of silver poured out the ETF on May 4, 2011. What is certain is that a move of this size is certainly notable.

Jan 17, 2013 - 11:44am


Right. Either using as a signal or they're taking out their frustrations (and losses) on metals by hitting HUI. If they can't beat up the big brother they'll attack the little brother. Would love to see a giant hedge fund come in on the long side and give the shorts a double-whammy today. We shall see.

Jan 17, 2013 - 11:48am

Every Oz. Repatriated means 100 Oz's of Paper needs to be bought

It looks like Chavez's real legacy is that in repatriating his country's gold, he started an avalanche with with a large snowball towards the destruction of the Western/Global fiat based currency scheme.

I think it is no coincidence that the typical/normal EE takedown this morning was counted with an inverse waterfall. The German demand for repatriation was in itself as "waterfall" event, however, tepid. I can only imagine that every country that has "gold" stored in NY or the City of London, are now talking about getting it back before they can't , are left in the cold, and are politically overthrown by those who would use it as a campaign issue. This is going to be a Nationalistic issue at its best or worst depending on whose side you're on.

It is now being outed that the Western CB's and Bullion Banks are and have been cheats, liars, and thieves. It is no wonder that so many Banks use the word "Trust" as part of their Name of their company. That is because as a fractional reserve system, there could be a run on the bank and in hours that Bank could go BK when the trust is no longer trusted.

This is the beginning of a run on the BB's of their 100:1 leveraged "gold" holdings. Every Oz. of gold that they have repatriate means 100 Oz of paper gold HAS TO BE BOUGHT!

The Dutch will be next. They remember the Tulip Bubble and they don't want to get scammed a second time.

"All the King's horses and all the King's men couldn't put Humpty Dumpty back together again".

Like borrowing more and more to pay back earlier debts, shorting more and more will simply make the grave hole deeper and deeper.


From King World News.

“In the case of Germany, the gold was sent abroad to France, and to the Federal Reserve Bank of New York during the Cold War because of fears the Russians may overrun Germany and seize the gold.

Those kind of fears evaporated a long time ago, and there is no reason for the Germans to have the gold elsewhere. In the last year, somebody in the ministry was interviewed and they were asked why the gold was still abroad? They said, ‘To facilitate trading.’ Well, this is exactly why the gold shouldn’t be elsewhere. It should be sitting there as the patrimony of the country, and it should be inviolate.

The latest round of gold repatriation was started by Hugo Chavez, and in Chavez’ case nobody knows if he is alive or dead right now. So we have seen a pattern from Saddam Hussein, to Gaddafi, and now Chavez, that anyone who interferes in the gold market or attempts to threaten the US dollar’s dominance ends up dead.

Ecuador decided to take a page out of Chavez’s book and ask for Ecuador’s gold back. So their gold was repatriated. The Germans and the Austrians were the latest to have public discussions asking the question, ‘Where is our gold?

Now the Germans have decided to take back their gold out of France, and apparently small portions of their gold will be sent from the Fed to Germany in coming years. I do believe a lot of Germany’s gold has been leased out internationally, through the bullion banks. So the reality is that the German gold hoard, which is supposed to be stored at the Fed, may already be gone.

There was the situation quite a few years ago when Drexel Burnham Lambert went down. They had borrowed 17 tons of gold from the Bank of Portugal, and when Drexel failed, the Bank of Portugal never got it back. Its claim evaporated when Drexel evaporated.

If you look at what happened to Portugal, the question becomes, should key bullion banks fail, would Germany and other nations forfeit their gold because the existing leases and claims would simply evaporate, as was the case with Portugal? This is something to consider. Countries such as Austria and others were getting paid to participate in gold leasing. I’m sure in the fine print it states if the bullion bank conducting the lease fails, the gold is lost, again, as was the case with Portugal and their 17 tons of lost gold.

I believe that most of the Western world’s gold, which is supposed to be in central bank vaults, has been leased out. Much of it is now in private hands in India, and what remains continues going East to China and other Asian vaults. So most of the Western gold has vanished from the vaults and it’s now just a book entry.

These various Western countries and bullion banks simply roll these leases over when they come due, and the gold never gets returned back to the countries. So it’s very interesting to see what’s going on. Obviously the trust is breaking down in the system.

Maybe we are going to see a bit of a run to the exits when more of this gold has to be repatriated, and the bullion banks are going to have to buy it from somewhere or fail. I just don’t think there is enough available physical gold out there to cover all of the outstanding loans. It’s just not out there in the marketplace to be acquired. For what it’s worth, all of this is very bullish for the gold price going forward.”

Jan 17, 2013 - 11:49am


I could have sworn that passing 31,80 USD for silver would trigger an avalanche of buy-stops...

edit: there we go. I wasn't that wrong.

Jan 17, 2013 - 11:52am

last two days

have had weakness across the GLOBEX session. What will today bring?

The drop was a surprise, the recovery was a surprise, the second wind just now is a surprise.... what's going to lead into the hour off?

Jan 17, 2013 - 11:54am

Banned Ingredients that Are Still Legal in the U.S.

"including oily anal leakage" Now you know why Turdites. Stop eating fat free potato chips. Thank you FDA for doing all your hard work at keeping us unhealthy. Have a look at the article for others.

Ingredient: Olestra (aka Olean) 
Found In: Fat-free potato chips Why the U.S. Allows It: Procter & Gamble Co. took a quarter century and spent a half a billion dollars to create "light" chips that are supposedly better for you, Calton says. They may need another half a billion bucks to figure out how to deal with the embarrassing bathroom side effects (including oily anal leakage) that comes with consuming these products.

Jan 17, 2013 - 11:55am

I second Manalishi's question

An extraordinary amount of SLV gets added in a single day (similar in size to the other extraordinary amount that got taken out 3 days after the massacre) - what to make of it?

Jan 17, 2013 - 12:21pm

Does anyne wonder why Germany

Does anyne wonder why Germany asked for it's gold back instead of just saying, "It's ok US. Just sell it, wire us the money, and we will buy the physical here in Europe. And thanks for saving us shipping costs!"

Think about it for a second. Why have it shipped? Why not just say wire Germany the dollar equivalent?

Jan 17, 2013 - 12:27pm

I'd never noticed that before

... that banks often use "Trust" in their name, Bally.

somehow it fits with giving out suckers in their lobbies--preferably the Dum-Dum brand.

Some things are just too coincidental to not be true. Aristotle had something to say about that: "

if, therefore, a thing that is believed is improbable and even incredible, it must be true, since it is certainly not believed because it is at all probable or credible."
Jan 17, 2013 - 12:33pm

orange is completely correct

and its a tossup--whats worse.......soft drinks or potato chips ESPECIALLY low fat or fat free.

kettle fried in a high smoke temp oil like peanut oil is a little better............and a high smoke temp, saturated, [ but non-hydrogenated] oil like coconut or palm is the best.

frying in mono and polyunsaturasted oils turns them into hydrogenated [transfats--the WORST] as they begin to approach their smoke temps.

low fat anything-in-a-bottle is worse than regular because usually it means hydrogenated fat.

Olestra and anal leakage boy that sounds just great..

thurd aye
Jan 17, 2013 - 2:22pm

Green of the

Green of the thread. Thanks.

Jan 17, 2013 - 4:55pm

Germans to bring 374 tonnes of gold home over 7 years?

We are informed by Debbie Carlson on Kitco that the Germans are going to bring some gold home.

In tonnage terms, the Bundesbank will transfer 374 metric tons from France and 300 tons from New York over the course of seven years.

That's 96 tonnes per year. Tongue-in-chhek, it means that the cartel have probably got to buy 96 tonnes a year out of the market to fulfil this order over the next 7 years!

maravich44 Indenture
Jan 17, 2013 - 11:09pm


I too, innocently and foolishly bought physical silver; Euro paper sounds like the better path. How much will it go up? How Soon? Why will it go up? Just trying to learn and invest my money wisely. Thanks.

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