Where is the German Gold?

Wed, Jan 8, 2014 - 1:48pm

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: https://www.zerohedge.com/news/2013-12-24/year-later-bundesbank-has-repa...

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: https://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. (https://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.


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Dagney Taggart
Jan 8, 2014 - 2:58pm








PS. I love palladium.

Jan 8, 2014 - 2:50pm

Quote:This is interesting to

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.

Iceberg Slim
Jan 8, 2014 - 2:41pm

As this German Gold Story continues to develop...

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

Jan 8, 2014 - 2:34pm

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.

Jan 8, 2014 - 2:29pm


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???

Jan 8, 2014 - 2:27pm

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!

  Image cannot be displayed

Jan 8, 2014 - 2:23pm

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?
Jan 8, 2014 - 2:18pm

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

Jan 8, 2014 - 2:14pm

this is the biggest game of musical chairs, ever.

why's my gold? I know exactly where.

Jan 8, 2014 - 2:11pm

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..

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