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Germany Fires a Warning Shot at the Fed

Phoenix Capital Research's picture




 

 

Germany has the second largest Gold reserves in the world behind the US. Since the early ‘80s, it has stored the majority of these reserves with the NY Fed (45% vs. 13% in London, 11% in Paris and the remaining 31% in Frankfurt).

 

With that in mind, everyone needs to be aware that last Monday Germany’s Bundesbank announced it will be moving a major portion of its reserves from the US and all of its reserves from France back to Frankfurt.

 

Nearly half of Germany’s gold reserves are held in a vault at the Federal Reserve Bank of New York — billions of dollars worth of postwar geopolitical history squirreled away for safe keeping below the streets of Lower Manhattan.

 

Now the German central bank wants to make a big withdrawal — 300 tons in all.

 

On Wednesday, the Bundesbank said that it would begin moving some of the reserves, the second-largest stock in the world after that of the United States. The goal is to house more than 50 percent of German gold in Bundesbank vaults in Frankfurt by 2020, up from a little less than a third today, the bank said…

 

The new policy will include the complete withdrawal of 374 tons of German gold stored at the Banque de France in Paris, about 11 percent of the total. Bundesbank officials were quick to note that the decision was not a reflection of French trustworthiness. Rather, because France and Germany now share the euro, there is no need for reserves as insurance against currency crises.

 

http://www.nytimes.com/2013/01/17/business/global/german-central-bank-to-repatriate-gold-reserves.html

 

This announcement came with the usual political statements that the decision had nothing to do with a lack of trust between the Bundesbank and the US Fed or Bank of France, but the message is obvious: Germany sees the writing on the wall and is moving to secure its Gold reserves.

 

Remember, Germany has spent the better part of two years preparing for financial chaos. Since the autumn of 2011, it has:

 

  1. Implemented legislation that would permit Germany to leave the Euro but remain a part of the EU.
  2. Revived its Special Financial Market Stabilization Funds, or SoFFin for short, allocating 480 billion Euros to the fund (and also providing German banks with a place to dump their Euro-zone Government bonds if they need to).
  3. Implemented reforms that would allow it to close off its borders for as long as 30 days if it needed to (so individuals and capital couldn’t leave Germany)
  4. Created a working group to assess both the economic impact of a Greek exit from the Euro as well as how to manage the impact of a collapse in France.
  5. Pulling all of its Gold from France as well as a major portion of its Gold from the US.

 

All of these are verifiable facts that the Western Media has avoided talking about. It is very easy to connect the dots here: Germany is implementing a contingency plan to put a firewall around its financial system for when the EU finally breaks down.

 

A final note here: the tension between the world’s Central Banks just increased dramatically.

 

Since the Great Crisis began in 2008, the world’s Central Banks have collectively pumped $10 trillion into the global financial system. Every major Central Bank from Germany to the US and China wants to debase its currency to benefit exports and facilitate dealing with its debt load (even China sports a real Debt to GDP north fo 200%).

 

This competitive debasement has lead to increased tension between the world’s Central Banks. You will never hear their stated outright for the simple reason that the single most important responsibility of the Central Banks is to maintain confidence in the system.

 

However, underneath the veneer of goodwill and the occasional necessary coordinated intervention, tensions are rising between Central Banks. When the US debases the US Dollar it pushes the Euro higher. This hurts German exports which in turn angers the Bundesbank.

 

The Bundesbank fired a warning shot at the Fed last autumn when it announced it wanted to have its Gold reserves at the Fed audited. To be clear here: no one of major financial import has ever questioned the Fed’s trustworthiness before. However, at the time of this announcement Germany stated it had no intentions of actually moving its reserves.

 

Fast-forward to today and Germany has not only audited and checked its Gold reserves at the Fed but it is now moving them. In plain terms, Germany has told the world that A) it does not trust the Fed and B) it is through playing around.

 

This situation will likely be getting worse going forward. The fact that Germany will be removing all of its Gold reserves from France certainly doesn’t bode well for future German French relations if push ever comes to shove (it’s not as though Europe has a history of getting along well).

 

On that note, we have produced a FREE Special Report available to all investors titled What Europe’s Collapse Means For You and Your Savings.

 

This report features ten pages of material outlining our independent analysis of the real debt situation in Europe (numbers far worse than is publicly admitted), the true nature of the EU banking system, and the systemic risks Europe poses to investors around the world… including the US.

 

It also outlines a number of investments to profit from this; investments that anyone can use to take advantage of the European Debt Crisis.

 

Best of all, this report is 100% FREE. You can pick up a copy today at:

http://gainspainscapital.com/eu-report/

 

Best Regards,

 

Phoenix Capital Research

 

PS. We offer several FREE Special Reports to help investors navigate other risks in the financial system. They include:

 

Preparing Your Portfolio For Obama’s Economic Nightmare

 

How to Protect Yourself From Inflation

 

And last but not least…

 

Bullion 101: Everything You Need to Know About Investing in Gold and Silver Bullion…

 

You can pick up free copies of all of the above at:

 

http://gainspainscapital.com/

 

 

 

 

 

 

 

 

 

 

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Mon, 01/28/2013 - 09:19 | 3190928 Farside
Farside's picture

I find it interesting that noone considers looking into why the German gold was deposited all over the world in the first place.

It wasn't for trading convenience. It was a post WWII allied action to ensure Germany never had the ability to do it's own thing economically, and therefrore militarily.

Really, Germany should have repatriated all it's Gold when it became a barbourous relic.

If there is no need for reserves as insurance against currency crises, why don't they sell the Gold and hold it as real money? In light of this, surely it's foolhardy to risk this gold by actually moving it around the world.

Mon, 01/28/2013 - 08:44 | 3190873 fredquimby
fredquimby's picture

Implemented legislation that would permit Germany to leave the Euro but remain a part of the EU.

Sounds backwards to me.

Implemented legislation that would permit Germany to leave the EU but remain a part of the EURO.

Sounds better, and is probably the best plan for the UK as well!!

 

Mon, 01/28/2013 - 06:43 | 3190762 zilverreiger
zilverreiger's picture

Keep in mind they only repatriate 33% of the american holdings over 7 years.

Mon, 01/28/2013 - 08:04 | 3190821 zhandax
zhandax's picture

Which means one of two things; 1) the ultimate collapse will take much longer than many of us would like to think or 2) Germany has mis-timed this and will be caught with their pants down.

Mon, 01/28/2013 - 02:20 | 3190592 Boxed Merlot
Boxed Merlot's picture

Even if their 300 tons are carried a brick at a time from the bedrock storage room of the NY fed, I can't imagine the rest of the logistics to transport the crap 3800 miles would take 7 years to accomplish. If it did, maybe they need to hire a couple of Jews like Ezra and Nehemiah to do the carrying for them.  This 84 month interim period is the result of unwinding prior counterparty encumbrances on their original “deposit”.

To say this stuff is a barbarous relic of bygone international monetary funding is akin to Nixon proclaiming his innocence or the boy Clinton giving new definitions to the meaning of “is” and “sex”.

 jmo.

Sun, 01/27/2013 - 23:11 | 3190232 wcvarones
wcvarones's picture

Bullshit. If Germany was pulling the plug on the global Ponzi, they'd pull all their gold NOW, not a fraction of their gold over the next decade.

Mon, 01/28/2013 - 09:13 | 3190910 Farside
Farside's picture

They never said that they wouldn't change their minds and change the amount or timeframe at some point in the near future.

It's their gold and they can take back as much as they want as soon as they please.

Sun, 01/27/2013 - 23:08 | 3190226 eddiebe
eddiebe's picture

While the article holds some interest, it surely isn't news.

Sun, 01/27/2013 - 23:03 | 3190212 One World Mafia
One World Mafia's picture

Phoenix pushing the myth that a weak currency is good for exports and exports are everything.

It’s a fallacy that a rising currency will mean you can’t export bc two things happen when you have a strengthening currency that reduce your overall costs. #1 is your raw material costs. Your components that you import from around the world will become less expensive for you. Also your capital costs will be lower. When you have a strong currency businesses can borrow money at more favorable terms bc the lender knows they will be paid back in a currency that’s not losing its value. So historically if you have a strong currency you have a lower cost of capital and you have lower raw material costs that help you be competitive.

The only reason you are exporting is to import. You are exporting to finance your imports, and if you can export less to import more you are better off bc you don’t have to work as hard to consume the things that you need. The idea that I’m going to have to lay people off if i don’t debase my currency, that’s the same thing as cutting their wages. What you are saying is we have to find a way to lower wages other than a pay cut. Lets just fool them into accepting a lower pay w/o their knowledge bc we are debasing the value of the currency in which they are paid, and if you look historically, the US had a very strong currency when we had trade surpluses. We now have a weakening currency and we have trade deficits. The Japanese yen was much stronger during the 70s and 80s than it is now. It was rising sharply yet they had trade surpluses the whole time. Same thing with Germany. Germany still has a trade surplus, but Germany, when it still had the Deutsche Mark, the Deutsche Mark was strengthening thru 70s, 80, 90s against the dollar and its trade surpluses were growing. America with its weakening currency had growing trade deficits.

So it’s just not true that you can increase the real value of your exports by debasing your currency. You might be able to increase the nominal price that you receive for your exports, but that doesn’t mean anything if you can’t buy anything with that. What’s the value of Zimbabwe’s exports?

Sun, 01/27/2013 - 23:00 | 3190204 JustanEmotion
JustanEmotion's picture

Thanks for the update. :/ Were you sleeping all last week?

 

Sun, 01/27/2013 - 23:50 | 3190192 billsbest
billsbest's picture
German Bundesbank: Co-conspirator in US Federal Reserve's Gold Heist

Certainly the citizens of Germany can trust to the utmost anyone with such an honorable career as Dr. Andres Dombret. One could not be more on the Inside of the international banking cartel than this bloke:

Career

Since 2010 Dombrett is member of the executive board of the Deutsche Bundesbank responsible for Financial Stability, Statistics and Risk Control.[2] From 2005 to 2009, Dombret has been the Vice Chairman of Bank of America Global Investment Banking in Europe, the Middle East and Africa as well as Head of the German, Austrian and Swiss branches.[1] Prior to joining Bank of America, Dombret was a Managing Director and the Co-Head of Rothschild Germany. Prior to this, he spent 10 years with JP Morgan in London and in Frankfurt, and was a Managing Director in the Investment Banking Division covering German clients. Andreas Dombret began his career at the headquarters of Deutsche Bank. READ FULL POST HERE


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