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Is Germany's Gold Housed in New York, Paris and London All Gone?

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foreward by JS Kim, Managing Director of SmartKnowledgeU

Here is a recent correspondence from our friend Lars Schall, an independent financial journalist, and the German Central Bank, the Deutsche Bundesbank, regarding the exact whereabouts and specifications of Germany’s national gold reserve. From the correspondence below, it appears that the US Central Bank had already leased out Germany’s gold reserves in prior years and no longer has it, as the gold bars the US Central Bankers returned to Germany last year were clearly not the same ones that Germany originally deposited with them. The questions Mr. Schall’s revelations now beg is (1) if the Banque de France and the Bank of England have Germany’s original gold as well; and (2) if the various Central Bankers are deliberately returning Germany’s gold on a painfully slow timeline because they have already leased out Germany’s gold into the open market in prior years, no longer hold it, and must
therefore scrape together Germany's gold from the open market now.

 

Below is Mr. Schall’s inquiry to the Deutsche Bundesbank:

 

December 26, 2013

Dear Ladies and Gentlemen:

I am an independent financial journalist. In connection with the transfer of 37 tons of Bundesbank gold from New York to Germany, I came across the news that the bars were a melted before the transfer. May I kindly ask you for the following information:

Why were the bars melted at all? And why couldn’t that wait until the bars arrived in Frankfurt?

Kind regards,

Lars Schall
 


Below is the Bundesbank’s curious reply that is riddled with a lack of transparency:


January 3, 2014

Dear Mr. Schall:

Thank you for your enquiry.

At a press conference on the topic of Germany’s gold reserves on 16 January 2013, Executive Board member Carl-Ludwig Thiele presented the Deutsche Bundesbank’s new storage concept. In addition to the relocation of gold bars, this concept includes, amongst other things, measures to ensure that the specifications of the London Good Delivery (LGD) standard are met. You can find these specifications on Page 17 of the
following presentation:

http://www.bundesbank.de/Redaktion/DE/Downloads/Presse/Publikationen/201

Storage plan (new)
                 2012          2020
Frankfurt    31% ………… 50%
New York   45% ………… 37%
London      13% ………… 13%
Paris          11% …………  0%

Planned relocations:

– Phased relocation of 300 tonnes of gold from New York to Frankfurt.
– Phased relocation of 374 tonnes of gold from Paris to Frankfurt.
– Achieve LGD standard, where this is not already the case.

You can find the specifications for the London Good Delivery (LGD) standard at the following address:
http://www.lbma.org.uk/pages/index.cfm?page_id=27

In cases where these specifications were not already met, the Bundesbank had these original gold bars melted down and recast in order to meet this standard. This was achieved without any difficulties. Please understand that in order to ensure the security of the gold transports and our employees, the Bundesbank is unable to provide you with any further information.

Yours sincerely,

DEUTSCHE BUNDESBANK
Communication
Wilhelm-Epstein-Strasse 14
60431 Frankfurt am Main
Tel.: +49 69 9566×3511 or 3512

 

And below are questions raised by Peter Boehringer, president of German Precious Metal Society and co-initiator of the Repatriate our Gold campaign, to the opacity and oddities of the Bundesbank’s response:


Why does the Bundesbank continue to avoid transparency regarding Germany’s gold holdings?

 

Why not just come up with easy-to-deliver facts instead of repeated rhetoric about an alleged remelting of gold bars in the United States that even people with some knowledge of the gold industry and some common sense fail to understand?

 

There is no reason why the original gold bars acquired in the 1950s and 1960s (if they ever existed at all, which has never been proven, as by publication of bar lists or photos) had to be melted down and recast into LGD-compliant bars in New York as opposed to Frankfurt. Nor is there reason why all this had to be done in obscurity without any published report of the recasting.

 

The public is still waiting for answers to crucial questions like these:

 

– What kind of gold bars were melted? Original material from the 1950s and ’60s?
– How can the Bundesbank hint in its press release that some of the old bars already met the LGD specifications when those specifications were not defined and made a standard for central bank bars until 1979?

Why has the Bundesbank not published a bar number list of the old bars?
How can there be security concerns about bars that no longer exist?
Why has the Bundesbank not published a bar number list of the newly cast
bars?
– Who exactly melted the bars? Where exactly was this melting performed? Is there a smelter at the Federal Reserve Bank of New York?
– Who witnessed the melting and recasting of the bars?
– Are there any reports on this in writing with a valid signature? By whom?
– And especially: Why was it deemed necessary to perform this action in the United States as opposed to Frankfurt or nearby Hanau, where there are some of the best facilities in the world for metal probing, melting, and recasting? Had these actions been performed in Germany in a fully transparent manner, it would have been so easy for the Bundesbank to dismiss all questions from “paranoid gold conspiracy theorists.”

 

The Bundesbank is just the custodian of Germany’s national gold, which is worth more than $125 billion. The Bundesbank owes the public full transparency in all these gold matters. That is, physical audits,
independently verified storage reports, and a publication of the full bar lists of all its gold in all national or international vaults. Despite having now had the excellent opportunity of this partial repatriation, the Bundesbank has again failed to produce any proof or indication that at least 37 tonnes (out of 1,500 tonnes of German gold at the New York Fed) still existed through 2013 in their original 1950s-’60s bar form. Instead, Germany is now owner of almost 3,000 LGD-compliant standard bars, which proves nothing and dismisses no allegations of decade-long manipulation of the gold price.

 

It is still possible and even probable that the old German bars were lent into the market long ago or that they have multiple owners or are backing multiple gold exchange-traded fund derivatives. Of course the same holds for our remaining 120,000 bars at the New York Fed. The “repatriation” of a mere 1.5 percent of Germany’s foreign gold holdings and the supposed melting and recasting of the original gold bars do not prove the continued existence of Germany’s remaining gold holdings supposedly vaulted at the New York Fed. The Bundesbank has missed a great opportunity to bring transparency to Germany’s gold reserves. What a pity. And at its current speed the Bundesbank will require 60 years to accomplish the repatriation mission forced upon it by an impatient public. What a shame.

 

The initiators of the Repatriate Our Gold campaign  are considering legal action based on freedom-of-information law against the Bundesbank and possibly also against its auditors, who have certified the Bundesbank’s balance sheet without having adequately considered the risks associated with a non-transparent gold hoard, which is the only asset of substance on the Bundesbank’s books. (Ninety percent of those assets are mere paper claims, many of dubious quality, like “Target 2? claims.)

 

Our objective remains to achieve the publication of all gold bar lists and full transparency involving Germany’s gold. The German people are entitled to have all information about their golden property. And the American people have a right to know as well. After all, it is the U.S. Federal Reserve System and the U.S. Treasury Department that have been obscuring their gold holdings and foreign gold holdings since the last proper audit in 1953.

 


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Tue, 01/07/2014 - 20:58 | Link to Comment fancyfree
fancyfree's picture

Here is what Antal Fekete has to say about impending gold backwardation: https://s3.amazonaws.com/khudes/fekete.docx

Tue, 01/07/2014 - 14:02 | Link to Comment Arthur
Arthur's picture

When gold is "leased"   where does it go?  Anywhere or is what is being leased a "paper" right to the gold.

Are you guys saying gold holdings were lent fractionally like banks do with paper dollars?

 

Something differnet then a car lease, correct?

Wed, 01/08/2014 - 18:24 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

no, it's exactly like a car lease.
If by 'lease' it means you can sell the car after borrowing it, buy another car to return in its place & be paid to do so by an owner that declares the entire time that it still holds the full value of the car knowing full well you sold it already while leasing it.
That's the same, right? Happens all the time, right?

Tue, 01/07/2014 - 13:59 | Link to Comment el Gallinazo
el Gallinazo's picture
Is Germany's Gold Housed in New York, Paris and London All Gone?

Duh!

Tue, 01/07/2014 - 13:34 | Link to Comment Mad Muppet
Mad Muppet's picture

I'm sorry, did you say "A fool and his bullion are soon parted"?

Tue, 01/07/2014 - 12:41 | Link to Comment PR Guy
PR Guy's picture

 

 

Germany figures in this spoof on a TED talk about capitalism and profit (though the UK bit before it is the best)

http://www.youtube.com/watch?v=7QPxDugs0Nw

Tue, 01/07/2014 - 13:55 | Link to Comment thefirstabomb
Tue, 01/07/2014 - 12:20 | Link to Comment GIABO
GIABO's picture

What kind of shit show are they running? Good ol' boy Marvin Bush must be running things....

Tue, 01/07/2014 - 12:00 | Link to Comment Fix It Again Timmy
Fix It Again Timmy's picture

Yes, of course, it's ALL gone!  The person/s who started this process are long gone and the present day custodians will simply say they are simply complying with the established policy.  "We didn't start it, we're not responsible."  A man and his gold are soon separated IF stupidity reigns or blind trust is relied upon....

Tue, 01/07/2014 - 12:06 | Link to Comment akak
akak's picture

New York, London, Paris, Munich

Everybody talk about ... lost bullion!

Talk about, lost bullion

Talk about, lost bullion

Lost, lost, lost bullion ...

Tue, 01/07/2014 - 21:04 | Link to Comment akak
akak's picture

Shoobeedoobeedoowop!

Tue, 01/07/2014 - 11:14 | Link to Comment Barbaric relic
Barbaric relic's picture

The most likely reason for Germany to melt down bars before delivery to Germany is that the US swapped 90% gold bars with the Germans for LGD bars (coins from Roosevelt gold confiscation had been melted into 90% bars) and then the fed sold the German gold into the market to manipulate the price.  The official US gold holdings include the terms "swapped" and "leased" but give no particulars on the amounts whether it be 1% or 100% of their holdings.  90% gold constituted a large percentage of America's holdings and for the US to lease Gold, they would've needed to obtain LGD bars to sell -- selling the 90% bars would've made it obvious to the market that the US was dumping their gold.

Tue, 01/07/2014 - 11:08 | Link to Comment Yancey Ward
Yancey Ward's picture

The very fact that repatriation of 300 tons is scheduled to take 7-10 years tells you everything you really need to know.  Fed Ex could deliver that to Frankfurt in a single afternoon if you contracted the transport to them.

Tue, 01/07/2014 - 11:01 | Link to Comment NoWayJose
NoWayJose's picture

The Fed's problem is not finding the German gold (the Fed can print as much fiat as it takes to find sellers), the problem is buying it while at the same time trying to drive the price of gold down.  If the pace does not increase soon, the German gold repatriation failure is going to really shake things up in about 2 years.

Wed, 01/08/2014 - 18:58 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

What? You're telling me scarcity & high demand can drive prices up? What twaddle & hogswaggle, surely an expert like Greenspan or Bernanke will easily explain this is balderdash. They shall speak great wisdom from down the mountain. Yellin from the hill-tops, if you will.

Tue, 01/07/2014 - 11:07 | Link to Comment tempo
tempo's picture

Leave your gold in Paris where it will be safely in the hands of people you can trust.

Tue, 01/07/2014 - 12:29 | Link to Comment teolawki
teolawki's picture

When it comes to my gold, the only hands I trust are my own!

Tue, 01/07/2014 - 10:39 | Link to Comment cognus
cognus's picture

most of you miscreants seem to assume that the original made-for-media angst about repatriating Gold to the Fatherland was real.  It ain't so. 

IF anyone of authority were serious about moving Gold bars into "safekeeping", the bribes/offers/threats would flow in like pronto and either such persons would be 'reassigned', 'promoted', or 'vacationing... for a long time'.

The timeframe here is an accordion, and will continue to be played for the chairs as long as any of us are on this side of the river

Tue, 01/07/2014 - 10:37 | Link to Comment Quinvarius
Quinvarius's picture

They are melting scrap and freshly mined ingots into LGD bars.  The US has no gold.  They bet it all on their ability to control FOREX markets with 10 trillion in derivatives every year.  Not only did they dump all of their gold, they owe gold.  There is no roof on theoretical price of gold in US dollars any more.

Tue, 01/07/2014 - 11:43 | Link to Comment snodgrass
snodgrass's picture

Bill Clinton and Robert Rubin stole the gold from Fort Knox and appropriated it for themselves and their friends. Hillary is runnning because she must think there is still something left to steal.

Tue, 01/07/2014 - 12:06 | Link to Comment Martel
Martel's picture

Hillary does not need more money. She's the World's best commodity trader! https://en.wikipedia.org/wiki/Hillary_Rodham_cattle_futures_controversy

Tue, 01/07/2014 - 10:20 | Link to Comment new game
new game's picture

i do know and keep it secure for ultra deperate times. just don't keep much anymore for the exact reasons ghostzapper pointsout.  plus, gold is a bulls eye-not something i would cherish...

Tue, 01/07/2014 - 10:16 | Link to Comment Bastiat
Bastiat's picture

I suspect one of the reasons tbtf banks are tbtf is that the USTreasury now owns more bullion bank paper  than gold--because once you "lease out" your gold, that's what you hold, bank paper. The big banks are all tired together in the derivatives web--if one goes, they all go and the treasury has worthless paper rather than gold.  Not much to base a new currency on.

Tue, 01/07/2014 - 11:18 | Link to Comment BeanusCountus
BeanusCountus's picture

You are probably right. And thats why every request for returning physical from the US (or any other "custodian") will be met with continued efforts to reduce the paper price so it can be acquired to facilitate the return at the lowest possible price. And yes, there is a finite amount that increases every year due to annual production. Current efforts by LBMA to acquire forward production from producers (through futures sold to them as "hedges") also fits nicely with its needs to secure physical to meet repatriation requests. Its all part of the plan.

Tue, 01/07/2014 - 13:32 | Link to Comment Bastiat
Bastiat's picture

dupe

Tue, 01/07/2014 - 13:32 | Link to Comment Bastiat
Bastiat's picture

Dupe

Tue, 01/07/2014 - 11:41 | Link to Comment Bastiat
Bastiat's picture

Right.  Much of the miner hedging racket was revealed in the Blanchard suit back in the 90s. ABX was a major player.  Paper sales suppressed the price and killed the miners.  Abx gobbled then up for a song then sold production forward.  Bush1 was on the Board of ABX and so was a former Canadian pm.

Tue, 01/07/2014 - 10:05 | Link to Comment Winston of Oceania
Winston of Oceania's picture

If I were to take possession of bars of unknown smelting then I would like to see that they are not filled with tungsten before they arrived in my own country.

Wed, 01/08/2014 - 19:48 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

SO you'd be extra trusting sure when someone else smelts it behind your back instead of in front of your face, right?
Right.

Tue, 01/07/2014 - 10:05 | Link to Comment MFLTucson
MFLTucson's picture

No, are you kidding me?  Of course not, we just need 7 years to round it all up. lol!

Tue, 01/07/2014 - 12:51 | Link to Comment XitSam
XitSam's picture

I predict that something will break in the next 7 years that makes Germany's 300 tons inconsequential.

Tue, 01/07/2014 - 10:06 | Link to Comment Yardfarmer
Yardfarmer's picture

the historical record proves that great and heroic efforts were expended to keep Europe's gold stores out of the hands of the third reich. most of it ended up in US, at the time the most secure depository in the world. gold flows inevitably into the coffers of the powerful-victors both in economic and military enterprise. that is presently taking place in the vast transference of gold to Chinese vaults, as Jim Rickards points out, "never to be seen again for three hundred years". however well researched and theorectically interesting from again, an historical perspective, from a practical standpoint, this remains a merely semantic exercise. for most of us  the real question is: do you know where your gold is and, more to the point, what it really represents?

Tue, 01/07/2014 - 09:33 | Link to Comment ghostzapper
ghostzapper's picture

This is another reason why I am not in the all in stackin bitchez camp.  All of the data we are spoonfed about how much phyz exists and who owns it is data from TPTB.  I don't trust it but you guys can if you want.  For all I know phyz gold has been sliced and diced just like mortgages were and lord knows where it is and who owns it or has claims on it via derivitaves.  I've been asking a simple question:  How much gold is out there, who owns it, and where is it?  Nobody can answer this accurately.  

Tue, 01/07/2014 - 10:07 | Link to Comment Winston of Oceania
Winston of Oceania's picture

There are simple tests that anyone can perform to test purity. Just keep buying stawks...

Tue, 01/07/2014 - 10:05 | Link to Comment Winston Churchill
Winston Churchill's picture

Schizophrenia much ?

You just made a great case for stacking, in your own possesion of course.

Tue, 01/07/2014 - 10:31 | Link to Comment ghostzapper
ghostzapper's picture

Valuation analysis much?

Confiscation risk much?

 

How do you know how to value it if you don't know how much exists?  For every piece of data saying there isn't as much as commonly perceived there is data saying the opposite.  

Wed, 01/08/2014 - 19:51 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

the risk of gold confiscation is equal to the risk of ALL confiscation - home, food, guns, vehicles, everything, including bank accounts.
If your risk is high where you are the solution is stacking gold & silver in another country and living there.

Tue, 01/07/2014 - 12:48 | Link to Comment NotApplicable
NotApplicable's picture

Valuation analysis?

All valuation is subjective. Either you want something at a given price, or you don't, all based upon your personal preferences.

Tue, 01/07/2014 - 10:40 | Link to Comment ghostzapper
ghostzapper's picture

And another thing is that since this thing is such a clusterfuck of epic proportions what happens if TPTB come out one day and say the following:  "Ooops, we grant ourselves a mulligan and set the price of gold at $xxx/ounce."

I don't like that kind of risk.   

Wed, 01/08/2014 - 19:52 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

I do. That risk is impossible. Once we have the gold and they don't we set the price.
You can't set a price on my house, car, land, etc., only on your own.

Tue, 01/07/2014 - 13:29 | Link to Comment Mad Muppet
Mad Muppet's picture

ghostzapper

And another thing is that since this thing is such a clusterfuck of epic proportions what happens if TPTB come out one day and say the following:  "Ooops, we grant ourselves a mulligan and set the price of gold at $xxx/ounce."

I don't like that kind of risk.   

 

 

Dude, sounds like currencies are your thing. Lots of security there.

Tue, 01/07/2014 - 12:00 | Link to Comment donsluck
donsluck's picture

Your logic is...strained. Price controls only encourage a black market when set too low as well as shortages. If set too high it forces money printing as everyone dis-hordes into the buyer's vaults (presumably the Fed). Of course, that's what you want as an owner of gold.

One could argue that, by dictating interest rates, the Fed has already set the price of money too low, thus the price of gold and everything else too high. It's not that simple though, so price controls distort the economy and reduce its' efficiency.

Tue, 01/07/2014 - 11:23 | Link to Comment Toolshed
Toolshed's picture

Good luck with your convoluted irrational delusion. I am sure it will keep you warm.

Tue, 01/07/2014 - 11:49 | Link to Comment Winston Churchill
Winston Churchill's picture

His paper burning will keep him warm, for a little while.

So much paper,so little worth.

Tue, 01/07/2014 - 13:36 | Link to Comment ghostzapper
ghostzapper's picture

Thank you all for confirming yet again for me that even at ZH (where purportedly all the "sharp" and "smarter than everyone else" guys hang out) there is still the line of reasoning that creates future opportunities for people like me.

I never said anything about "paper" whether you are referring to PMs or equities.

I never said I was against PMs.

I've consistently said two things:

1) for a couple years now the charts have told you that it is not YET time to get long again PMs

2) part of the reason PMs have done poorly the last couple years is because people are having more respect for two big risks - manipulation and confiscation

I'll keep using what the market is telling me instead of thinking I am smarter than the market and you guys can keep doing what you are doing.   

Wed, 01/08/2014 - 19:54 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

I guess you can't read charts. The last 2 years have told me this is  the stacking chance of a life-time.

Tue, 01/07/2014 - 09:09 | Link to Comment Overdrawn
Overdrawn's picture

Just a question:

 

Does anyone know how much of Germany's gold is actually belongs to the German's?  How much, if any of this gold was stolen from invaded nations, or individuals during WW2?

Tue, 01/07/2014 - 09:47 | Link to Comment Azannoth
Azannoth's picture

All of It!! It was earned in the 50' and 60' in the "German Economic Miracle"

Tue, 01/07/2014 - 10:15 | Link to Comment max2205
max2205's picture

Mr T has it all.    Suckazzzz

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