Some Follow-Up Questions For The Bundesbank, And Its Gold

Tyler Durden's picture




 

Yesterday we posted the official statement of Bundesbank executive board member Carl-Ludwig Thiele, which in turn was a response to a recent surge in concerns about the safety and sanctity of German sovereign gold, held mostly abroad (if a major part of it held in London had been secretly repatriated), and demands by the general public - i.e., those who actually own the gold - for either an audit, or full repatriation, or both. There are, however, some problems with the official Bundesbank statement: the statistics cited in it, as well as the various explanations, are wrong, incorrect or misleading. Below we present some of the "facts" stated by Herr Thiele, and what the truth is.

The statistics, and facts, Thiele quotes in the interview are either patently wrong or indicate a major lack of understanding about the gold market.

1. Thiele says:

"By 1956, the gold reserves had risen to DM 6.2 billion, or 1,328 tonnes; upon its foundation in 1957, the Bundesbank took over these reserves. No further gold was added until the 1970s"

This is factually incorrect. From a documented source such as Timothy Green's gold reserves report from 1999 (source), we find that German gold reserves were 1,328 tonnes in 1956 and contined to rise every year until 1969 when they hit 4034 tonnes, an increase of 200% since 1956! Offical German gold in 1970 was 3,537 tonnes and declined to 2,963 by 1979. Since then it has increased by just 400 tonnes.

2. Thiele says:

"At the beginning of the last decade, we brought 930 tonnes of gold to Frankfurt from London and subjected it to a painstaking inspection. Part of the gold was melted down in order to create new bars which conform with the “Good Delivery Standard”.

Fact: All gold stored at the Bank of England has to be London Good Delivery Standard. Bars that do not conform are not accepted. That is how the LBMA system works. There is an accepted refiner list. There would be no need to melt down anything from the Bank of England unless the Bundesbank had been duped with coin bars or similar and/or does not have faith in the BOE in the first place.

3. Thiele says:

"We have at our disposal fully documented lists of the bars, and our partner central banks send us every year confirmation not only of the bars’ existence but also of their quality. We receive confirmation of our gold reserves, measured in troy ounces."

Which is it: on a bar basis or on a fine ounce basis? They are two very different things. One is covered by bailor/bailee law, the other is covered by a debtor/creditor relationship.

Fact: The gold reserves built up and stored on behalf of the Bundesbank at the Bank of England were earmarked on a bar basis in the Bundesbank's set-aside account. Set-aside accounts were not accounted for on a fine ounce basis. Thiele does not seem to be aware of this difference between a set-aside bar basis and a fine ounce basis.

A lot of gold in the FRBNY vaults is in the form of US assay office melts. These have a history of losing fine ounces on re-smelting, so with the Fed he is explicitly off base.

All of this, of course, excludes Thiele's emotional appeal to German heartstrings to please trust the New York Fed and the BOE (whose British Pound apparently is still a reserve currency by the Buba's offered logic), while completely leaving out the ECB (that other bank in Frankfurt, whose currency is what Germany currently does use). It also excludes his disturbing statement that "when push comes to shove, we can have it available as a reserve asset as soon as possible." The fact that "gold is not money", at least according to the Chairman, aside, one wonders just what signal is, or rather was, the Bundesbank sending by reclaiming its gold: is the need for gold to be used as a reserve assets once again approaching? (this is, obviously, rhetorical).

Finally, all of this begs the question: was the German writing while under the influence when he posted the official Bundesbank retort, or was he simply truly ignorant about some very simplistic facts about gold, official gold reserves and the gold industry, which anyone could fact-check on their own in 5 minutes or less. Or was he simply being disingenuous in hopes that nobody would actually question his authority and thus, his "facts"?

Because if anything, the Bundesbank response only opens up even more question about the credibility, not to mention the validity, of the official German stance, which logically implies that the fundamental hypothesis: that German offshore gold is in good hands, is also debatable at best and null and void at worst.

We hope that this ongoing dialogue between the German Central bank and its people continues, as it is one that is urgently needed in a world in which the old form of currency - fiat - is rapidly losing its credibility around the entire developed, and developing, world.

h/t Ronan

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Sun, 10/28/2012 - 14:40 | 2925565 fightthepower
fightthepower's picture

Germany, your gold has been gone for 65 years, ha ha!

Sun, 10/28/2012 - 14:52 | 2925585 alstry
alstry's picture

GOLD WORKED WHEN HUMANS PRODUCED

What will all those German factory workers do when technology replaces their jobs in a few years?  Do you think Computers, Algorythms, and Robots want gold?

If you are looking backwards, you are looking in the wrong direction.

The real issue is what will we milk when technology replaces most industrial jobs as we head into the http://www.udderworld.com

There is ZERO HEDGE in a world moving towards technological production.....it's now time to think.

Sun, 10/28/2012 - 14:55 | 2925588 alstry
alstry's picture

Say hello to my little friend.....Baxter.  He is far more productive than Germans......and Chinese......and Koreans........and Americans........

http://blogs.wsj.com/digits/2012/10/26/baxter-the-22000-robot-goes-on-america-tour/

And doesn't bitch, moan, or require benefits.

Sun, 10/28/2012 - 15:16 | 2925623 BaBaBouy
BaBaBouy's picture

I think Germany is under Serious THREAT If they demand their GOLD Back.

 

The "POWERS" Have Already used it up in their Operations IMO...

 

Thats Why, the Physical GOLD in your Underwaer Drawers will be $50K, Bitches ...

Sun, 10/28/2012 - 15:34 | 2925671 Decolat
Decolat's picture

Gold is and will be worth what it has always been worth. The plastic veneer of the current era, paid for with oil-fiat, will most certainly crumble away, and sooner than later. Of course, anything worth paying for with gold will follow gold's value skyward. Save what you can now with gold. 

 

I'd put a safe in that underwear drawer if I were you.

Sun, 10/28/2012 - 23:42 | 2926844 jeff montanye
jeff montanye's picture

i'm not saying james turk is right, but as the executioner said as he lit the heretic on fire, he does make some convincing points.  http://jhaines6.wordpress.com/2012/10/26/james-turk-the-entire-german-go...

Mon, 10/29/2012 - 01:03 | 2926957 TwoShortPlanks
TwoShortPlanks's picture

Caveat: We live in a 4,000 Ton/pa Gold market.

When you look at this carefully you can easily recognise that with the current economic climate Gold should have an upper price limit set by the current economic woes and currency debasement however, throw into the equation the possibility that multiple countries have lost their Gold stocks (not being able to recall Gold stocks for decades due to physical limitations of the Gold Market IS the same as losing your Gold in a boating accident), then really, there is no upper limit to the Gold price, none....nor can there ever be a Gold Standard or even a simple monetization of Bank Debts, for decades to come.

This is the perfect position for physical Gold holders; a general public completely oblivious to the merits of Gold, a double decade global economy slowdown, a print-fest from Central Banks and, Central Bank stupidity in leasing-out Gold to Bullion Banks who in turn leased it out dozens of times over.

We are completely free now!

The general public wake-up call (signalling time to sell is afoot) will be years away, but once here, it constitutes the perfect bubble...one which cannot collapse...so you never sell, so you borrow against it as collateral...and use their fiat system against them.

FUCK YEAH!!!

Mon, 10/29/2012 - 02:24 | 2927032 merizobeach
merizobeach's picture

"I'd put a safe in that underwear drawer if I were you."

Gets me thinking...  A prudent entreprenuer might find a niche market in custom kevlar suits for guard dogs, payment accepted in gold.

"Ok, Xiong-xiong, time to put on your vest and helmet--the zombies are coming--go, kill!"

Sun, 10/28/2012 - 15:49 | 2925721 knukles
knukles's picture

Many thanks, Tyler.
Your point #2 is exactly that which I was noting yesterday.
There is or isn't confirmation to LBMA standards with respect to bar integrity (refining, weight, assaying) held within the BoE's LBMA approved vault in which commingling is a no no with nonLBMA bars.  They cannot be both (the non bars may not appear) counted on an LBMA approved list from an LBMA approved vault holding LBMA approved bars.

And, it makes No Difference whether the bars are held in London or Frankfurt with respect to liquidity and good delivery as the Bundesbank as well as BoE are, LBMA approved vaults and the buyers who wish physical delivery have the responsibility to ensure delivery (physical) if other than segregation/allocation in said vault is done in LBMA approved manner.

(see LBMA website for all regs. and details)

Further, the whole LBMA approval structure is about as secure as Swiss cheese and strainers, for the refiner/assayers are approved via an inspection of a bar created thereby.  Said bar is produced for the LBMA folks upon several days notice (ie, not a random bar selected) taken back and analyzed, proofed as to weight and fineness.
Now, even I as a slow learner can figure out how to game said system with respect to non-examined bars once officially approved as a LBMA refiner/assayer....  (Got tungsten?)

See, once a salted bar (if hypothetically, now, understand) is produced by an LBMA approved refiner/assayer and is shipped away, the refiner/assayer can always say, "Wasn't My Doing!" and voila!  somebody else must be the culprit.

Close your eyes and click your heels....
(what's the price of tungsten?..... A littel over $16/lb, meaning about $1.00/oz.... now lemme see, the difference between $1700 and $1 is what, about $1700/oz!)

Sun, 10/28/2012 - 16:19 | 2925788 Fred C Dobbs
Fred C Dobbs's picture

You nailed yesterday knukles.  

Sun, 10/28/2012 - 17:21 | 2925930 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Tyler should Google Translate this all into German and lob it to a few journalists over there

Mon, 10/29/2012 - 00:49 | 2926949 trada101
trada101's picture

@ alstry

 What does a less manipulatable form of currency have to do with technological advancement?

Or are were you attempting to say when we finally go "Matrix Style" that our robotic overlords will not want gold?

Until then there will be plenty of people aorund who will need to design, build, and manage technology and will want to trade, transact, and store their wealth in something that can't be manipulated so easily like fiat money.

 

Sun, 10/28/2012 - 18:33 | 2926031 vamoose1
vamoose1's picture

and quit  strutting  you  jackbooted  fuckspittles   churchill  nailed it    long long   ago    knocking  off  his  morning  champagne  in  the  tob  tub .....  when  he  said    they  are  either  at  your  throat   or  at  your feet,    well  feet,           dont  fail  me  now     draw  back   and   kick  their  nuts  through  their  ears

Sun, 10/28/2012 - 20:29 | 2926303 Buck Johnson
Buck Johnson's picture

And that is the horible truth, they don't have any gold anymore.

Sun, 10/28/2012 - 14:44 | 2925569 JustObserving
JustObserving's picture

"When It Becomes SeriousYou Have To Lie"  Jean-Claude Juncker

The German gold situation must be serious.

Sun, 10/28/2012 - 15:40 | 2925692 Urban Redneck
Urban Redneck's picture

Central Banker insults "fly-by-night operators"

Central Banker gets pwned by "fly-by-night operator"

time for BUBA to tap out or get their own fly-by-night operator

Sun, 10/28/2012 - 14:44 | 2925570 THE DORK OF CORK
THE DORK OF CORK's picture

Germany and other euro countries do not own the Gold.

The banks own the gold.

Countries remain in debt to the banks.

 

Sun, 10/28/2012 - 15:09 | 2925612 disabledvet
disabledvet's picture

indeed. and "revaluation" only works with gold when gold only is revalued. we appear to have a "general revaluation" going on...but no worries...it's not "inflation" per se eating away at the value of those same said gold reserves. or reserves of pretty much anything for that matter....

Sun, 10/28/2012 - 14:45 | 2925572 RockyRacoon
RockyRacoon's picture

The AMOS (Average Man On the Street) hears that all is well.  That's the objective.  It's all about perception and expectation.   Any further investigation would not have any effect since the citizenry has been mollified.

Sun, 10/28/2012 - 15:47 | 2925685 sitenine
sitenine's picture

"Any further investigation would not have any effect since the citizenry has been mollified."

Normally I would agree 100% - but how do you put this genie back in the bottle?  Yes, many 'enlightened' humans have to come a world view that gold is basically just a rock, but the vast majority of humans still cling to 'tradition'; and even the 'enlightened' ones still see value in the 'rock', and would gladly take it and own it for its value.  It's been shown, pretty conclusively, that folks don't care much about debt until the point of default.  Don't fuck with our money though!  Gold is THE reserve asset of choice for Central Banks, and we are in the midst of a full blown currency war.  The people are waking up, and we're are in no mood to find out that our gold has gone missing..

Sun, 10/28/2012 - 15:51 | 2925725 knukles
knukles's picture

Most people don't understand or give a rats' rectum.
It's all about sex, alcohol, Dancing with the Stars and the World Series/football, whatever.

Sun, 10/28/2012 - 14:51 | 2925579 VonManstein
VonManstein's picture

thoughts on this chart please. thumbs up or down dont care just putting it out there

http://twitpic.com/b87nr3/full

since 2001 gold 18 month pattern. bottoms seem predicatable. less sound is the every 66 month SPX/XAU divergence (SP breakdown) Fits with coming macro though dont you think?

Sun, 10/28/2012 - 14:54 | 2925587 GtownSLV
GtownSLV's picture

July 2011 is your answer.

Sun, 10/28/2012 - 14:58 | 2925594 LawsofPhysics
LawsofPhysics's picture

beware the next great uncoupling.  All paper promises will fail.

Sun, 10/28/2012 - 15:04 | 2925604 VonManstein
VonManstein's picture

very aware dont worry. Do you think they will close down FX too? XAG/XAU ? isnt this more of a currency pair than "paper" gold?

anything can happen of course

Sun, 10/28/2012 - 16:53 | 2925869 LawsofPhysics
LawsofPhysics's picture

Since the vast majority of all obligations to deliver cannot be met, yes, they will shut it all down.  This will be the death knoll for all fiat.  All economies will get very local, very quickly.   We have been here before from an economic perspective (of course last time there wasn't 7 billion people on the planet).

Sun, 10/28/2012 - 17:17 | 2925924 VonManstein
VonManstein's picture

you make statements of fact regarding uncertain events. we cant be sure of anything.

Old Rothschild has been calling for China to open up its currecny to the market, this doesnt fit the whole "china vs US" narrative. i think the elites are ready to discard the US but not the system. The "market" system is how they control everything why would they destroy it?

Dont think it will happen. They will destroy nations and currencies but the system will be preserved. What the fuck are they gonna do without a stock market, currency market or commodity exchange? where are they gona get their power and money if all becomes super localised as you say. Are they going to grow potatos and live in the garden? doubt it.

They want to destroy the USA and the USD no doubt. But not the market, the source of power.

What your implying is theyve lost control of everything and are going to destroy themselves and the world. im Not sure about that, though it could indeed be so Nuclear war would be he only way (possible too)

I think its more lickely the US is being sacrificed at the alter and they will move on to another host.

Prior to that they will accumilate gold and then allow the gold bubble to run. at the top they will transfer assets and so it goes on.

“Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” ?-Napoleon Bonaparte

 

Sun, 10/28/2012 - 14:52 | 2925582 GS-DickinDaMuppets
GS-DickinDaMuppets's picture

If you can not go to, and pickup, the gold in your own two hands - then it is not really there, it is simply a thought or an idea in your head.  It's 12 o'clock....do you know where your gold is...

 

Doing God's work...GS-DickinDaMuppets

Sun, 10/28/2012 - 14:52 | 2925583 GtownSLV
GtownSLV's picture

This reeks of complete BS and these gold inventories and their accounting are looking like a complete sham. All these stores should be audited and every bar accounted for (and x-ray). This gold doesn't belong to the politicians, it belongs to the people of the respective countries and\or their private owners. 

Sun, 10/28/2012 - 15:09 | 2925610 Lore
Lore's picture

 

Yes

Possession is -- at very least -- nine tenths of the law.  It seems entirely likely that the Bundesbank sold out the German people decades ago. The people will NEVER see their gold.

Next big scandal will be American gold, which was likewise stolen just a very few years ago. <Ahem>

Herein lies a principal theme of the next 'great' war:

"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks." - Lord Acton (1834-1902)

Sun, 10/28/2012 - 15:12 | 2925614 disabledvet
disabledvet's picture

they melt it down...even better. you might ask the question "why did the gold reserves end up in London and New York in the first place" and ponder that one for a while. Would seem quite the elaborate hoax to be "moving it around all the time." As if seizing it pays the bills of Government for...more than 5 minutes.

Sun, 10/28/2012 - 14:55 | 2925590 LawsofPhysics
LawsofPhysics's picture

Wake up people.  When fraud is the status quo, if you can't touch "it" or defend "it" you sure as hell don't own whatever "it" is.

 

Bloody sheep.

Sun, 10/28/2012 - 14:55 | 2925591 Dr. Engali
Dr. Engali's picture

Gold? What gold ? Most of it was cleared out on 911. Sandy is preparing to take care of the rest.

Sun, 10/28/2012 - 16:22 | 2925798 Decolat
Decolat's picture

More likely cleared out on 910.

Sun, 10/28/2012 - 17:41 | 2925858 Al Gorerhythm
Al Gorerhythm's picture

Sandy"s coming! Will New York collapse in its own footprint?

Sun, 10/28/2012 - 20:10 | 2926240 Winston Churchill
Winston Churchill's picture

We all live with that hope.

Sun, 10/28/2012 - 15:34 | 2925592 Pseudo Anonym
Pseudo Anonym's picture

if hofjuden hands can be considered good hands than

that German offshore gold is in good hands, 

otherwise, you're fucked.  i think you're fucked, germany.  serves you right.  you just never learn.  hofjuden hands are not good hands.  the hofjuden got the better of you every time; but it might be different this time....not

Sun, 10/28/2012 - 14:58 | 2925595 Poor Grogman
Poor Grogman's picture

Apparently the UN weapons inspectors are going to be redeployed looking all over the world for the missing gold.

It could take years for their final report.....

Sun, 10/28/2012 - 15:11 | 2925613 Lore
Lore's picture

 

 

How about those ~144 Tons that belong to the people of Libya?  Whatever happened to those?  Did I miss that repatriation?! 

Sun, 10/28/2012 - 15:12 | 2925616 Poor Grogman
Poor Grogman's picture

Corzined like the rest..

Sun, 10/28/2012 - 16:09 | 2925759 Lore
Lore's picture

What about all the gold belonging to the Iraqi people?

http://www.youtube.com/watch?v=BNkM9o41lb4

Sun, 10/28/2012 - 16:39 | 2925833 Poor Grogman
Poor Grogman's picture

Sales must continue normally or the Global FIAT ponzi system could go critical within a few days or even hours.

Im certain that the TPTB see gold sales merely as tool to help maintain the Hegemony of the FIAT system. ( see greenspans early comments)

Just where do people think all this extra gold walking out the door is coming from? I admit I haven't got a clue but the figures just do not add up.

There is an urgent need for more and more gold to fulfill delivery for large and small purchases alike, and the whereabouts of some gold seems to be "uncertain".

Now let me think for a minute...

Sun, 10/28/2012 - 17:02 | 2925893 Pseudo Anonym
Pseudo Anonym's picture

Now let me think for a minute...

Iran?

Sun, 10/28/2012 - 17:11 | 2925913 wearef_ckedwith...
wearef_ckedwithnohope's picture

It couldn't be blamed on anyone if Germany's gold just happened to float away somewhere in flooding caused by Hurricane Sandy.  Because everyone would be assured that it was most certainly there before the Frankenstorm hit and the US did everything it could to prepare for the storm.

Sun, 10/28/2012 - 17:59 | 2925973 Supernova Born
Supernova Born's picture

"I'm with stupid" should be the shirt worn by all at every Euro-fantasy meeting on the future of the euro.

Sun, 10/28/2012 - 17:24 | 2925936 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Nah Gaddafi's gold is still out there in the desert, buried in shipping containers, Moammar machine gunned all the guys who buried it. Common knowledge in Tripoli where my brother-in-law lived for the last five years. Retrieving it would make a good movie script, probably easy enough to find using satellite imagery

Sun, 10/28/2012 - 17:43 | 2925957 Al Gorerhythm
Al Gorerhythm's picture

If they're accompanied by the CFTC Investigation Division, they could be lost forever in the twilight zone.

Sun, 10/28/2012 - 15:01 | 2925599 AL_SWEARENGEN
AL_SWEARENGEN's picture

It seems that some agenda was enacted after WW2 and leading up to the original bretton woods agreement. The US was able acquire a large (majority?) portion of the European gold after WW2.  Most likely Europe was sold the new world order lie.  And that their Gold must be mobilized (taken) to support the coming order.  Coupled with being war battered and desperate, probably took the deal (Germany included) knowing full well they would never see their gold again.

 

I wonder if anyone has broken down how much gold the US's allied countries in Europe kept after the war VS enemy or unfriendly countries?

Sun, 10/28/2012 - 15:12 | 2925615 Lore
Lore's picture

Watch where you step.

Sun, 10/28/2012 - 15:15 | 2925622 disabledvet
disabledvet's picture

The...AGENDA as you call it WAS CALLED World War II. The gold was already there...that was called "World War I"! In order to slaughter themselves Europe first needed to agree to turn over all their gold to the USA so that they could then be given the tools for said slaughter. sound like a bad deal? i agree. might i interest you in a bailout then?

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