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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


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

There is ZERO HEDGE in a world moving towards technological'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........

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.

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 which cannot you never sell, so you borrow against it as collateral...and use their fiat system against them.


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'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

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' 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



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?

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...


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

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?

Mon, 10/29/2012 - 08:03 | 2927238 earnulf
earnulf's picture

Two words...."Kelly's Heros"

Woof Woof Woof


Sun, 10/28/2012 - 15:02 | 2925600 The Shootist
The Shootist's picture

I heard a guy on the radio today sayng you couldn't buy or trade gold for anything if tshtf. He also said that today's gold wasn't like the pieces of 8 in the past that you could break up, 'cause you couldn't do it with your teeth. Lol, poor, stupid schmucks. I think the show was ironically called 'the truth about money.'

Sun, 10/28/2012 - 15:47 | 2925715 wahrheit
wahrheit's picture

That's what silver, particularly Constitutional or "junk" silver is for.  Gold is for storing and preserving wealth, not to use as daily currency.

Sun, 10/28/2012 - 16:00 | 2925743 knukles
knukles's picture

Ta Dah!
Give the man a Big Gold Star!

BTW, in days of yore (way back when, when men were men and women were either wenches or princesses) most folks (who had some wealth) did not carry bulk gold (coins, etc.) but rather wore gold necklaces which when funds were needed to pay for a room, goblet of mead or a wench, one would prise out a link and carve off the necessary weight.... etc.

If TSHTF, ya'll ain't gonna be exchanging whole Maple Leaves for daily barter/exchange purposes.  (And yes, you'll be bartering gold for gold/silver/etc.... got small notes?  Sorry I can't break and 440 ouncer!)

Mon, 10/29/2012 - 00:43 | 2926940 seataka
seataka's picture

Things they wont teach you anymore

Days before the much needed victory at Valley Forge  more than half of George Washington's Continental Army enlisted volunteers' agreed upon terms of duty had expired, and all had not been paid anything of value for some time. they were wearing rags, and had rags for shoes.... The Continental Army was about to lay down its arms and go back to their farms, families and wives embraces. George Washington sent an urgent message to Philadelphia, and a wagon load of GOLD COINS was rushed to scene.

In one of the young republic's darkest hours, a chest full of gold coin saved the American Continental Army from going home -

Mon, 10/29/2012 - 08:05 | 2927242 earnulf
earnulf's picture

Perhaps that's why our forefathers demanded that money be defined as Silver and Gold, ONLY!

Mon, 10/29/2012 - 00:46 | 2926941 seataka
seataka's picture


Sun, 10/28/2012 - 15:04 | 2925603 apberusdisvet
apberusdisvet's picture

The fact that the gold from the BOE had to be re-refined indicates that maybe, just maybe, it included the FDR confiscation gold that, after an initial melt,  was never in "delivery" form and was nothing more than 60-70% pure at best.

Just another "conspiracy" item to consider when thinking about whether or not there is any gold left in Fort Knox.

Sun, 10/28/2012 - 15:09 | 2925605 Monedas
Monedas's picture

If the Swiss will never see their gold .... what ever makes you think there is a fart in a blast furnace chance we'll ever see ours ?

Sun, 10/28/2012 - 15:09 | 2925608 ebworthen
ebworthen's picture

"Barbarous relic.

Who needs tangibles when intangibles rulle the ledger book?

Only the little people need tangibles, so this story about our barbarous relics is good enough.

They trust our printing, our promises, our illusions, as they pay more and more into the black hole of central banking.  Forward with austerity!"

Sun, 10/28/2012 - 15:16 | 2925624 disabledvet
disabledvet's picture

well i'm sure Greece is "good for whatever is missing...

Sun, 10/28/2012 - 15:09 | 2925609 Motorhead
Motorhead's picture

Gold, Huren!

Sun, 10/28/2012 - 15:13 | 2925617 Dabale arroz a ...
Dabale arroz a la zorra el abad's picture

Was the official statement a direct answer to some fringe blog? Have there been these rumours circulating elsewhere?

Sun, 10/28/2012 - 15:13 | 2925618 Gringo Viejo
Gringo Viejo's picture

THERE IS NO FUCKING GOLD! IT'S GONE.....OUTTA HERE...AND IT AIN'T COMIN' BACK! When the cover comes off this shitball after failed Sovreign efforts to conceal it, the gold price in fiat will be essentially, meaningless.

Sun, 10/28/2012 - 15:14 | 2925620 timbo_em
timbo_em's picture

Thiele is a politician, former member of the Bundestag's budget committee and finance committee. He went directly from the Bundestag to the Board of the Bundesbank. This means a) he tends to lie and b) he has no clue and doesn't know any details (difference between bars and ounces).

Sun, 10/28/2012 - 15:19 | 2925627 disabledvet
disabledvet's picture

i go to the bar all the time. i ask for 12 ounces. should i ask for 16 instead? i simply don't understand the confusion. there are only two choices: 12...or 16.

Sun, 10/28/2012 - 15:49 | 2925719 wahrheit
wahrheit's picture

Your bar must not have barleywine!

Sun, 10/28/2012 - 15:14 | 2925621 giggler123
giggler123's picture

I heard that one of the main reasons they want BoE good delivery bars is simply they can melt new material down at request and make a given bar that would otherwise be gone with the wind.  basically it is a lot easier to fudge the figures and bars if you own the melting pot and moulds, along with a load of other peoples gold to melt in the meantime.   Like Madoff, it'll all go wrong if everyone asks for their gold.

Sun, 10/28/2012 - 15:16 | 2925625 tyrone
tyrone's picture

I sure hope the Germans are drilling all that repatriated gold from BOE. If they find just one bar which has been wulframized, TSHTF! Or maybe they will revert to blackmail.

Sun, 10/28/2012 - 16:07 | 2925755 knukles
knukles's picture

If BoE gives gold bar to Bundesbank and its not real, BoE owes Bundesbank replacement bar.... as BoE is storing LBMA approved bars as LBMA approved vaulting agent. 

In any case, if Bundesbank is receiving Good Delivery LBMA bars, why would they want to melt to proof if LBMA system has integrity?

Somebody don't trust the system!?!?!?!?!
And it ain't us here at ZH, folks!

Sun, 10/28/2012 - 15:18 | 2925626 Peter Pan
Peter Pan's picture

A lot of things are missing. Gold, honest bankers, competent politicians and men of peace. As a result, men are destined to suffer.

Sun, 10/28/2012 - 15:27 | 2925628 Monedas
Monedas's picture

TSPTB (The socialist powers that be) who have lived high on the Ponzi and have raided the public treasure for themselves and their cronies .... will incite the masses and make us .... the private hoarders, trying to protect ourselves, the scapegoats ?     Then THEY will have it all .... and we will be like Stalin's Ukranians searching the fields on our knees for a speck of wheat !    Math question:  How many specks in a peck ?

Sun, 10/28/2012 - 15:28 | 2925653 The Shootist
The Shootist's picture

Yup. We're evil speculators hell bent on financial terrorism.

Sun, 10/28/2012 - 15:37 | 2925683 Monedas
Monedas's picture

I find Berlusconi, entertaining and refreshingly candid, compared to our sneaky thieves !   

Sun, 10/28/2012 - 16:08 | 2925757 zhandax
zhandax's picture

TSPTB (The socialist powers that be) who have lived high on the Ponzi and have raided the public treasure for themselves and their cronies

This pre-supposes that it is already all gone.  A 1400+ level on the S&P tends to discount this claim.  Although rapidly approaching, when the public treasure is finally all looted, everything plunges in value.  Since this implies that there is a bit more to plunder, your TSPTB have a decided interest in the continuation of the ponzi until it is all gone.  Since the holder of the gold in question also controls the reserve currency and, by extension, the swaps market, and since Germany is still considered to be 'in the club', Germany's gold will be 'found' and delivered.  The question becomes 'who else will get Corazined in order to deliver Germany's gold'?

Sun, 10/28/2012 - 17:58 | 2925976 Monedas
Monedas's picture

I agree and you are indeed more informed than I am !  If incredibly stupid things were done with our gold (like Gordon Browne selling Brit gold on the cheap) .... they may have been done in the '70s or '80s when Keynes was considered invincible ! I agree that they will milk the Ponzi to the max .... until they can't !      To replace all the gold with tungsten seems to be a daunting task .... and hard to keep quiet .... and quite unecessary and expensive .... if they don't have to show and tell ?    Don't underestimate the Socialists in giving away our gold through the IMF !     My guess is it's gone or much of it is gone and they will refuse to let us see it to milk the Ponzi to the bitter end !

Sun, 10/28/2012 - 15:32 | 2925658 Monedas
Monedas's picture

Access Denied .... Ukrainians !

Sun, 10/28/2012 - 15:23 | 2925637 JR
JR's picture

It will be available when “push comes to shove.” Get real. Push-come-to-shove is now. And guess what? The gold is not available.

Like A Thief in the Night by Davos Sherman Okst | Financial Sense | September  26, 2010

Gold  -  Currency status since 2600 BC

To date, the crime syndicate has struck 3,800 times… the mob hits that have been made by the organized crime syndicate many refer to as: La Cosa Nos(Cen)tra(l) Banksters. The families of the diseased are large - entire nations. They made the unfortunate and common mistake of trusting their late, and once rich Uncle Currency with safeguarding the value stored in their life savings. Those that didn’t take out a life insurance plan suffered. Many, like the little children of Argentina, actually starved to death.

The modus operandi is identical in every case. The loot is taken first, the heist ends with a rub on the mark…

Let’s look at the above crime scene. Germany lost World War I. They were saddled with war debt and forced to pay reparation. The French took over Germany's industrial base when the Germans got behind on their payments. Without the industry revenues the German government began printing to cover their debt and avoid default.

  • ‘Gave up its industrial base’.
  • “...government began printing to cover their debt and avoid default.”

Sound familiar?

It should. Globalization off-shored the bulk of our industrial base. In 1959, manufacturing accounted for 30%+/- of U.S. economic output. In 2008, it was 11%+/-. The United States lost 32% of its manufacturing jobs since 2000. Manufacturing employment in the U.S. computer industry is now lower today than it was in 1975. Asia produces 84% of all printed circuit boards. The United States has lost 42,000+/- factories since 2001. In 2008, 1.2 billion cellphones were sold, none were made here.

An out of control deficit has left Ben-Willy-Nilly-Bernanke printing. The formula for what we print is this: (Tax revenues taken in + What Communist China et al will loan us) - (What we owe out) = Counterfeit / print the difference... 

Back to the German Job: The inflation alarm sounded in 1921 when gold spiked from 1,349 to 2,175. I bet a lot of Germans didn’t purchase an insurance plan then… My hunch is that in Germany a lot of folks looked to the 1920 drop from 1,340 to 1,201 and thought deflation, or that things were under control…

The Germans were robbed and it came like a thief in the night. A year later their marked Mark was dead, rubbed out Central Bankster mob style. Their entire savings had been looted… You do not have to be a rocket scientist to understand what an overextended country’s M.O. is…

Sun, 10/28/2012 - 19:04 | 2925642 Hulk
Hulk's picture

Dear Germany, you have been MF Global cubed. Thanks for playing! We will mail you, at no additional charge, your graduation certificate from Corzine U. That is all for now...

Storage wars, Bitchez!!!

Sun, 10/28/2012 - 15:31 | 2925657 Hannibal
Hannibal's picture

Any foreign gold stored at the FRNYB to be "swept away" by Sandy!

Sun, 10/28/2012 - 15:32 | 2925663 Bansters-in-my-...
Bansters-in-my- feces's picture

Fuck you Bernanke....

Sun, 10/28/2012 - 16:32 | 2925670 Joebloinvestor
Joebloinvestor's picture

Who would have thought the next bank run will be on gold and it will be the banks themselves?

Sun, 10/28/2012 - 15:41 | 2925674 resurger
resurger's picture

In the previous posts, i read that ze Germans are reassuring TPTB that they are keeping faith in the Status Quo and that they are okay with the notion that CB's are in fact a safe haven for gold!

You dont know what's behind the curtains..

Sun, 10/28/2012 - 16:10 | 2925765 knukles
knukles's picture

Lemme take a guess...

A felonious bureaucrat with lots of smoke and mirrors?

Sun, 10/28/2012 - 15:38 | 2925686 q99x2
q99x2's picture

Germany's central bank should be exiled after the Gold is returned to the people. Or the people should start using a currency of their own and fuck the banksters.

Sun, 10/28/2012 - 15:44 | 2925709 Wakanda
Wakanda's picture

Carl, sie können ihnen sagen der Hurrikan wusch es weg.

(Carl, you can tell them the hurricane washed it away.)

Sun, 10/28/2012 - 15:52 | 2925726 OhBaldOne
OhBaldOne's picture

Jim Turk wrote in 2001

Behind Closed Doors

April 23, 2001 - This past December in "The Smoking Gun" I provided substantive proof that the Exchange Stabilization Fund was intervening in the gold market. From publicly available reports prepared by the Federal Reserve, I established that the weight of gold held as a component of the US Reserve Assets has been changing, and that these changes - some of which are of significant size - result from activity by the ESF. These Federal Reserve reports conclusively demonstrate that the ESF has been intervening in the gold market since at least 1996.

Though these Federal Reserve reports make clear that the ESF is involved in the gold market up to its 'earmarks', a lot of people remain skeptical. I don't know why that is. It is worth noting that many of the most obstinate skeptics who deny US government involvement in the gold market live overseas and have little, if any, experience or understanding of the way the US government really works. But even Americans find it difficult to accept that the US government intervenes in the gold market. Ironically though, they readily admit that the government intervenes in the debt markets, foreign currency markets, and according to a growing number of people, even in the US stock market. It is therefore most baffling that they do not concede the ESF's involvement in the gold market.

Maybe people are skeptical because they haven't bothered to take the time to read the Federal Reserve reports for themselves. Maybe it's because it's easier to accept the word of some government bureaucrat who denies ESF involvement in the gold market than it is to seek out and look for the truth. Maybe they don't want to believe that the US government is lying to them when Treasury official after Treasury official denies any involvement by the ESF in the gold market. I don't know. Or maybe it's because they think that government officials work for the American people - and not for vested interests - in their deliberative sessions behind closed doors. Wouldn't it be refreshing if we could peek-in behind those closed doors to see what really is being said?

The reality is that very little emerges from behind closed doors, and the minutes and transcripts of closed-door sessions that do make it into the public domain contain redactions that blank out the 'good parts' - the revealing statements. But what if someone forgot to redact one of those 'good parts'? Too fantastic to be true? Well, sit down, take a deep breath and carefully read what follows.

A few weeks ago Reg Howe contacted me and asked my view on something he had discovered. He wanted a second opinion on this discovery, just like I contacted him for a second opinion after I came across the Federal Reserve reports showing the ESF's gold related activity.

When I read what Reg showed me, I was stunned. But at the same time, it was clear to me what I was reading and what had happened. A transcript of the Federal Reserve Open Market Committee has been released for which somebody forgot to get his or her red pen out. Someone forgot to redact some very revealing words about the ESF and its activity with gold. Here's what was said. - Transcripts [See the transcript from the January 31st 1995 meeting.]

MR. MATTINGLY. It's pretty clear that these ESF operations are authorized. I don't think there is a legal problem in terms of the authority. The [ESF] statute is very broadly worded in terms of words like "credit" - it has covered things like the gold swaps - and it confers broad authority. [Emphasis added]

Please read the above statement again, and maybe even a third and fourth time. This statement, which I can only assume was inadvertently not redacted by the FOMC Secretariat, confirms what we already know, but the US government has all along refused to admit - that the ESF is involved in the gold market. In fact, the authority of the ESF is so broad that "it has covered things like the gold swaps". In other words, the authority of the ESF is so broad it has even been used to authorize "gold swaps".

Before further exploring the above quote, some background information is necessary.

The proceedings of each FOMC meeting are taped. These tapes are then transcribed, and the Federal Reserve releases these transcripts after five years. Thus, the transcripts from the 1995 meetings were released earlier this year, and having now read through them, I can honestly say that they contain a treasure trove of material, even though there are many redactions. The important point is that these transcripts are not only informative, but they are an accurate record of what is going on behind closed doors. Here is what the Federal Reserve itself says about the FOMC transcripts:

"Beginning with the 1994 meetings, the FOMC Secretariat produced the transcripts shortly after each meeting from an audio recording of the proceedings, lightly editing the speakers' original words, where necessary, to facilitate the reader's understanding. Meeting participants were then given an opportunity within the next several weeks to review the transcript for accuracy.

For the meetings preceding 1994, the transcripts were produced from the original, raw transcripts in the FOMC Secretariat's files. These records have also been lightly edited by the Secretariat to facilitate the reader's understanding. In addition, where one or more words were missed or garbled in the transcription, the notation "unintelligible" has been inserted. In some instances, words have been added in brackets to complete a speaker's apparent thought or to correct an obvious transcription error or misstatement.

Nonetheless, for the pre-1994 transcripts, errors undoubtedly remain. The raw transcripts were not fully edited for accuracy at the time they were prepared because they were intended only as an aid to the Secretariat in preparing meeting minutes. The edited pre-1994 transcripts have not been reviewed by present or past members of the Committee."

In other words, the 1995 transcripts are accurate. There are no disclaimers for them, like those made for the pre-1994 transcripts. Therefore, the above quote by Mr. Mattingly about the ESF and gold is accurate. And who is Mr. Mattingly? Virgil Mattingly is General Counsel of the Federal Reserve, its chief legal advisor.

That Mattingly's remark passed without comment by anyone in the FOMC meeting implies that everyone knew exactly what he was referring to. In other words, to explain ESF authority his example was purposefully chosen. It was one to which the Federal Reserve Governors could all relate because it was something they saw happen during their watch. In my imagination I can see them sitting around the big FOMC conference table nodding their heads in agreement when Mattingly used this example of the gold swaps to explain how broad the ESF's authority actually is.

Recognize too that though he is talking in the past tense, it doesn't necessarily mean the swaps had already happened. They may still be happening because he may be referring to the authority that approved the gold swaps and presumably the swap lines, but not necessarily the date of the actual swaps themselves.

So that this quote of Mattingly is not taken out of context, let me provide some background information. Also, I invite you to read the full 145-page transcript of this January 31st, 1995 FOMC meeting if you would like to confirm both the accuracy of the above quote and the background information I am about to provide. By reading the entire transcript you will also see how frequently material was redacted.

Mattingly's comments were made in a discussion by the FOMC on the rapidly deteriorating financial situation in Mexico. Crisis conditions had been prevailing since the Peso began tumbling the month before, i.e., December 1994. You will recall that the Clinton administration back then had proposed that Congress provide a $40 billion package of government guarantees to bailout those who had loaned money to Mexico, and that Congress had rejected this proposal. The administration was therefore scrambling to come up with a way to get the money they thought necessary to 'fix' the problem. Unable to tap the Treasury directly because of the rebuff by Congress, the administration turned to the ESF.

Because the Federal Reserve was to be part of the proposed bailout, the FOMC was reviewing what role the Federal Reserve would play in conjunction with the ESF. A proposal was on the table for the FOMC's consideration. A Mr. Fix-it who seems to be the go-between for the Treasury and the Fed was presenting the proposal. His name is Ted Truman. And he was responding to various FOMC members who were questioning whether the ESF had the legal authority to do what was being proposed. Hence, the Federal Reserve's legal counsel Virgil Mattingly responded, using the "gold swaps" as an example of just how broad the ESF's authority actually is.

To give you a flavor of the full discussion underway in the FOMC meeting, here's a sample of the transcript.

MR. MELZER. What ability do the Treasury or the ESF have to take us out of an obligation [i.e., repay the Federal Reserve] if funds are not appropriated by Congress? Do they have the ability just to say, we committed to this and we are going to pay the Fed off?

MR. TRUMAN. Yes, they could.

MR. MELZER. But if they can do that, why can't they just advance it themselves?

MR. TRUMAN. They could, but I think they feel that it would be useful to their objectives to have a lot of people - [apparently the rest of his comments are redacted]

The discussion then continues on this point, but touches upon the relationship between the ESF and the Treasury. These comments also establish that the ESF does not use "appropriated funds", meaning that the ESF is answerable only to the Secretary of the Treasury and the President. All actions of the ESF are beyond Congressional authority.

CHAIRMAN GREENSPAN. Could I just formally respond to Governor Lindsey? There is a question here of whether or not the amount the United States Treasury gives us has to be appropriated funds, which I think is really where our examination of the issue has to be. In examining the take-out, we ought to make certain that we talk to them with respect to the question of what happens if they do not get the appropriated funds.

MR. TRUMAN. Mr. Chairman, the Exchange Stabilization Fund does not have appropriated funds.

CHAIRMAN GREENSPAN. Are we going to be getting a take-out from the Exchange Stabilization Fund?

MR. TRUMAN. I think that is what is in the program.


SPEAKER(?). That is not the same as the Treasury.

MR. TRUMAN. Even if we didn't, the precedent in the 196Os - I think there was a question then about whether the Treasury could engage in foreign exchange operations outside of the ESF - was the use of Roosa bonds in the 1960s. The Treasury floated Roosa bonds to obtain foreign currencies and used some of those currencies to take us out. That did not involve appropriated funds. That was treated as a debt-management operation.

The above passage confirms what we already know, but many people refuse to admit. The ESF is a slush fund beyond Congressional oversight. It can be used to 'get around' most anything (i.e., it can skirt normal governmental procedures). No wonder so many people want to do away with the ESF. There is no room for it in our democratic process. It is not subject to the normal checks-and-balances so carefully crafted by the Founding Fathers that have proven over time to be so essential for control within the federal government. The ESF is the antithesis of the American foundation of representative government because it subjects a free people to an unconstitutional governmental force. Still not convinced? Here are some more excerpts:

MR. LINDSEY. My second question has to do with our credibility. I don't know what questions to ask, and I hope you will help me out in that regard. I have this document in front of me, which includes a page entitled "What is the Exchange Stabilization Fund?" The document came from Treasury International Affairs. I gather it was written by them. I have written enough of these to know what you do, and that is to tell your point of view. Paragraph 3, not to mention the dots indicating an omission in paragraph 2, got me a little nervous. Paragraph 3 says these holdings in the ESF are used to enter into swap arrangements with foreign governments, to finance exchange market intervention, to provide short-term bridge finance, etc., and all these things are great. So, basically paragraph 3 is establishing that this is not unprecedented. My question would be: Do we do all these nice things if it's not in support of the dollar? Is this unprecedented with regard to the fact that we are supporting another currency?

MR. TRUMAN. The language before the dots is--

MR. LINDSEY. I am talking about the third paragraph. I will go to the second paragraph in a second. I'm sorry. I am running a little out of order. It is saying the ESF has done all these things.

MR. TRUMAN. The legislation governing the objectives of the ESF was changed, I think for the most part in the mid- to late-1970s. The changes included the language that the government of the United States and the International Monetary Fund have the obligation to promote orderly exchange rate arrangements leading to a stable system of exchange rates. That was interpreted to include making loans to Bolivia in helping it maintain a system of stable exchange rates.

MR. LINDSEY. So that has happened before?

MR. TRUMAN. Yes. They have made loans to or financial arrangements with at least 31 countries around the world over the last 50 years.

MR. LINDSEY. I think we all will be asked questions about this. Can you read this paper and tell me that there is not something missing that I should know about, meaning that this is not only the truth but the whole truth? MR. TRUMAN. I can only say that Treasury lawyers have looked into the question of whether these operations are legal under this broad authorization of what they can do and what the purpose is--

MR. MATTINGLY. If I can help out?


MR. MATTINGLY. It's pretty clear that these ESF operations are authorized. I don't think there is a legal problem in terms of the authority. The statute is very broadly worded in terms of words like "credit - it has covered things like the gold swaps - and it confers broad authority. Counsel at the White House called the Treasury's General Counsel today and asked "Are you sure?" And the Treasury's General Counsel said "I am sure." Everyone is satisfied that a legal issue is not involved, if that helps. [Emphasis added]

MR. LINDSEY. Is there anything missing on this page?

MR. MATTINGLY. No, there is not. If you look at the last paragraph, for example, that is part of the statute.

MR. LINDSEY. About notifying Congress in writing in advance?

MR. MATTINGLY. The statute says that with the permission of the President they can make loans.

There you have it. The ESF doesn't have to notify Congress about anything in advance. It is under the sole authority of the Secretary of the Treasury and the President, and they can do "gold swaps" without any Congressional approval, which brings up an important point I made in "The Smoking Gun".

I had noted a curious pattern in the correspondence emanating from the Treasury Department. The Secretary of the Treasury never answered any questioning letters concerning the ESF, even if they were written directly to him. Rather, one of his assistants invariably responded. I therefore wondered whether the Treasury Department chain of command was being relied upon just like President Nixon had tried to rely upon the White House chain of command in an attempt to avoid being sucked into the vortex of a growing Watergate scandal. I even asked in "The Smoking Gun": "Did Secretary Summer's knowledge of the goings-on in the secretive ESF explain why his underlings, and not him, were writing the letters denying US government involvement within the Gold market?" The above excerpts from the FOMC transcript clearly establish that my question needs answering.

It is becoming increasingly clear as more and more evidence emerges that the Secretary of the Treasury does not answer questions concerning the ESF because he, but not his underlings, know to what extent the ESF is engaged in gold related activity. His underlings can say that the ESF is not involved in the gold market because as far as they know, what they say is true. However, we now have sufficient evidence proving that the ESF is indeed involved in the gold market. Therefore, the Secretary of the Treasury does not respond to letters asking questions about the ESF and its activity in the gold market. He can't answer them truthfully without 'spilling the beans'. He obviously knows everything about what really is going on within the ESF, in contrast to his underlings. Or at least most underlings because it appears that one of them is in there up to his elbows washing ESF laundry. His name is Ted Truman.

From the FOMC transcripts it is quite apparent that Ted Truman has a special role. Though recorded in the attendee list in the FOMC transcripts under the featureless title of "economist", his role is anything but ordinary. The transcripts reveal that he clearly speaks for the Treasury Department in FOMC meetings, and is very knowledgeable about the ESF. The insight displayed by him in the FOMC minutes makes it clear that he is not just fully informed about the ESF and its operations, but that he probably is also intimately involved in ESF decision making. Consequently, the following excerpt is particularly intriguing.

MR. PARRY. What is the size of the ESF?

MR. TRUMAN. The usable funds in the ESF today, counting the foreign exchange as usable, amount to roughly $25 billion.

MR. PARRY. Can you say how it is broken down?

MR. TRUMAN. About $5 billion is invested in Treasury securities and the balance is roughly equally divided between marks and yen. I think they have slightly more yen than marks.

MR.PARRY. Thank you.

MR.BOEHNE. Is any of it obligated in any way beyond what we are talking about with Mexico?

MR. TRUMAN. It is obligated only in the sense that they have one other swap arrangement with the Bundesbank.

Wouldn't it be interesting to know what this swap arrangement with the Bundesbank entailed? What is the nature of this swap? Is it a Dollar/Deutschemark swap facility? Or is something else being swapped, like gold perhaps?

Gold being swapped with the Bundesbank? It's an outrageous thought. Or is it? I have already established that the ESF is very much involved with gold. The only thing I haven't established is with whom the ESF has those gold swaps that Virgil Mattingly was talking about.

Let's put one and one together here to see if we can come up with an answer. According to Virgil Mattingly, the ESF has authorized gold swaps, presumably in the recent past (circa 1995). According to Ted Truman, the only outstanding swap facility of the ESF (circa 1995) other than the one established for Mexico is their facility with the Bundesbank. Ergo, the ESF has a gold swap facility with the Bundesbank.

It's an interesting proposition, and one that fits well with another newly discovered fact. Some very interesting sleuthing by Mike Bolser, who has been assisting Reg Howe in his lawsuit against the BIS, has revealed that the Treasury has made a small but very significant accounting change. Mike noticed that the Treasury Department has changed the designation of nearly 1700 tonnes of inventoried gold at the US Mint's facility in West Point, New York (approximately 21% of the total US Gold Reserve) from "Gold Bullion Reserve" to "Custodial Gold".

The August 2000 Status Report on US Treasury Owned Gold stored at West Point has a designation of "Gold Bullion Reserve". (See: But the September 2000 and subsequent status reports inexplicably designate this same gold that is stored at the US Mint in West Point as "Custodial Gold". (See:

This change was made without explanation, so rather than let the matter remain unexplained, Mike diligently contacted the Treasury asking what seemingly are two uncomplicated questions. Would the Treasury please explain why they made this change, and what does this change in designation mean with respect to the ownership status of the gold at West Point?

They are simple questions, but perhaps they touch too close to a nerve. Not surprisingly, the Treasury so far has not responded to Mike. I have some views on what Mike discovered, and why the Treasury is so quiet about it. I think this change in asset classification is related to the ESF gold swaps. Here's my thinking.

The change Mike spotted possibly occurred as a result of accountants looking at the financial statements of the US Mint being prepared for its annual report ending fiscal year 2000. Note that the previous director of the Mint (Phillip Diehl) resigned in early 2000, so this was the first annual report signed by the new director (Jay Johnson). If there is one thing that government bureaucrats do well, they take great pains to call things by their right name. To do otherwise would put their job in jeopardy if something under their responsibility came under Congressional scrutiny, and it was subsequently determined that the name assigned to something was incorrect or misleading.

Therefore, this change in the descriptive label for nearly 1,700 tonnes of gold at West Point from "Gold Bullion Reserve" to "Custodial Gold" was purposeful. It happened for a reason. This conclusion is all the more plausible because the Treasury did not change the classification from "Gold Bullion Reserve" to "Custodial Gold" to describe the gold stored in Fort Knox or at the US Mint in Denver. Maybe new US Mint director Johnson saw something he didn't like. What could that have been?

I've already put one-and-one together to establish that the ESF has "gold swaps" with the Bundesbank. It therefore does not require much conjecture to add one supposition to the equation by concluding that the gold in West Point has been swapped with gold owned by the Bundesbank, thereby necessitating its reclassification from "Gold Bullion Reserve" to "Custodial Gold". Here's what I think has happened.

The Treasury Department wanted to make gold available to some bullion banks. This statement is based on my basic premise that several of the big banks have gold books that are hopelessly imbalanced. By having borrowed short and loaned long, these banks have in their quest for profits imprudently fallen into the alluring but usually fatal banker's deathtrap - a mismatched loan book. But what's worse for these banks, it is even more difficult and treacherous to try extricating themselves from this particular deathtrap because they haven't mismatched their loan book of dollars, which we all know can be created by the Federal Reserve 'out of thin air' if dollars are needed to bailout banks from a deathtrap predicament. Instead, these banks have mismatched their gold book. And no one - not even the Federal Reserve - can create gold out of thin air.

So given this reality about the nature of gold, the Treasury had to turn elsewhere to find the gold necessary (1) to keep these banks from defaulting on their bullion obligations arising from their mismatched gold books in an environment where metal had become increasingly difficult to come by and/or (2) to keep the gold price low so that the likelihood of default by the banks would be lessened, even though metal would remain tight because fabrication year after year was exceeding newly mined supply. Rather than accept the bitter pill that certain banks were about to default on their bullion obligations, the Treasury looked for alternatives and found one - they put their hand into the till, until recently known as the Gold Bullion Reserve at West Point. They swapped this gold with the Bundesbank. I'll explain how they did it, but let's first consider the practical aspects of this transaction.

In all likelihood, these particular bullion banks needed gold in Europe where their obligations were originally established. There is very little gold lending in New York. It is a practical problem to ship the gold out of West Point without raising the alarm of government auditors. It is costly too. Also, it is likely that some of the gold in West Point is coin-melt from the 1933 gold confiscation. Even if it could be smuggled out of the West Point vault into the market without raising suspicions, the alarm bells would go off at the refiner and soon thereafter in the market because everyone knows that only the US government has coin-melt bars. The appearance of coin-melt bars in the market would immediately raise suspicions that the US Gold Reserve was being dishoarded, an outcome that the Treasury would obviously take steps to avoid in concocting its scheme because the US Gold Reserve cannot be depleted without Congressional approval. Therefore, one is faced with the practical considerations of overcoming these hurdles, but the answer is relatively simple.

The Treasury has gold in West Point. The Bundesbank has gold in Europe. The Treasury cannot directly do a deal with the Bundesbank because unlike the ESF, the Treasury is subject to Congressional oversight. So instead the Secretary of the Treasury and the President decide to use the ESF to set up a swap line for gold with the Bundesbank.

By so doing, the gold in the Bundesbank's vault in Europe becomes ESF gold, to do with as they please - i.e., the ESF lends this metal to bailout certain bullion banks. And the Bundesbank now owns the gold in West Point, which as a result was purposefully re-classified from Gold Bullion Reserve to Custodial Gold because the Treasury no longer owns this gold, having swapped it out through the ESF in exchange for gold in Europe owned by the Bundesbank. Case closed. The mystery of the abnormally low gold price is solved. The ESF did it.

The abnormally low gold price is the result of the mounting irrefutable evidence that the ESF is deeply involved in the gold market, and I do mean deep. They are involved in some 1,700 tonnes worth because that is the weight of gold stored in West Point, which was probably being swapped at the rate of a few hundred tonnes per year from circa 1995 through 2000. There are two other tidbits that I would like to share with you that add even more validity to this supposition.

First, a couple of months ago I was analyzing the 1998 and 1999 balance sheets of the ESF. Being an ex-banker, I know a little bit about accounting, including where to find the big holes through which the proverbial truck can be driven. And suffice it to say, I found one of those, which could suggest that in these two years 975 tonnes of gold came into the market from the ESF. Interestingly, after reaching this conclusion, I wanted to test it. So I called a top gold market expert whose supply/demand analyses are second to none, and who believes that gold from the US reserves has been coming into the market for several years.

Without telling him about my analysis of the ESF balance sheet, I asked him how much gold he thought came out of the Treasury/ESF in 1998 and 1999 in total. His response was 1,000 tonnes, a mere 25 tonnes difference from what I deduced from the ESF financial statements. When I told him this, that we had both reached the same conclusion from different sources, he chuckled but was not in the least bit surprised, being so convinced that the Treasury/ESF has been a major source of metal for years. I have thoroughly reviewed his supply/demand numbers since 1994 and have determined that as much as 2,000 tonnes of gold from the US reserve may have entered the market in order to make the gold price as low as it is, which leads me to the second tidbit that I would like to share with you. It is just as intriguing.

This same individual told me several months ago about some astonishing intelligence he had learned from a source in Europe. He told me that the Bundesbank's gold vault was empty, which seemed so preposterous that I found it hard to believe. He also admitted that this news startled him when he learned about it, and that he did not have an adequate explanation for it. He knew that the Bundesbank was an active lender of gold, but he had a difficult time accepting the possibility that all 3,400 tonnes that it owned had been loaned. Yet he was confident that his source had provided him with accurate information.

We now know what has happened. The Bundesbank has loaned 1,700 tonnes, one-half of its 3,400 tonnes reserve; the other 1,700 tonnes were swapped for gold in the US reserves, requiring the change in the West Point vault from Gold Bullion Reserve to Custodial Gold. In other words, the Bundesbank's vault is empty because one-half of their gold is stored in West Point not Europe, and the other half has been loaned out.

Despite the irrefutable proof that the ESF is involved in the gold market, two questions remain unanswered. First, what's the ESF's motive? Unfortunately, we just don't know for certain.

Many, including me, claim that it is to use gold to provide the liquidity needed to bailout some big banks that have imprudently grown their gold books by recklessly expanding credit and mismatching their asset/liability maturities. These banks are the ones with the unusual - some say abnormal - derivative activities that are named as co-defendants in Reg Howe's suit against the BIS. That this list includes Germany's largest bank may explain why the Bundesbank would agree to participate in this gold swap scheme. It was bailing out one of its own.

Others claim the ESF aims to manipulate the gold price to make inflation numbers look better than they really are by keeping the gold price artificially low. And there are some who argue that the US government, acting at the behest and under the instructions of the big banks, aim to destroy their combined arch enemy - gold, regardless of the fact that the gold mining industry would be destroyed along with it.

This last theory is not outlandish. It has currency because gold is the world's only free-market money. In contrast to national currencies, all of which circulate only because of government fiat, Gold's value derives from everyone who understands that it has usefulness as money. And governments and banks don't like the fact that while they can manipulate gold for a time - and as have we have seen in recent years, even a long time - they cannot in the end control the price of gold anymore than they can control the price of a Picasso painting. The value of a Picasso is determined by the free-market, and so too is gold. In short, you and I give gold its value - not the central banks, not the US government or any other government, either acting alone or together. But the US government either has not yet learned - or refuses to admit - this reality that its power to control gold is limited, which is an inexplicable conclusion unless you accept the notion that governments have short memories and need to relearn what logic says they should have learned from experience.

If logic prevailed, the US government would have learned from its ill-fated attempt in the 1960's to keep the price of gold abnormally cheap at $35 per ounce that the market determines gold's value. But instead, the US government is about to learn that it cannot keep a manipulated 'floating-rate' gold price from rising any more than it was able to keep the manipulated 'fixed-rate' gold price from rising thirty years ago. The free-market rate of exchange between dollars and gold will prevail, eventually repeating today what happened in the 1970's after the artificially low $35 rate was no longer tenable - the gold price will skyrocket higher. It is well worthwhile keeping in mind that the gold price rose nearly three-fold in the eighteen months after the fixed-rate price was abandoned in August 1971.

Then there is the second unanswered question. To what extent is today's exceptionally low gold price the responsibility of certain bullion banks, which have cheapened gold by extending gold credit to such an extreme, and the ESF, by perpetuating this scheme? This question too does not have an answer, at least not yet. But as the truth about the ESF's involvement in the gold market continues to emerge and become more widely known, the price of gold is destined to rise to a more normal level, just like it did after August 1971. The high price that gold eventually achieves will indicate how badly certain bullion banks and the ESF have damaged gold mining companies and the gold industry.

In conclusion, while we don't know whether any of these motives for manipulating the gold price that I ascribed to the US government are accurate, one point is clear and cannot be denied. The US government cannot claim that the ESF is not involved with gold. We now have the irrefutable proof that establishes beyond any reasonable doubt that the ESF is indeed involved in the gold market. We know this for a fact because of our peek behind closed doors.

Sun, 10/28/2012 - 19:34 | 2926168 wchild
wchild's picture

Thanks for sharing, have ya'll seen this?

What I have been afraid to blog about: The ESF and Its History (Part 1-5)


June 3, 2011 by Eric deCarbonnel

If you enjoyed the video, feel free to donate. I have spent a lot of time on this.

Part 1:

Part 2:

Part 3:

Part 4:

Part 5:

Tue, 10/30/2012 - 21:56 | 2933410 tyrone
tyrone's picture

AS Reagan once said, "Trust, But Verify".

But don't worry.. after the election, the Republican congress will authorize an audit of the US Gold holdings. Then we will know the truth.

I hope for Ben's sake that the FRB has kept a detailed trail of all transactions since 1953, and that the inevitable forensics of ALL bars in the various vaults, doesn't reveal any contamination.

Sun, 10/28/2012 - 15:53 | 2925730 OhBaldOne
OhBaldOne's picture

A critical last graph: The Bundesbank has loaned 1,700 tonnes, one-half of its 3,400 tonnes reserve; the other 1,700 tonnes were swapped for gold in the US reserves, requiring the change in the West Point vault from Gold Bullion Reserve to Custodial Gold. In other words, the Bundesbank's vault is empty because one-half of their gold is stored in West Point not Europe, and the other half has been loaned out.


So there is no gold in Germany…and someone is going to be very pissed!

Sun, 10/28/2012 - 16:15 | 2925776 knukles
knukles's picture

Yeah, well....
Lemme see, the gold is supposedly in NY, London and Paris.
US, UK and Frogs have troops occupying Germany.

Go on, yell, scream, piss and moan all your little heart desires, Kraut.


(DC to Berlin.  You know that big airport in Frankfurt that's on the Ramstein Air Base?  Rent's overdue, assholes...)

Sun, 10/28/2012 - 15:56 | 2925733 pain_and_soros
pain_and_soros's picture

What Thiele knew but was trying to cover up is that all of Germany's gold was sold unbeknwonst to it by the Fed, BOE, etc.,  to China...

Chinese central bank say "All your gold are belong to us"


Danke Schoen

Sun, 10/28/2012 - 17:00 | 2925793 Uskatex
Uskatex's picture

This video (in Italian) shows the gold reserves held by the Bank of Italy in Rome:

In the video the person says that this gold was valued 20 billion Euros in 2005, so it should be about 1400 tons on a total of 2400 tons Italy officially holds. The remaining is in USA, England and Switzerland.

This gold should be OK, because they were never able to sell the gold under Central Bank Gold Agreement in early 2000', due to the too many laws and rules to be followed.

Sun, 10/28/2012 - 16:31 | 2925817 sasebo
sasebo's picture

Lets see ---- Gary North defines the fed as a quasi - government enterprise. That means it is owned by the banks & supervised by a group appointed by the asshole president, all of whom are owned by the banks. The same banks that caused the subprime whatever by making stupid loans with OPM, loans that went bust & are being purchased at par by the fed with digital "money" created out of thin air. 

And germany thinks their gold stored with the fed is still available? They better ask OPM about that.

OPG? AW SHIT!!!!!!!!!!!! 

Sun, 10/28/2012 - 16:33 | 2925823 markar
markar's picture

Seems Germany is once again the banksters' favorite bitch. How does such an advanced and productive society wind up here time after time? You would think after the  toxic crap Wall St. dumped on the German banks leading up to the financial crisis, they would have demanded at least an audit if not repatriation of their gold. Oh wait, the Fed and Treasury placated them with with TARP money, currency swaps, IRS, and access to all sorts of discount windows.

Stockholm Syndrome's a bitch

Sun, 10/28/2012 - 17:11 | 2925912 newworldorder
newworldorder's picture

Its called - Losing both World Wars and being deathly afraid of the Russians till 1990.

Losing 2x at something that big is a bitch.

Sun, 10/28/2012 - 16:47 | 2925852 Fred C Dobbs
Fred C Dobbs's picture

Germany's leaders have sold their people out just as American leaders have sold us Americans out.  Americans are too trusing, fluoridated, bpa'd, gmo'd, distracted to notice.  Let's hope the German people are not.  They have an opportunity right now to push this against the bankers/nwo/illumanati/rothchilds/whoever.  Let's hope they take it.  

Sun, 10/28/2012 - 18:08 | 2925986 Monedas
Monedas's picture

Let's not forget that we won the war and would be entitled to the gold as a tiny compensation for all the war expense .... but we claim we were big hearted .... and we are .... but we are also duplicitous enough to say we won't take it .... then take it anyway ?  Fiat is fraud .... where is the moral red line ?

Sun, 10/28/2012 - 18:14 | 2926001 fijisailor
fijisailor's picture

The French are "turning water into gold"

Sun, 10/28/2012 - 19:52 | 2926200 Non Passaran
Non Passaran's picture

the headlineis a hoax. And to regain and recycle preciousmetals from industrial waste water, that´snothing new. You have to solve the computer or cell phonewaste in nictric acid, only. And for regaininggold from this "water" - this is meant by theterm "water"! - polymeres are not necessary.This is done by adding some other chemicals.That´s all! We don´t need French "experts"for this purpose. Everyone can do this!

Sun, 10/28/2012 - 18:59 | 2926087 Its_the_economy...
Its_the_economy_stupid's picture

Here's the bitch. Here in the good 'ol USA, this shit can stay under wraps for decades..maybe longer. But, overseas, its a different matter. The truth will bust out, be it Germany, Finland or where ever. The veil will be lifted and the whole world will demand an accounting. Then, then the SWHTF.

Sun, 10/28/2012 - 19:38 | 2926177 terryfuckwit
terryfuckwit's picture

Doth yon sagefull gentlefolk speak of and relish that his cup does overflow with multifarious promises or prefer in splendor that cup did weigh heavy with the real substance of yellow metal bright with the shine and glisten of value known

Sun, 10/28/2012 - 20:27 | 2926295 Dr. Gonzo
Dr. Gonzo's picture

The bottom line is: If the New York Fed and The BOE do not have any of Germany's gold there is not a fucking thing Germany can do about it...Hope and trust...NOT GOLD... is all they have right now. Did Libya ever get their gold back from BOE? Fuck no! and leaders get killed over requests like that so just forget about your gold Germany. You're not getting it back.

Sun, 10/28/2012 - 20:56 | 2926366 cranky-old-geezer
cranky-old-geezer's picture



Again I ask, why all the fuss over an antiquated relic of the pre-Keynesian fiat currency era no respectable banker would take seriously today?

Why do central banks even care about gold anymore?  It's not needed to back a currency, today's currencies have no backing at all. 

Ask a central banker what backs the value of their currency and they'll look at you like you're from the dark ages. 

Today's currencies are "backed" by faith.   That's it, just faith.  Trust.  (And military force in the case of the US dollar.)

Printing and debasement?  You're not supposed to concern yourself about that.  Trust your central bank to do the right thing. 

The asset side of their balance sheet is a garbage dump of worthless financial paper?  It doesn't matter, the currency isn't backed by what's on the asset side.  It's backed by faith, trust. 

So keep the faith.  Keep trusting.  And don't worry about any of that antique dark-ages relic they have or don't have.  It doesn't back the currency.  It's just tradition to have some gold according to Bernanke, nothing more than tradition.

Sun, 10/28/2012 - 21:26 | 2926422 cornflakesdisease
cornflakesdisease's picture

Also, who will clean their pools . . .

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