It Begins: Ecuador Demands Repatriation Of One Third Of Its Gold Holdings

Tyler Durden's picture

One week ago, when we reported the news that the Bundesbank had secretly pulled two thirds of its gold from London years ago, we said the following:

... Germany has done nothing wrong! It simply demanded a reclamation of what is rightfully Germany's to demand.


And here is the crux of the issue: in a globalized system, in which every sovereign is increasingly subjugated to the credit-creating power of the globalized "whole", one must leave all thoughts of sovereign independence at the door and embrace the "new world order." After all this is the only way that the globalized system can create the shadow cloud of infinite repoable liabilities, in which we currently all float light as a binary feather, which permits instantaeous capital flows and monetary fungibility, and which guarantees that there will be no sovereign bond issue failure as long as nobody dares to defect from the system in which all collateral is cross pledge and ultra-rehypothecated... for the greater good. Until the Buba secretly defected that is.


And this is the whole story. Because by doing what it has every right to do, the German Central Bank implicitly broke the cardinal rule of true modern monetary system (never to be confused with that socialist acronym fad MMT, MMR or some such comparable mumbo-jumbo). And the rule is that a sovereign can never put its own people above the global corporatist-cum-banking oligarchy, which needs to have access to all hard (and otherwise) assets at any given moment, on a moment's notice, as the system's explicit leverage at last check inclusive of the nearly $1 quadrillion in derivatives, is about 20 times greater than global GDP. This also happens to be the reason why the entire world is always at most a few keystrokes away from a complete monetary (and trade) paralysis, as the Lehman aftermath and the Reserve Fund breaking the buck so aptly showed.


We are confident that little if anything will be made of the Buba's action, because dwelling on it too much may expose just who the first country will be (or  already has been) when the tide finally breaks, and when it will be every sovereign for themselves. Because at that point, which will come eventually, not only Buba, but every other bank, corporation, and individual will scramble to recover their own gold located in some vault in London, New York, or Paris, or at your friendly bank vault down the street, and instead will merely find a recently emptied storage room with humorously written I.O.U. letters in the place of 1 kilo gold bricks.

It appears that the story, which has refused to go away, was not covered sufficiently fast, and precisely the worst case scenario - at least for the "asset-lite" status quo - is slowly but surely starting to materialize. From Bloomberg:

Ecuador’s government wants the nation’s banks to repatriate about one third of their foreign holdings to support national growth, the head of the country’s tax agency said.


Carlos Carrasco, director of the tax agency known as the SRI, said today that Ecuador’s lenders could repatriate about $1.7 billion and still fulfill obligations to international clients. Carrasco spoke at a congressional hearing in Quito on a government proposal to raise taxes on banks to finance cash subsidies to the South American nation’s poor.

So yesterday: Germany... today: Ecuador... tomorrow: the World?

Because while Ecuador, with its 26.3 tonnes of gold, may be small in the grand scheme of gold things, all it takes is for more and more banks to join the bandwagon and demand delivery in kind from official repositories (i.e., New York and London), and the myth that is the overcollateralization of hard money by central banks will promptly come to an abrupt, bitter and, likely, quite violent end.

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maxmad's picture

We are running low on Tungsten, give them the gold wrapped chocolate coins....

maxmad's picture

Hey its Halloween, if they can't take a joke...

camaro68ss's picture

I see a sinking cargo ship heading to ecuador filled with gold in the near future.

crazy how gold fill ships sink all the dam time.


Donde esta mi oro bitchez?

EnslavethechildrenforBen's picture

Gas will be $20/gal by Dec, $50/gal by next summer and $100/gal by this time next year.

Gas is not going up, the dollar is going down, all the way down.

Got a farm?

akak's picture

Damn, just think of how positive that will be for GDP though!

redpill's picture

My prediction:

'Why yes of course Ecuador... soon as you hand over Mr. Assange.'

doomandbloom's picture

Lets 'democracy' Ecuador.

akak's picture

I foresee Ecuador very shortly joining the official "Axis of Evil" rogue nation list, Obama-style.

knukles's picture

Plan B from BIS.
Whispering to Rockefeller delegate (er excuse me, US delegate)  Hey, do they have oil?  Well then let's goad them into repatriating all their gold back and the shock and awe 'em right back into the modern democratic mold of free men everywhere...

Rathmullan's picture

Someone please explain to the Equadorians' that gold is mere "tradition" (polite chairman quad b speak for "relic").

DeadFred's picture

I watched them sell four times this amount once in the time it took to transition from Ron Paul questioning Ben Bernanke to Maxine Waters's questions. Just to keep it in perspective. They must have loads of the stuff if they can throw it around so recklessly.

Winston Churchill's picture

Love the sound of drones over Quito in the morning.

Dungeness's picture

Ecuador followed by Venezuela, then Bolivia, and maybe Argentina for a finale.

A latin spring? or perhaps a latin winter?

JPM Hater001's picture

Assange comment is about as The most unexpectedly true comments I didn't see coming

Strider52's picture

Kirk: "How's the Ecuadorian Bones?"

McCoy: "He's dead Jim."

hmmtellmemore's picture

I agree with both of Cynthia Myers points.

Manthong's picture

Hypothecation means never having to say it’s gone.

Dr. Richard Head's picture

I am reminded of the words Chairman and CEO, Tom McInerney, regarding the relatively small country of Austria and their respective economy. Let the gold grabbing begin.

JPM Hater001's picture

I am reminded of price discovery bitchez

UnpatrioticHoarder's picture

If we assume gold in London is rehypothecated up 100-fold (a reasonable assumption) then Ecuador's 26 tonne holding is equivalent to 2600 tonnes of imaginary LBMA gold - pretty hefty.

Pladizow's picture

Lets see the US justify a Ecuador/Venezuela invasion!

But as the US has its 3rd largest embassy in Colombia, i'll guess they'll try!

EnslavethechildrenforBen's picture

Then Brazil...

The very last 2  of 200 stars on our flag will be Mexico and Canada

Urban Redneck's picture

Brazil has been building more roads than the US, and that's without $700B in "shovel-ready" stimulus...

unrulian's picture

you mean our 11th province will be USAchewan, you're broke Bitchez...


Awww.. who am i kidding so are we

CPL's picture

All Eggs in one oil basket right now, what could they send on the other side of the planet.  About as far away from the task at hand.  

Besides it'll myseriously "sink" in the ocean like the Russian ore that vanished last week.  Wasn't there something about Chile in there as well...or Peru.  Anycase, turns out all the Nazi gold was as phony as a six dollar bill.  People are just starting to catch on what BreX really was.


It was a way for governments to lie about gold holdings for one.  A scam and a half of a company publically stating that it had the line on 4% of the entire human mining efforts, of all time.  That's how outgraeous the lie was.  But it didn't stop governments from filling their greedy little pockets with IOU's from a stock market darling on future gold holdings.  It was certainly all too good to be true.  It took nearly a decade before people figured out that the execs were scraping gold fillings into core samples...nothing has ever been done legally, ever other than a "so Sorry, here's minimum back".


If they did something about it, then the gross gold manipulation that happened during the 90's and carry's on until today.  Because the non gold "mined" by BreX was actually counted, as if it actually existed, when it didn't.  So wait for that "gold" to vanish as well because it never existed.  That's the secret of gold btw.  BreX was the awful bandwagon of bullshit they rode in on to create the boom of the 90's and the constant rebubbling.  The assumption was there was a fall back IOU's instead of gold.


But people don't accept IOU's do they.  What's really horrible is the more than likely embargoes about to happen soon because of it because once the trust in gold is wrecked, it's going to be a real mess unless we all figure out the "best" worst possible scenario in two really bad end results.  It's pretty scary shit.

Dr. Richard Head's picture

USS Enterprise style. Oops, that is the Iran trigger. Hasn't happened ...yet.

UnpatrioticHoarder's picture

I registered for that reason - strangely now both my twitter accounts with email addresses hosted at the same IP are censored - none of my followers see my tweets in their feeds and my tweets don't appear in search results.

hmmtellmemore's picture

You enjoy meeting FBI agents at your workplace?

overmedicatedundersexed's picture

central bank bullion vault: a hole in the ground with a lying executive standing next to it..

THX 1178's picture

No-- the economy shuts down when it gets that high-- no money left for discretionary spending.

Wakanda's picture

El tungsteno es seguro en Nueva York.

TwoShortPlanks's picture

Better than any feedback from the Gold Market, the repatriation of Gold back to their respective countries may not only show us cracks in the wall of the financial system, it may show us that Libor was just a Winona Ryder moment, and that the scale of the Gold larceny may dwarf anything before it.

In light of Germany's issue, I'd say every country with Gold in storage offshore somewhere is wondering just how to get it back without creating waves...and fast!

dick cheneys ghost's picture

Kinda what Jim Willie says in his latest piece, out today..........


Too bad Jim is not discussed more on ZH.............I learn just as much from the comments on ZH as i do the posts!!



toothpicker's picture

Yup. He's spot on. Venezuela, Germany, Holland, Romania and now Ecuador want their gold back. 

aleph0's picture

" Venezuela, Germany, Holland, Romania and now Ecuador want their gold back. "

Turkish Banks are now offering a "Gold Account" .

They are offering to "hold" your Gold so you can even borrow against it !

Wow .. thanks ... NOT

"Turkish Banks Go for Gold to Lure $302 Billion Hoard"

natty light's picture

Turkey on the FDR 1933 tip.

salvadordaly's picture

It's kinda like sitting at a game of poker. There you are, all your (gold) chips. You try to bluff with a pair of kings, staring down an ace on the river, and everyone calls your bluff! At this point you better have your hat pulled low and your sunglasses on! The Pucker Factor is very high!

bank guy in Brussels's picture

Yes, Jim Willie is terrific

In his latest:

How President of Ghana John Atta Mills has suddenly turned up dead after asking for Ghana's gold back from London

And how 6000 metric tonnes of gold have secretly departed London in recent months, to handle margin calls from Asian nations

Meaning there is not enough gold in London and New York left in the supposed supply held for other countries ...

And many other things in the global 'Gold War'

Always an intriguing read

Urban Redneck's picture

Presidents Mills died of natural causes.

BigJim's picture

What did he think he was doing leaning that far out of the window?

unrulian's picture

I heard he drowned in a "boating accident"

Kiwi Pete's picture



Presidents Mills died of natural causes.


marriedgeordie's picture

Well, I cannot think of any unnatural cause of death. If, for instance, a bullet passes through your brain, it would be natural for you to die - in fact, it would be unnatural for you to continue living. So, I believe you when you say that president Mills died of natural causes. However, this statement is irrelevant - a relevant question to ask is whether the death was assisted or nor. And to this question, sir, you have given us no answer.

TwoShortPlanks's picture

When I lead the Global Financial Cleansing And Purging, I will be offering Jim Willie the position of Minister Of Propaganda, with a zero-bullshit-tolerance agenda.

Once mathematical inevitability swings the pendulum to opposite, I will dedicate the rest of my life to hunting down these mongrel dogs.

The Earth is round so there's nowhere to hide. So run motherfuckers, running makes the game a lot more fun.

Lore's picture

I hope the unnamed sources for some of these bits of market intel realize just how much they are appreciated. In these lying, stinking, corrupt, psychopathic markets, a truth teller is as rare and precious as gold. I mean it. If you read this: THANK YOU.

Dr. Sandi's picture

Jim Willie is a god.

I only hope 'they' never catch up with him.