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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BigJim's picture

I'm still waiting for his 'Morgan Stanley is about to crash!' call to come good.

unrulian's picture

I'm still working on that crash JPM buy silver bullshit

Dr. Sandi's picture

Buying silver is a great idea, whether JPM crashes or not!

Dr Benway's picture

Yeah but I fear a lot of the repatriating countries will just sell their gold to keep their respective ponzis going

EnslavethechildrenforBen's picture

You don't need gold to keep a ponzi scheme going, that's the entire point of printing toilet paper. What's happening is that the entire planet has figured out that it's just worthless valueless paper, and the central bankers know that they are going to have to start printing more and more faster and faster before people take things in to their own hands and go back to the gold standard by themselves.

In other words, the bankers don't want to be left holding bags of paper, they know they're going to need the real deal.


TwoShortPlanks's picture

BINGO! If the players truly believed that Gold was not important in the scheme of things, then Gold would be worth as much as copper. The fact that Gold is starting to play an emergng role indicates two things, they are; 1. That Gold is indeed part of the end game wealth transfer /stabilization and, 2. That the players want as much as they can get.

The trick is to watch and observe just how heated this game becomes.

4-5 years ago this was all too complex, now, after so much converging of interests and hands being shown (thanks ZH), and asside from a few surprises here and there, it's a relatively simle game...but mindful of games within games.

DavidPierre's picture

11 - 12 years ago this was all too complex, now, after so much converging of interests and hands being shown (thanks GATA !)...

Karl von Bahnhof's picture

Any volcano close the ecuador? Or a shore suitable for tsunami? Assange in the closet?

HardwoodAg's picture

U must not have gotten the memo. The HMS Bounty (replica) was chartered by the chairsatan

Ljoot's picture

My sock drawer was on that boat. Shame.


Buck Johnson's picture

The game is ending and people are running for the door now.

Jason T's picture

So it begins...again. lol

Induced Coma's picture

Something Dreadful this way comes...



Lore's picture

Why only a third?  Why don't they simply repatriate it all in one shot?  By analogy, why wait until just before Halloween to shop for candy, when you risk finding the store shelves empty? 

akak's picture

Didn't "it" begin with Venezuela repatriating their much larger foreign gold holdings?

XitSam's picture

Musical golden chairs, bitchez. When the music stops ....

Freegolder's picture

When the music stops......

'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.'


So, some are still viewing gold as 'hard money'?

No, gold is just an asset, nothing to do with money, and is at its best when left out of the monetary system.

You might want to take a look at the design of the Euro, where its gold reserves are marked to market every quarter, as a reserve holding, a clear display of the wealth of the Eurosystem.

It's the next stage in the world's monetary development, and it is a wonder ZH ignores the issue, I have never seen them discuss the monetary developments contained within the Euro, the world's greatest ever currency.


A rising gold price is great for the Euro, but a real pain for the dollar. Hence all of the paper gold to keep the price down.

XitSam's picture

Why I think I detect a true disciple of fofoa. Someone who believes that the Euro is partially backed by gold (because they print a report). And just where is the gold that backs the Euro? Germany says its gold is in London, Paris and NY Fed, but they haven't checked in a recent decade. And they will bring home 150 tons in the next three years. That ought to debunk the doubters, right? When the music stops and Germany is left grasping a bundle of rehypothecated IOUs, what will the oh, so clever European central banks do then?

akak's picture


I have never seen them discuss the monetary developments contained within the Euro, the world's greatest ever currency.

I thinkI just threw up in my mouth a little.

Truly, if you believe that, I feel sorry for you, as you are obviously as brainwashed as any garden-variety statist, and are apparently, if unknowingly, suffering from classic Stockholm Syndrome.

TrillionDollarBoner's picture

"Didn't "it" begin with Venezuela repatriating their much larger foreign gold holdings?"


It continues indefinitely, bitchez

jonjon831983's picture

Indefinitely, bitchez until there's none left to repatriate and the next step is to invade each other for more gold?

The Fonz...before shark jump's picture

And what did that take? 10 months to fully realize? Wait until the repatriation orders come flying in...

I remember spott saying how long it took to secure the physical for his funds...and this was during less volatile times.... It took over a year and the bars came to him stamped from all over the world....wasn't just sitting in one place....

disabledvet's picture

Didn't this Government just throw Chevron under the bus? Wow...who knew. "Ecuador...trying their hand at extortion." I think the bigger story is Petrobas missing by a country mile.

Gringo Viejo's picture

This should get ugly..............

kill switch's picture

GOLD I love it's color!!! Auric Goldfinger!! and Kill Switch!!

Captain Benny's picture

Lets not forget that Venezuela already is demanding their gold back too!

knukles's picture

Hugo already got all his gold back.
Old news.

Urban Redneck's picture

But Germany actually hasn't gotten its gold back, and they are now politely letting other States cut in line...

JLee2027's picture

And Merkel is quiet about it, meaning she knows the Gold is long gone.

Tompooz's picture

Merkel is quiet about it, because she knows that the obligation to come up with Germany's gold will not disappear. The Germans can be patient and make the best of the Fed's and London's discomfort. They will get "zeir Gold".  Weaker parties will be vaporized first.

TruthInSunshine's picture

If there's a run on the illusory frauds that constitute the Federal Reserve "Bank" and "Bank" of England, whereby a significant number of sovereigns really do request actual, physical repatriation of their gold stocks that are being held on custodial bailment arrangements in New York City and in London, expect a war or some other major global geopolitical event to break out shortly.

Kitler's picture

There is a backlog at the electroplaters... you can't just paint that shit on the tungsten you know.

CunnyFunt's picture

Soon we will be told that Ecuador harbors terr'ists and is building a nuke.

Kitler's picture

Correct. They want $19 billion in damages from Chevron. Now they are official terrorists for wanting that and 1.7 bill of their own gold back. Bloody communists... Hillary is going to tear them a new one.

11b40's picture

Why not.  After all, Chevron is flush with excess cash.  They must be, to have just written a check last week to the House Republicans for $2.5 Mil.


EnslavethechildrenforBen's picture

And their gubment's supressen em so we gots to install freedom and democrasyz

groundedkiwi's picture

Hillary no longer uses the term freedom and democracy. Its now democracy and the rule of law...... and thevlaws they are a changin

knukles's picture

"rule of law"

Ha ha ha ha ha ha ha


Horseshit horseshit horseshit
Horseshit horseshit horseshit
Horseshit horseshit horseshit
Horseshit horseshit horseshit
Horseshit horseshit horseshit
Horseshit horseshit horseshit
Horseshit horseshit horseshit



akak's picture

That's correct: "The Rule of Law".


What Hillary is not telling us, though, is that she is referring to "The Rule of (John) Law".

JPM Hater001's picture

Http:/ just sold on

h0oS's picture

Long on Gold, long on silver, long on Tungsten, short on toilet paper and I don't mean I have a smelly ass...

dick cheneys ghost's picture

Bye Bye Miss American Pie

akak's picture

Drove my Corzine to the bullion bank but their gold vaults were dry

And bad ol' banksters waved the gold price 'bye bye'

Singing "this'll be the day that I die, this'll be the day that I die".

semperfi's picture

popcorn time?  I'm not getting my hopes up quite yet.

ThirdWorldDude's picture

Popcorn can wait, still busy stacking ABCD here...

yogibear's picture


The suckers are wondering if they have been scammed.

Look at the bright side you can gold plate your light bulbs and have plenty of tungsten for the filaments.

What, you gonna fight the US if you have been scammed? Obama, Bernanke and Dudley will laugh at you while they send you home.