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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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Wed, 10/31/2012 - 17:59 | Link to Comment constantine
constantine's picture

Why only one third?

Wed, 10/31/2012 - 18:03 | Link to Comment MiltonFriedmans...
MiltonFriedmansNightmare's picture

Ecuador demands?  Are you kidding me? The rules of engagement will be *explained*  and they will happily walk away with tails between legs. Don't fuck with TBTF.

Wed, 10/31/2012 - 18:02 | Link to Comment Catullus
Catullus's picture

To support growth... of an international monetary crisis.

Wed, 10/31/2012 - 18:04 | Link to Comment Jack Kreuz
Jack Kreuz's picture

This has nothing to do with their government's gold holdings. Rather, it's a confiscatory policy intended to nick assets from ecuadorian banks.

Wed, 10/31/2012 - 18:05 | Link to Comment Lendo
Lendo's picture

Ditch currensy and buy money

Wed, 10/31/2012 - 18:07 | Link to Comment Piranhanoia
Piranhanoia's picture

Ya load 16 tons, what do ya get?   Another year gone and unsurmountable debt

St. Peter don't call me, can't afford to go,  I owe it all to them banking ho's

Wed, 10/31/2012 - 18:14 | Link to Comment fukidontknow
fukidontknow's picture

Could this be the begining of the mother of all bank runs? Here's hoping!

Wed, 10/31/2012 - 18:16 | Link to Comment toothpicker
toothpicker's picture

Carlos! Word of advice: don't use any helicopters.

Wed, 10/31/2012 - 21:11 | Link to Comment unrulian
unrulian's picture

don't use any fucking boats eithor.... those things are always sinking

Wed, 10/31/2012 - 18:27 | Link to Comment The Count
The Count's picture

I am pretty sure that if some of the BUBA gold turns out to be indeed tungsten or whatever, that we will never hear about it because the one thing Ben is really afraid about is that ALL foreign gold depositors want their stuff back.

Wed, 10/31/2012 - 18:32 | Link to Comment Arcturus
Arcturus's picture

Next they will want to repatriate their silver too. Oh.......never mind.

Wed, 10/31/2012 - 18:34 | Link to Comment Rathmullan
Rathmullan's picture

Buy Raytheon, Boeing, General Dynamics, Oshkosh et al. They fight over oil, they'll certainly fight over gold.

Wed, 10/31/2012 - 18:34 | Link to Comment Heyoka Bianco
Heyoka Bianco's picture

Seriously, does anybody believe that Ecuador is going to be allowed to fuck with the system? Iran has about 100X the international stature (and suction) of Ecuador, and look what's happening to them over the petrodollar.

Wed, 10/31/2012 - 18:35 | Link to Comment evolutionx
evolutionx's picture

The Bundesbank's fear of Fed tungsten bars

In response to public pressure, the Bundesbank, the German central bank, now wants to bring "parts" of Germany’s gold reserves home and verify their authenticity. Is fear rife in Frankfurt of counterfeit gold bars from the USA which are actually made of tungsten?

Wed, 10/31/2012 - 18:47 | Link to Comment unemployed
Wed, 10/31/2012 - 20:11 | Link to Comment Dr. Sandi
Dr. Sandi's picture

Hey, it's real gold. And IT'S A BOY!!

Wed, 10/31/2012 - 18:36 | Link to Comment Threeggg
Threeggg's picture

Whats the old sayin ? If your gonna panic panic first !

Wed, 10/31/2012 - 18:44 | Link to Comment edb5s
edb5s's picture

I sense, once again, another conspiracy "theory" turning to conspiracy "fact" very soon.

Wed, 10/31/2012 - 18:47 | Link to Comment Leto II
Leto II's picture

Give them some of Gaddafi's 143 tons we democratically liberated.

Wed, 10/31/2012 - 18:54 | Link to Comment knukles
knukles's picture

Thats where Hugo's just might have come from...

Wed, 10/31/2012 - 19:22 | Link to Comment Nehweh Gahnin
Nehweh Gahnin's picture

Yeah, with the 143 tons of silver we vaporized with the circuitry of them Tomahawks...

Wed, 10/31/2012 - 19:35 | Link to Comment are we there yet
are we there yet's picture

Thank you, I posted that there was an even greater disparity between gold held by Lybia in its attempt to create a pan-african currency to what ended up being claimed after the revolution.  No explination or speculation as to what happened to the Lybian gold.

Fri, 11/02/2012 - 22:08 | Link to Comment Dr. Sandi
Dr. Sandi's picture

All I can tell you is that a whole lot of gangstas have a much shinier smile than they did last year.

Wed, 10/31/2012 - 18:48 | Link to Comment honestann
honestann's picture

Attention:  Repatriate 100%.

The only way to get your gold back... is to get your gold back.

This is a classic ponzi scheme, which means only early withdrawers will get their gold back.

Don't be foolish suckers, demand 100% repatriation.  That goes for everyone.

Wed, 10/31/2012 - 19:44 | Link to Comment seataka
seataka's picture

I bet this was the best they could do, didn't Chavez get get all of Venezuelas gold back? Viva Chavez! Viva Zapatista!

Wed, 10/31/2012 - 18:50 | Link to Comment fijisailor
fijisailor's picture

And Ecaudor's official currency /bogus fiat is the USD.

Wed, 10/31/2012 - 18:54 | Link to Comment magpie
magpie's picture

Ratfuckers minted the 'catch Moby Dick gold escudo'

Wed, 10/31/2012 - 18:59 | Link to Comment natty light
natty light's picture

Sovereign bank run.

Wed, 10/31/2012 - 19:02 | Link to Comment topspinslicer
topspinslicer's picture

yeah well we keep yours in Deeetroit, come an' get it biatch and don't be bringing a knife to this fight baby

Wed, 10/31/2012 - 19:04 | Link to Comment topspinslicer
topspinslicer's picture

Benny at the fed has a tradition of not giving up the gold so easy like. It's just a tradition -- nothing personal

Wed, 10/31/2012 - 19:05 | Link to Comment topspinslicer
topspinslicer's picture

Can we interest you in some freshly minted fiat? It smells so fresh and feels so crisp -- it's really to die for

Wed, 10/31/2012 - 19:07 | Link to Comment jvetter713
jvetter713's picture

Where did this stupid tradition come from?

Do people store their drugs at a crack heads house?

Did Russia ask the US to *hold* its Nuclear weapons during the cold war?

Who ever thought it would be a good idea to let a foreign country hold their gold?

I don't get it.

Wed, 10/31/2012 - 19:14 | Link to Comment dark pools of soros
dark pools of soros's picture

take my wife, please

Wed, 10/31/2012 - 19:41 | Link to Comment seataka
Wed, 10/31/2012 - 20:18 | Link to Comment Dr. Sandi
Dr. Sandi's picture

I believe it's a legacy from the post WWII era. The US was the center of trade and commerce. Since everybody else's manufacturing had be lost in various boating accidents, the US was selling their fine merchandise to all who could put up the gold for it.

A lot of that gold stayed in US vaults rather than moving back and forth with the tradewinds, and US dollars were used instead.

While not an expert, it's my guess that the nations with the gold sitting in US vaults decided it was just cheaper and safer to leave it parked than to take the responsibility of guarding it. Particularly those states with questionable stability.

As we got complacent and started to regard gold as a barbarous relic, nobody could be bothered to haul it back home.

But suddenly, some folks in some places are starting to smell a nasty drowned rat. They would like to fondle their shiny again, the way granpappy used to do, back before the Second War to End All Wars.

Wed, 10/31/2012 - 21:19 | Link to Comment optimator
optimator's picture

The gold was all stored in NY in those days, and they simply moved pallet from one country's area of the vault to another and vice vesa.  The other option would have been moving it from country to country with all the transportation risks involved. 

Wed, 10/31/2012 - 19:08 | Link to Comment warezdog
warezdog's picture

The big question should be: Which countries with nukes will be left standing in the repatriation line?

Wed, 10/31/2012 - 19:09 | Link to Comment The Duke of New...
The Duke of New York A No.1's picture

Happy New Year Ben Shalom!!!;

Wed, 10/31/2012 - 19:20 | Link to Comment GubbermintWorker
GubbermintWorker's picture

I sure am glad that I am my own repository!


the system's explicit leverage at last check inclusive of the nearly $1 quadrillion in derivatives, is about 20 times greater than global GDP.


Ooohhhh, that is scary indeed!

Wed, 10/31/2012 - 19:19 | Link to Comment Nehweh Gahnin
Nehweh Gahnin's picture

Oh, let's not get hasty, Ecuador.  You've got your ETF certificates, right?  Good as gold, amigos, good as gold.

Wed, 10/31/2012 - 19:37 | Link to Comment Fix It Again Timmy
Fix It Again Timmy's picture

Money vs. The Rule of Law - the greatest fight on earth.  Wait, 1 nano-second into the 1st round, The Rule of Law takes a wicked right, it went down like a sack of rocks, 1,2,3......10 - and the winner and still champeeeennn - Money!!!!

Wed, 10/31/2012 - 19:41 | Link to Comment Sound of Silence
Sound of Silence's picture

A great cartoon explaining in mostly layman's terms the bind we face!

Wed, 10/31/2012 - 19:45 | Link to Comment mercenaryomics
mercenaryomics's picture

Positioning Short Carlos Carrasco/Long Latin-American drone strikes.  

Wed, 10/31/2012 - 19:46 | Link to Comment oddjob
oddjob's picture

Correa interviewed by Assange.

Wed, 10/31/2012 - 19:51 | Link to Comment Common_Cents22
Common_Cents22's picture

trick or treat??!!!

Wed, 10/31/2012 - 20:10 | Link to Comment Angus McHugepenis
Angus McHugepenis's picture

I crrrap bigger than fucking Ecuador! I'm higherrr on the foood chain! GET-IN-MY-BELLY yoo heathen Ecqueerdorians!

Yours truly,

Ben "Shalom" Barecracky

Wed, 10/31/2012 - 20:24 | Link to Comment fuu
fuu's picture

Slacker Gold bitchez


Wed, 10/31/2012 - 20:33 | Link to Comment Pejorative Requiem
Pejorative Requiem's picture

Giving away drilling rights in the Gulf in the face of denying US drilling isn't a stimulus?

Wed, 10/31/2012 - 20:51 | Link to Comment mayavision2012
mayavision2012's picture

I see that Romania also wants its gold back (from Russia) :

Netherlands, too [seems Netherlands is teaming up with Germany on this one]:

Wed, 10/31/2012 - 20:54 | Link to Comment Monedas
Monedas's picture

WTF was Hillary doing in Ecuador .... seeing if they needed any fuel rods en lieu of gold ? 

Wed, 10/31/2012 - 20:58 | Link to Comment RSDallas
RSDallas's picture

I believe you are definitely right here. The scramble for "A+" assets is nearing the end.

Wed, 10/31/2012 - 21:01 | Link to Comment RSDallas
RSDallas's picture

Why am I all of the sudden getting all of these f$&@?!g pop up ads on my iPad on this site. Don't follow the crowd Tyler!

Wed, 10/31/2012 - 21:15 | Link to Comment akak
akak's picture


Why am I all of the sudden getting all of these f$&@?!g pop up ads on my iPad on this site. Don't follow the crowd Tyler!

Humorous irony, or ironical humor?

Wed, 10/31/2012 - 21:18 | Link to Comment unrulian
unrulian's picture

An ipad user accusing someone of following the crowd? is yours 7" or 7.89"? bastard..beat me to it..and better

Wed, 10/31/2012 - 22:05 | Link to Comment famousamos
Wed, 10/31/2012 - 22:58 | Link to Comment css1971
css1971's picture

So in a fractional reserve, rehypothecated system when people start demanding actual delivery, isn't that.... like... a run on the bank?

And in this case a run on the central bank? Which can print any amount of currency.......... but not gold of course... You need a nuclear reactor for that, and then it comes out radioactive[1].

Dearie me. 400 years and people still never learn.



Thu, 11/01/2012 - 01:17 | Link to Comment Atlas Shrieked
Atlas Shrieked's picture

the author forgot Venezuela already repatriated most of theirs, and the Netherlands is also seeking theirs.

Let's get physical.

Thu, 11/01/2012 - 01:44 | Link to Comment natty light
natty light's picture

The Bank of Mauritius will begin selling minted gold bars to the public in November, in a bid to promote a savings culture in the country.

Thu, 11/01/2012 - 02:19 | Link to Comment The Duke of New...
The Duke of New York A No.1's picture

Oh Ben Shalom, what have you and your pals been up to;

Thu, 11/01/2012 - 07:22 | Link to Comment Bogdog
Bogdog's picture

Since Ecuador's offsite gold is probably vapor already, the holder(s) of the vapor will instead pledge them better loan rates/storage fees/debt forgiveness (pick two) in lieu of repatriation. And that's the last you'll hear out of Ecuador.

Thu, 11/01/2012 - 09:25 | Link to Comment toomanyfakecons...
toomanyfakeconservatives's picture

Better get in line... the FED and BIS are getting slapped with countless lawsuits and liens over their stolen gold.

Thu, 11/01/2012 - 19:21 | Link to Comment honestann
honestann's picture

One thing is for sure.  JPM and the other major paper gold and silver manipulators/shorts are doing a bang-up job lately, to hold down the price of gold and silver with the constant pressure of "gold bullish" stories lately.  Of course, that's not difficult when you can create unlimited fiat, fake, fraud, fiction, fantasy, fractional-reserve debt toilet-paper out of thin air at zero cost.  But still.

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