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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knukles's picture

Send you to your New Home at some involuntary protective custory high security work camp

SillySalesmanQuestion's picture

I dream every night of banksters and CEO's jumping out of tall buildings with tungsten parachutes.

akak's picture

That would be much too quick and merciful a death for the likes of them.

My daydream: put them, separately, into seamless vats filled with an inch or two of concentrated sulfuric acid, constantly replenished ---- and enjoy their screams over the following many hours as they slowly dissolve, feet first, and sink down into the acid.


EDIT: The acid-containing vaults should, of course, be lined with gold (which is unaffected by sulfuric acid), providing them with a certain irony to contemplate in their final moments.

CH1's picture

Damn, a lot of anger there!

akak's picture

Actually, it is just the very old residue of a conversation that I participated in as a chemistry undergraduate many years ago, in which we idly competed to see who could come up with the most gruesome torture we could imagine.

I think I won the contest, as I recall.

Conax's picture

You win.. that would be worse than sliding down a 40 foot razor blade into a vat of iodine.

Thecomingcollapse's picture

I actually got shivers imagining that one... Damn Dude!

Conax's picture

I heard it in the Air force. They are a twisted bunch.

JimBowie1958's picture

Airmen are novices in this area.

Imagine having your skin peeeled back on your back and chest, cut off, then your body being doused with boiling oil, then being sawed in half upside down starting at the groin.  That was mideival 'harsh interogation'.

knightowl77's picture

I think they would bleed out before their ankles dissolved??? But still inventive....


Drawn and quartered worked well in the Medieval times and might suit our purpose....

knukles's picture

A warm Thorazine and Lorazepam enema would help

unrulian's picture

i know where to start...we could call it a "Corzenema"

Pseudo Anonym's picture

well, of course

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

the comments, reports, articles re phys gold being compromised would scare the shit out of anybody; right or wrong.

also, let's not forget good ol' hugo chavez who started it all

max2205's picture

Where do they think they are gonna get 29 tons

praps's picture

Easily solved.  Just confiscate all the gold.

Lord Peter Pipsqueak's picture

We here in the Royal Principality of Englandistan feel no desire to repatriate our gold since our previous chancellor Gordon Brown saw no possible benefit in holding gold and decided to sell over half the countries reserves for an average of $300/oz using the proceeds to buy dollars and Euros.So we are way ahead of everyone in finding out that we are broke,deciding to avoid the messy drawn out process and just going straight to insolvency.Highly recommended.

Bullionaire's picture

Wow...a +1 from TD themselves. Impressive.

h0oS's picture

Englandistan! Priceless - Oddly enough, in the Persian speaking world the UK is actually referred to as Englestan. I'm from Londonabad myself ;)

debtor of last resort's picture

Tia Maria Golden Brown
Drink it, when the sun goes down

And Hollandistan on place 9 of the world gold holdings, with 90% abroad, part of the net EU contributorzzz, what to expact?

Yeah yeah, Corzined, i know.... Sounds like Van Rompuyed, Sandy'd whatever. Let's party! Let's get this game running faster and faster.

Zadok's picture

So, here is a question. Outside of the minor useless eater holdings, where do you think the lions share of the gold actually resides now?

dogbreath's picture

good question.   165 000 tons of above ground stocks.   for being a barbaric relic it sure is a popular thing to steal.  All them pirates and privateers way back, bank robbers, train robbers, looters and embezelers, yamashita's gold.   where did it all go

Dr. Sandi's picture

It's in leaky boats and canoes at the bottom of various streams, lakes and the Seven Seas. Most of it at one time belonged to ZH loyalists.

Treason Season's picture

¡Arriba! ¡Arriba!

cxl9's picture

¡Hijo de puta!  ¡Estamos Corzinado!

news printer's picture

Lagarde is coming with paper money but for Egyptians more precious is Egypt gold

Egypt stocks take further fall even as IMF talks restart

On Tuesday, an Egyptian court ordered a halt to local operations of international gold producer Centamin, saying the contract signed between the firm and the government was invalid.

Pseudo Anonym's picture

iran, here we come

all it takes is for more and more banks to join the bandwagon and demand delivery

bombs away!

kito's picture

hey tyler, im sorry, but i dont see where this story has anything to do with ecuador's gold. this is an attempt to bring the private banking cartels holdings back home to prevent outflow of dollars. how do you equate this news with ecuador's gold holdings?...............................

akak's picture

Hmmmm ...... good point.

kito's picture

i feel a little guilty correcting tyler, but we have to stick with the facts. the private banking cartel in ecuador holds much of their reserves outside the country, and correa is trying to bring some of that money back home. i dont see the connection to ecuador's gold reserves.....................

Dr. Sandi's picture

The tiny part of me that is naturally suspicious says that the real reason to bring the shiny home has nothing to do with mistrust of offshore vaulting.

Methinks it's a lot easier to 'acquire' solid gold in the state run bank than from some vault in the Magical Land of America.


That is THE point.  None of the central bankers gold is the citizens gold. It's all an illusionary mind f'ing. 

kito's picture

not true. you know not of what you speak. this has nothing to do with gold. this is private banks holding dollar reserves outside the country, which correa wants to repatriate. period. if correa wants gold, he could simply nationalize the gold mines from kinross.........................


Ouch, a ZH smackdown.  Thanks for explaining it to me. ;-)

Tyler Durden's picture

"an attempt to bring the private banking cartels holdings back home"

This includes all assets. 

Of course one can define it as preservation of capital flows. Obviously the whole point is to ringfence the "capital" domestically: without the gold the capital will outflow indefinitely. Just ask Germany, or at least, divine based on their actions, if not their talk.

The bottom line is the same as the motive behind Germany: bring the gold locally in case one needs alternative "reserve" liquidity.

The underlying logic is the same.

Dr. Sandi's picture

Steal it locally, steal it internationally. Just STEAL it!

Excuse me, I mean, just acquire it for the national treasury on behalf of the nation's citizens.

kito's picture

tyler...its your we will agree to disagree..........

yogibear's picture

LOL, surprise, "We don't have it!"


That will show these countries for entrusting their gold in financially irresposible countires. Guess the gig is up.

Banksters's picture

We can't have gold based money. That shit is too expensive! And behold the age of state sanctioned fraud...

Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

I don't know what you're complaining about. Any IOUs are as good as gold as illustrated in this documentary clip...

Verum's picture

No where in that Bloomberg summary does it say that they are demanding the physical.  If they need the funds to support growth than cash (on 'redemption') will suffice, yes?

Mr Lennon Hendrix's picture

It begins? 

It began with Hugo awhile ago.

constantine's picture

Why only one third?