Exclusive: Bank Of England To The Fed: "No Indication Should, Of Course, Be Given To The Bundesbank..."

Tyler Durden's picture

Over the past several years, the German people, for a variety of justified reasons, have expressed a pressing desire to have their central bank perform a test, verification, validation or any other assay, of the official German gold inventory, which at 3,395 tonnes is the second highest in the world, second only to the US. We have italicized the word official because this representation is merely on paper: the problem arises because no member of the general population, or even elected individuals, have been given access to observe this gold. The problem is exacerbated when one considers that a majority of the German gold is held offshore, primarily in the vaults of the New York Fed, and at the Bank of England - the two historic centers of central banking activity in the post World War 2 world.

Recently, the topic of German gold resurfaced following the disclosure that early on in the Eurozone creation process, the Bundesbank secretly withdrew two-thirds of its gold, or 940 tons, from London in 2000, leaving just 500 tons with the Bank of England. As we made it very clear, what was most odd about this event, is that the Bundesbank did something it had every right to do fully in the open: i.e., repatriate what belongs to it for any number of its own reasons - after all the German central bank is only accountable to its people (or so the myth goes), in deep secrecy. The question was why it opted for this stealthy transfer.

This immediately prompted rampant speculation within various media outlets, the most fanciful of which, of course, being that the Bundesbank never had any gold to begin with and has been masking the absence all along. The problem with such speculation is that, while it may be 100% correct and accurate, there has been not a shred of hard evidence to prove it. As a result, it is merely relegated to the echo chamber periphery of "serious media" whose inhabitants are already by and large convinced that all gold in the world is tungsten, lack of actual evidence to validate such a claim be damned (just like a chart of gold spiking or plunging is not evidence that a central bank signed the trade ticket, ordering said move), and in the process delegitimizing any fact-based investigations that attempt to debunk, using hard evidence, the traditional central banker narrative that the gold is there and accounted for.

And hard evidence, or better yet a paper trail of inconsistencies, is absolutely paramount when juxtaposing the two most powerful forces of our times: i) the central banking-led status quo (which is de facto the banker-led oligarchy whose primary purpose in the past several centuries has been to accumulate as much as possible of the hard asset-based fruits of people's labor, who toil in exchange for "money" created out of thin air - a process which could be described as not quite voluntary slavery, but the phrase would certainly suffice), and ii) "everyone else", especially when "everyone else" still believes in the supremacy of democratic forces, accountability, and an impartial legal system (three pillars of modern society which over the past 4 years we have experienced time and again have been nothing but mirages). Because without hard evidence, not only is the case of the people against central bankers non-existent, even if conducted in a kangaroo court co-opted by the banker-controlled status quo, it becomes laughable with every iteration of progressively more unsubstantiated accusations against the central banking cartels.

Finally, when it comes to cold, hard facts, which expose central banks in misdeed, even the great central banks have to be silent silent, as otherwise the overt perversion of justice will blow up the mirage that modern society lives in a democratic, laws-based world will be torn upside down.

And while others engage in click-baiting using grotesque hypotheses of grandure without any actual investigation, reporting or error and proof-checking to build up hype and speculation, which promptly fizzles and in the process desensitizes the general public and those actually undecided and/or on the fences about what truly goes on behind the scenes, Zero Hedge travelled (metaphorically) in space - to London, or specifically the Bank of England Archives - and in time, to May 1968 to be precise.

While there we dug up a certain memo, coded C43/323 in the BOE archives, official title "GOLD AND FOREIGN EXCHANGE OFFICE FILE: FEDERAL RESERVE BANK OF NEW YORK (FRBNY) - MISCELLANEOUS", dated May 31, 1968, written by a certain Mr. Robeson addressed to the BOE's Roy Bridge as well as its Chief Cashier, and whose ultimate recipient is Charles Coombs who at the time was the manager of the open market account at the Fed, responsible for Fed operations in the gold and FX markets.

This memo, more than any of the other spurious and speculative accusation about Buba's golden hoard, should disturb German citizens, and of course the Bundesbank (assuming it was not already aware of its contents), as the memo lays out, without any shadow of doubt, that the BOE and the Fed, effectively conspired to feed the Bundesbank due gold bars that were of substantially subpar quality on at least one occasion in the period during the Bretton-Woods semi-gold standard (which ended with Nixon in August 1971).

The facts:  

At least two central banks have conspired on at least one occasion to provide the Bundesbank with what both banks knew was "bad delivery" gold - the convertible reserve currency under the Bretton Woods system, or in other words, to defraud - amounting to 172 bars. The "bad delivery" occured even as official gold refiners had warned that the quality of gold emanating from the US Assay Office was consistently below standard, and which both the BOE and the Fed were aware of. Instead of addressing the issue of declining gold quality and purity, the banks merely covered up the refiners' complaints 

It is this that the Bundesbank, the German government, and the German people should be focusing on. If in the process this means completely ridiculing the Buba's "she doth protest too much" defense strategy that what is happening in the media is a "phantom debate" as per Andreas Dobret's recent words, so be it. In fact, one may be well advised to ignore anything Buba has said on this matter, because in attempting to hyperbolize the matter out of irrelevancy, the Buba is now cornered and will have no choice now but to explain just what the true gold content of the gold even in its possession is, let alone that which is allocated to the Buba account 50 feet below sea level, underneath the infamous building on Liberty 33.

Full May 1968 memo from the BOE to the NY Fed: highlights ours:




U.S. Assay Office Gold Bars


1.  We have from time to time had occasion to draw the Americans’ attention of the poor standards of finish of U.S. Assay Office bars. In addition in 1961 we passed on to them comments from Johnson Matthey to the effect that spectrographic examination did not support the claimed assay on one bar they had so tested (although they would not by normal processes have challenged the assay) and that impurities in the bar included iron which caused some material to be retained on the sides of crucible after pouring.


2. Recently, Johnson Matthey have put 172 “bad delivery” U.S. Assay Office bars into good delivery form for account of the Deutsche Bundesbank. These bars formed part of recent shipments by the Federal Reserve Bank to provide gold in London in repayment of swaps with the Bundesbank. The out-turn of the re-melting showed a loss in fine ounces terms four times greater than the gross weight loss. Asked to comment Johnson Matthey have indicated verbally that:-


(a) the mixing of “melt” bars of differing assays in one “pot” could produce a result which might be a contributing factor to a heavier loss in fine weight but they did not think this would be substantial ;


(b) a variation of .0001 in assay between different assayers is an extremely common phenomenon;


(c) over a long period of years they had had experience of unsatisfactory U.S. assays


3. It is not, however, possible to say that the U.S. assays were at fault because Johnson Matthey did not test any of the individual bars before putting them into the pot.


4. The Federal Reserve Bank have informed the Bundesbank that adjustments for differences in weight and refining charges will be reimbursed by the U.S.Treasury.


5. No indication should, of course, be given to the Bundesbank, or any other central bank holder of U.S. bars, as to the refiner’s views on them. The peculiarity of the out-turn will be known to the Bundesbank: it has so far occasioned no comment.


6. We should draw the attention of the Federal to the discrepancy in this (and any similar subsequent such) result and add simply that the refiners have made no formal comment but have indicate that, although very small differences in assay are not uncommon, their experience with U.S. Assay Office bars has not been satisfactory.


7. We hold 3,909 U.S. Assay Office bars for H.M.T. in London (in addition to the New York holding of 8,630 bars). After the London gold market was reopened in 1954 we test assayed the bars of certain assayers to ensure that pre-war standards were being maintained. It might be premature to set up arrangements now for sample test assays of U.S. Assay Office bars but if it appeared likely that the present discontent of the refiners might crystalise into formal complain we should certainly need to do this.  In the meantime I would recommend no further action.


31st May 1968



To summarize: Bank of England discovers discrepancies with US Assay Office gold bars, notifies the NY Fed that its gold bars have major "bad delivery" issues, but, and this is the punchline, on this occasion, we'll keep it quiet, because the Bundesbank got these bars. This is merely one documented assay occasion: one can imagine that of the hundreds of thousands of gold bars in official circulation, the "good delivery" quality of bars outside of the US, and perhaps BOE, official holdings has progressively declined over the decades of Bretton Woods. One can also only imagine what has happened to all those "good delivery" bars currently held by the Fed as custodian at the NY Fed. Literally: imagine. Because there is no way to check what the real gold consistency of these gold bars is, and whether the refiners found ongoing future inconsistencies with "good delivery" standards of bars handed off to other "non-core" central banks. And, yes, without further evidence the above is merely speculation.

As to the remaining relevant facts: the US ran out of good delivery gold in March 1968 and only had coin bars remaining. Which is why it closed the gold pool and went to a two-tier price system. The Bundesbank went on to cover some of the outstanding gold debts of the Fed to the gold pool. Subsequently, the US then did several deals with the BOC to get a substantial amount of gold to pay back the Bundesbank which was sent over to England from March until June 1968. One can, again, only speculate on the quality of said gold. The Fed then created unsettled accounts to account for these transfers between itself and the Buba.

In light of the above facts and evidence, one can see why the Buba is doing all in its power to avoid the spotlight being shone on the purity of its gold inventory: after all the last thing the German central banks would want is someone to go through the publicly available archived literature, to put two and two together, and figure out that it does not take one massive "rehypothecation" (see "to Corzine") event for German gold credibility to be impaired: all it takes is death from a thousand micro dilutions over the decades to get the same end result. Because chipping away one ounce here, one ounce there for years and years and years, ultimately adds up to a lot.

We eagerly look forward to the Buba's next iteration of self-defense. We can only hope that this one does not include a reference to a "phantom debate", to "East German terrorist Simon Gruber" or to Goldfinger, as it will merely further destroy any remaining credibility the Bundesbank may have left in this, or any other, matter.

* * *

Look forward to more archive-based disclosure ot what may have happened to Buba's, and not only, gold in the coming days and weeks.

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CPL's picture

Mexican standoff.  Watch out.

MiguelitoRaton's picture

Tungsten now trading at $1731.40 per Oz...problem solved

CPL's picture

If the contract was in tungsten.


This weekend everyone is going to figure it out and you bet your ass geologists, P Material Engineers, Metal Smiths and Cash for Goldsteins are being called all over the world on this to assess their deliveries.

malikai's picture

Uh, that report said there was iron in those bars. Is iron a common find in refined bars? That doesn't make much sense to me at all.

CPL's picture

Only if taking the delivery in 100's of tonnes of pig iron.

knukles's picture

Here's what we also know.
Many of the old photos of the gold in Ft. Knox are not of LBMA good delivery standards.
Yes, we can see that Just By Looking.
LBMA good delivery standard requires that the top of the bar be larger than the bottom so as to facilitate it being lifted by hand (Fact, see LBMA website) as each should weigh something right around 440 oz. (Fact) and have a chemically established purity assay embossed/stamped thereupon (Fact).

Now, that said bars sent from FED to Buba did not measure up to purity standards, means that said bars were either....
Represented as LBMA good delivery standard and therefore Fraudulently Delivered as Good or,
Not represented as LBMA and would by necessity need to be refined (remelted and recast) to meet LBMA standards, properly assayed and bearing the refiners marks (Fact, again see site)

Now, that the FED agreed to make whole is a meaningless entry, for if they were indeed LBMA, there would be no need to make whole, if fraudulently represented as such, there is a contractual necessity to make whole as Buba can reasonable demand LBMA good delivery (Unless officially being screwed knowledgeably by the Fed and BoE) or, was sending all sorts of coin junk (non-good delivery) as they'd run out of the other?!?!?!?!

So one way or the other, this in my mind constitutes a smoking gun.

PLUS  Back to the video tape er, photos.  The old photos of the Ft Knox and the PR pamphlet form the NY Fed (the latter case I am not 100% sure of but think its the case, ref NY Fed website) show "square" "brick" form bars without the top and bottom being of differing sizes. 
Those are not LBMA good delivery.  Period, and probably represent the US's Assay Office coin bars which lends credence to the statements about running out of good delivery bars, etc.

Ah, but the plot thickens.
See, anything exchanged between LBMA recognized vaults must be transported by LBMA recognized shippers and be in LBMA good delivery form.
Period, end of conversation.

To suggest there's a problem is probability highest.
Second case might be with all our (US and UK) troops still occupying Germany, "fuck ya'll take what we give ya" might have been the order of the day... which is still the back to the case of highest suspicions.


I love a good mystery.

(mystery my ass)

SafelyGraze's picture

in case you missed it last time:

it's all just a bunch of gold-foil-wrapped lasagna noodles

for real

you'd think someone would have noticed how light they felt

and the Mueller's package they shipped in

strannick's picture

Canadian Mint now selling units of undeliverable silver EFT.


Not surprizing as Canada has a long history of participating in gold price suppression, selling gold to help its US overlords control the price, being one of the first western central banks to dump their gold in 1980s


saturn's picture

Next headline: Ron Paul: "End the FED AND the FRACTIONAL reserve GOLD!"

Al Gorerhythm's picture

Next headline: People to the Central Banks; "GIVE US OUR WEALTH BACK!" 

francis_sawyer's picture

Jews steal gold & have done so throughout recorded time...

So tell me something I don't already know...

prains's picture

So tell me something I don't already know...


Dick Cheney is not Jewish

markmotive's picture

We're basically days away from WWIII so what does it matter anyway? Gold melts in a nuclear fireball.

Iranian jets fire on US drone in international airspace.



SWRichmond's picture

Gulf of Tonkin; yes, I've been watching this.

francis_sawyer's picture

@prains (above)

1. I KNEW Dick Cheney was not Jewish... (so that's FAIL #1)...

My comment was "Jews steal gold"... The methods for doing so have been various throughout recorded history, but the result is the same...

Mostly, the THEFT has occurred by way of illicit banking schemes (might as well just call ALL of them "ponzi's" for the sake of simplification)... Nevertheless, it all amounts to THEFT... Most recently [last century, & more], the MIC (which is where your boy Cheney comes in, & which, along with oil, has become the BLOOD which runs the body) have become part & parcel of the same schemes which are led by the same banking thieves who have assembled themselves together into a [not so] hidden cartel over time...

So nowadays... non-jews happen to be beneficiaries as well, but they are just agents... It's always the same scheme, & as you follow the pyramid upwards towards its capstone, the PURER the theft becomes refined into a group with a SINGLE common denominator...


Of course... francis_sawyer will be the one who gets "junked" for making these types of comments... But the TRUTH is... I'm NOT the one stealing your gold or your wealth... In fact ~ I'm doing quite the opposite... I'm trying to help you hurdle the barrier that has been created in your mind that you won't be "liked" by people if you speak certain truths... & in the process, HOPEFULLY, I'm helping you to preserve your hard fought for wealth instead of having it stolen from you...

You don't have to thank me...

prains's picture


i won't thank you because the jews are just the middle men in this transaction but you keep falling for it 





Wile-E-Coyote's picture

This story stinks, I would have thought a drone would be easy to bring down. The ramping up of tension has begun.

TwoShortPlanks's picture

Cheney is Zionist...oh, and a war criminal.

Buzz Fuzzel's picture


Moron     |

Big Slick's picture

Point of perspective:  In 1968 only half as much time had elapsed since WWII as as elapsed from 1968 to now.  The generration who wrote the memo was the same one being fire-bombed by V2s.  Just sayin'

bigkahuna's picture

Everyone likes to steal gold.

TwoShortPlanks's picture

That's true, I've just pinched yours and I feel great.


francis_sawyer's picture

Not true... While I like gold ~ I don't want to STEAL it...


elementary's picture

It's interesting that we are seeing so many of these "fake gold" stories in the last 6 - 12 months. Perhaps it is a final attempt to separate the only thing of value from the little people.

Ident 7777 economy's picture






Exclusive: Bank Of England To The Fed: "No Indication Should, Of Course, Be Given To The Bundesbank...

- Circa 1968


We have very easy, quick techniques today to ascertain if somethng is rotten in Denmark in the way of bogus Gold bars ... Don't buy into the hype.


Fake Gold Bars - How to detect them using ultrasound testing



THIS technology DID NOT exist back in 1968 ...





CPL's picture

I got the perfect guys to solve that mystery.  Riddle below.


My job is so fukking unbelievable. I'll try to sum it up by first telling you about the folks I work with:

First, there is this supermodel wanna-be chick. Yeah, okay, she is pretty hot, but damn is she completely useless. The girl is constantly fixing her hair or putting on makeup. She is extremely self-centered and has never once considered the needs or wants of anyone but herself. She is as dumb as a box of rocks, and I still find it surprising that she has enough brain power to continue to breathe.

The next chick is completely the opposite. She might even be one of the smartest people on the planet. Her career oppertunities are endless, and yet she is here with us. She is a zero on a scale of 1 to 10. I'm not sure she even showers, much less shaves her "womanly" parts. I think she might be a lesbian, because every time we drive by the hardware store, she moans like a cat in heat.

But the jewel of the crowd has got to be the fukking stoner. And this guy is more than just your average pothead. In fact, he is baked before he comes to work, during work, and I'm sure after work. He probably hasn't been sober anytime in the last ten years, and he's only 22. He dresses like a beatnik throwback from the 1960's, and to make things worse, he brings his big fukking dog to work. Every fukking day I have to look at this huge Great Dane walk around half-stoned from the second-hand smoke. Hell, sometimes I even think it's trying to talk with its constant bellowing. Also, both of them are constantly hungry, requiring multiple stops to McDonalds and Burger King, every single fukking day.

Anyway, I drive these fuktards around in my van and we solve mysteries and shit.

Harbanger's picture

The Diva, the Dyke, the Beatnik and his lover.

jeff montanye's picture

the dog's his lover?  

seriously i went to a five year old girl's birthday party and they all were there.

Likstane's picture

CPL_You must be the 6'4" blonde haired stud with the white sweater and the tight jeans.  Why the hell do you hang around with these jerk-wads unles you think you are going to get in the supermodels pants?  Maybe you should branch off into your own detective company; maybe lose the sweater and get a partner named Starsky and drive around a red Grand Torino...that would be cool. 

piliage's picture

But think about it, he's got the title, free and clear, to at least 200 broken down amusement parks in the US. It's a mini empire.

SafelyGraze's picture

"I got the perfect guys to solve that mystery. Riddle below."

I'm gonna have to go ahead and say .. "batman"?

that's probably not right.

is that right?

is it batman?

I think it's batman.

that's gonna be my guess.


knukles's picture

Oh I get to play Robin....
Where my tights, where my tights, where my tights?

erg's picture

Holy ethyl Batman...I have a nasty run in my leotard.

Jafo's picture

If cock robin is the answer what is the question?


What's that up my ass, Batman?

swmnguy's picture

Wow, you work for the SEC?

ebworthen's picture

C'mon, Thelma is hot.

I just know she's a closet Kielbasa swallower.

StychoKiller's picture

Linda Cardillini definetly is!

sgorem's picture

"there is this supermodel wanna-be chick. Yeah, okay, she is pretty hot, but damn is she completely useless". I hate to inform you, BUT, two tits, a hole, and a heartbeat does not make one "useless". And a heartbeat is optional.:)

BTFDemocracy's picture

Copied from Reddit.com

macholatte's picture



..the FED agreed to make whole is a meaningless entry,


But, but what if the Fed printed some 1969 dollars? Wouldn't that make up the difference, factor for inflation and all that?  Shirley, the 1969 paper is worth way more than the 2012 paper.





CrockettAlmanac.com's picture

If Buba used the refunded cash to purchase more gold to add to the bad delivery bars and then recast them to good delivery standards there is no problem. But if Buba pocketed the cash and still has bad delivery bars marked as good delivery bars then the German gold supply numbers would be invalid to some degree and the possibility exists that those bad delivery bars will be passed on to someone else as good delivery bars.

DaveyJones's picture

it would indeed be a "good" mystery

if there were any good people involved

Almost Solvent's picture

Iron, lead, tungsten, whatevz. 

How many bars are we holding that are coated with gold colored rustoleum (so they don't rust)? 

Rust would be a quick sign that the assay is not good.

CPL's picture

Start shipping foil wrapped caramilk bars for all the good it'll do them now.  This is serious stuff, government toppling in fact.  The people of england will hardly stand for the fact their own political class, all of them, for giving away their back up plan.


It's going to get so weird in the UK real fast.


Psst, Fellow Canucks and fellowship of the commonwealth.  We're next.  The Queen will not be amused, at all.  Please consider at the end of the day in the commonwealth, the buck stops with the Queen.  Always.



jmcadg's picture

I like your optimism of British people in all matters gold. Sadly they are mostly worried about who's going into the jungle and who's out of x factor, or some other such bullshit ... I think!

Cover up should be easy this side of the pond. Some Tory toff has thrown his toys out of the pram for being tarred with Jimmy Savile's brush! Allegedly!

CPL's picture

And that is good for you.   It gives you time to prepare while everyone is being amused to death.   Otherwise fuck'em, there isn't time to help them either now.  This gaffe has created a big solvency problem for the UK.


If the pound is worth a fiddlers fuck by Weds colour me surprised, because the assumption everyone had all this gold lying around to back their asset as the back up plan.  Now it's confirmed that the Republic of Togo has more gold than the UK and more credibility.  Christ what a mess.


If you have anyway to buy gold, silver, cagarettes, pot, booze, food, tarps (blue and clear), zipties, seeds, rope, 180 piece toolkits with carpentry toolbox....anything not perishable and tradable I suggest you go get some shopping done tommorrow with lots of cash, do not use credit cards to identify purchases or ownerships.  Keep it quiet and tidy so to speak.  Lots of lists online that can provide details with supply lists for various budgets and situations.


England needed that gold for securing Iranian energy.  They don't take IOU's or fiat of any kind.


knukles's picture

Her Majesty will get so fucking pissed she'll morph right lickety split into the Reptilian Annanuki trans-human individual she is, eat George  Cameron in one big bite, breathe fire on Princess Whazhername and consume the web wrapped body of King George II been in storage in the basement of the Tower of London for just such a special occasion and all will be filmed live by Alex Jones and the BBC in memorium of Gary Glitter and Sir Jimmy Seville with David Icke as guest host and professional commentator.


(I so miss London, the Scotch of St James in Mason's Yard and young ...oh never mind ....)