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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old naughty's picture

anxiously waiting...

So, this is why we are here for? Witnessing.

kaiserhoff's picture

young... pussy on the hoof?  Bet you don't miss the weathuh.

knukles's picture

I loved the weather.
Nothing better than a sweet young thing, all dolled up to the nines, motor in from Chigwell, pre motorway days.. Spot of rain, clinging under the brolly.

Was bloody romantic back in the early 60's, civil society, clean, safe

Back in the old days when London's population was primarily Brit.

Not the same these days, what?

DaveyJones's picture

knuckles, what did you eat tonight?

DeadFred's picture

The Annunaki are back? I thought we only had Draco overlords at best. Sweet. We must be rising in the slave-world hierarchy

Redhotfill's picture

The QUEEN?!   I thought that was the Govenor General's job?  

CunnyFunt's picture

Trace metallic elements are always found in that 0.001% There are limits for these tramp metals, but it seems like JM didn't assay anything. Even if they didn't assay the bars prior to going into the pot, they should have taken a pin-tube sample of the melt and assayed it BEFORE the pour. Never assume it's pure.

malikai's picture

Thanks for that. I don't know that business, but the fact that it was sticking to the pot stood out to me. It seems either A) very poor quality work, suggesting many other potential problems OR B) fraud. 

But I don't know. I'm not qualified to talk about that stuff.

Gully Foyle's picture

Biden 2016, fuck a phone Joe has free tablets for all.

Unprepared's picture

At least 6 central banks have been conspiring to feed citizens currency bills that were substantially subpar.

Karlus's picture

So if the US Govt does not have any gold, why do they mint coins? Surely it cant be for the small amount of markup...its not even a rounding error compared to the QEInfiniti.

Why would they coin at all?

Redhotfill's picture

This year, the Mint's bullion facility at West Point, NY, has produced 1,767,500 gold coins, about a quarter of the number produced in Philadelphia in 1904. Why so few, when the buying public clearly demands more?

The short answer points up the perils of depending on outside producers in a chain of manufacture - the Mint has over the past few decades outsourced all precious metals refining and planchet production to foreign mints and private refiners.

Bullion Eagle buyers will long remember that from August of 2008 through February of 2009 in the case of gold Eagles, and for the last ten months of 2008 in the case of silver Eagles, the US Mint was unable to produce coins sufficient to meet demand. During those long periods, premiums charged to the average consumer soared, as the Mint could not obtain enough blanks to fulfill their obligation to supply US bullion buyers adequately.

Director of the Mint Edmund Moy, in an editorial in Coin World magazine last month, wrote that “(W)e are using all sources that can supply planchets – and which meet required specifications – to meet the unprecedented demand that we are facing.”


Source  http://www.onlygold.com/Articles/ayr_2009/Free_TheUS_Mint.html

Buck Johnson's picture

It's so funny and Germany was a fool.  Why store your gold in another country, I guess it made sense during the cold war but it's over and get it all back in your power.  This is funny because a few years ago there was a program on NBC that had Brian Williams doing an hour long show on 1 day in the white house and in one part he was in the oval office Obama was at his desk and there was a few others (don't remember their names).  He asked about certain things and they said everything is going find and then Obama asked about the German situation and then it got kinda weird where one of the others asked if they could have the cameras out of the room.  The rumor was that German was asking for it's gold back during this time.

lemonobrien's picture

where's my golds?

CPL's picture

Gold...silver...tin.  It's metal right?

Sands8oo's picture

Ask for my gold.

Receive my lead.

otto skorzeny's picture

"Pa-I got the gold right here Pa"

markovchainey's picture

+1 - Outlaw Josey Wales reference...brilliant!

MiguelitoRaton's picture

Would you like that lead painted gold and mailed to you, or hot, pointed and traveling at 2,263 fps?

Gully Foyle's picture


Funny how the internet gives everyone Supermans balls of Steel.

But I hear in a firefight damn near everbody shits himself.

JohnG's picture



Not everyone, mostly replacements until (if) they get a little time under thier belt.  Last thing my Dad told me before dropping me off for grunt school: "Don't shit yourself when the shooting starts son."

Winston Churchill's picture

Right after the adrenalin wears off, the first time.

markovchainey's picture

I just take my pants off, problem solved...well, mostly...

Raymond Reason's picture

Not necessarily.  Psychologists say many people fear death less than giving a speech. 

WAMO556's picture

Really??? And what two way range have you ever worked. Your words are spoken from a position of ignorance. YOU probably shit your pants because you have a cowardly soul.

All thieves think others are thieves and all cowards think others are cowards.

Ya, I junked ya too!

Motorhead's picture

Quatsch, bitchez!

otto skorzeny's picture

amazing that a barbarous relic is still so sought after.

malikai's picture

I just like the way coins skip when you throw them into deep water.

falak pema's picture

a bit like women; scarlett J is now a barbarous relic in Paris.

DosZap's picture

amazing that a barbarous relic is still so sought after.


Yes it is, and ESPECIALLY since it is the ones who call it a Barborous relic,that so love to coddle & gather it.


CClarity's picture

I look forward to mobile as a medium of exchange without currencies or Central Banks.  Authentication aspects are all but there and we will be conducting commerce and personal acquisitions and relinquishments this way in the future.  Think eBay + Amazon + FB + Twitter + PayPal (and even ZH).  

Banking relationships and roles gonna change big time too!  It's not too late to dump Citi, BofA and Ally.

Unprepared's picture

You obviously have no idea what the words exchange, value, count, money or currency are.


Bypassing the physical form of money doesn't solve any of the inherent problems with centralized control of such money, it just compounds it and makes that much easier to track, lever, control and corzine (in addition to several other no less serious issues such as confidentiality)

Winston Churchill's picture

Store of mobile just doesn't sound right.

Burr's 2nd Shot's picture

I lost all of my mobile in a freak sunstorm accident.

knukles's picture

Guy has no concept of digital money, infinte creation at the stroke of a key.... sorta like what the Fed does this very moment.

Tell ya waht youngin', I'll take all your gold at $1700/oz with i{Pad digitals via Knukles PlayPud System...

Burr's 2nd Shot's picture

Still waiting to see what is the nutritional value of digital money. Speaking of which, is the iPad mini a reaction to new federal portion size guidelines?

Boxed Merlot's picture

sorta like what the Fed does this very moment...


In fact Ben has committed to creating 17K frns a second from now on in exchange for legal possession of US real estate backed by its member banks criminal mortgages that will now be in their control and no longer be able to be used as evidence in future court proceedings.  Mobius would be proud of the way these "smarter than us" snakes twist their way through their time on earth.  And we bless them for it!

Tinky's picture

Just got off the phone with a high level source at Bundesbank, and he said: "Look, a 'bad delivery' is preferable to no delivery at all."

zilverreiger's picture


wandstrasse's picture

Nee, nee... alsjeblieft niet!!

dvfco's picture

What, but American advertisers gave the




in exchange for the gelt.  Sounds fair, no?



Atlantis Consigliore's picture

Petraeus Bitch to Media: What,  ??? What??? Jesse gave her a $ 40,000 Watch,  all I got was this Benghazi T shirt and some chocolate Luv....

SHEEPLE;... theres no Gold Goldfinger took it.... take delivery only

Meatballs's picture

Gimmee my Tungsten Bitchez!