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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jmcadg's picture

So was Gordon Brown just selling UK gold at fair Market value? Rather than admit to having tungsten in the UK stack, clear out the US crap, keep the good shit? Just thinking...

THE DORK OF CORK's picture

I don't buy it .

The central bankers hold no nationality - they are all just good friends..............


I believe you could cash a Sterling cheque in Berlin up to 1916...............what exactly does that tell you ?

mantrid's picture

I wonder what poor Chavez got

Smiddywesson's picture

LOL, same thought on Chavez


MsCreant's picture

No one said it yet?

Say it! Say it!

GubbermintWorker's picture


Parrotile's picture

And nickel (you don't want to leave your lead in the cold without a jacket do you?? !!)

Old but nice-the old 7.62mm NATO Boxer rounds do still have pretty excellent "Stopping Power" - and they fit the AK 47 too!!

(Just sayin' . . .  )

TheFourthStooge-ing's picture

Parrotile said:

And nickel (you don't want to leave your lead in the cold without a jacket do you?? !!)

Copper is the most widely used material for jacketing lead bullets. Nickel is used more for protecting the brass cartridges from corrosion (nickel washed brass).

Old but nice-the old 7.62mm NATO Boxer rounds do still have pretty excellent "Stopping Power" - and they fit the AK 47 too!!

I hope you never need to depend on that sort of "knowledge". The 7.62x51mm NATO round (Boxer? Most military cartridges use Berdan primers) and the 7.62x39mm AK-47 round are in no way interchangeable. The shells differ in length, diameter, and shape, and even the bullets themselves are of different diameters (7.82mm v. 7.92mm).

(Just sayin' . . .  )

Well, yeah, the internet is like that.

FeralSerf's picture

They don't fit very well. The 7.62 NATO is 51mm long.  The AK47 is 39mm long.  The 7.62X51 is similar in energy to the old .30-06.  The AK47 7.62X39 is similar to the .30-30 Winchester.  Big difference.



lakecity55's picture


lakecity55's picture


"and me.... I'm Rhodium. I'm cool, too."



(Thought I would round it out)

GubbermintWorker's picture


Blagio's picture

1974 Audit of Fort Knox

Here we see Rep. Gene Snyder of KY holding a U.S. Postal scale as Rep. John B. Conlan of AZ places a gold bar on it. When you enhance the image, you can see that the scale shows the bar weighing 22.25 pounds. A normal bar of .995 gold would weigh 28.9 pounds, nearly 30% more.

The Sec. of the Treasury tried to explain away this discrepancy by claiming that the scale was a common household scale and was defective. The photo shows, however, that it was an official postal scale, typically accurate to one ounce.


SmittyinLA's picture

BOC (Bank of China?) 1968? We're we at war with them at that time?  

CrockettAlmanac.com's picture

Cold war. Although this was going on:


Sino-Soviet relations soured after the Soviets invaded Czechoslovakia in August 1968. In October, the Chinese demanded North Vietnam cut relations with Moscow, but Hanoi refused.[234] The Chinese began to withdraw in November 1968 in preparation for a clash with the Soviets, which occurred at Zhenbao Island in March 1969. The Chinese also began financing the Khmer Rouge as a counterweight to the Vietnamese communists at this time. China's withdrawal from Vietnam was completed in July 1970.[235]



SmittyinLA's picture

Was "the Nam" a total fraud? 

Poor Grogman's picture

With al that Hippy coombaya touchy feely stuff breaking out in Cali and people "dropping out" of the system.

Of course it was..


Couldn't have peace and love breaking out now could we?....



rosethorn's picture

"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."


Should trigger an audit immediately.

knukles's picture

Close enough for government work.

Urban Redneck's picture

As much as government employees are cut from the same stock the world over, that level of BS in an assay office isn't acceptable.

However, while laughing at the the latest english-language propaganda from Swiss government I came across this:


Scroll down to the Precious Metals Control video

at 3.10 into the video they have a gold plated tungsten bar that I haven't seen before


(that's offical government media, not some reporter running around the NY jewelry district)



smiler03's picture

+1 Great link, very educational, not just the tungsten bit.

dogbreath's picture

there is never just one cockroach

debtor of last resort's picture


Mr. Durden.

Don't get Assange'd

And thanks for the wipers.

luna_man's picture



And...If you don't check with MY MAIN MAN first...


"I pity the fool"

Al Huxley's picture

For something that apparently is just held for 'tradition' everybody sure fucks with it a lot.

mick_richfield's picture

Well, that's traditional too.

There's a reason all the coins that matter have little ridges all around their edges.

AUD's picture

gold bars that were of substantially subpar quality


declining gold quality and purity

Yes indeed ZH - quality

MsCreant's picture

Everyone, everywhere, anytime you can, should be commenting on this story and putting the pressure ON!


knukles's picture

Doubled over, grunting...

CrockettAlmanac.com's picture

Did GATA know about this? Or did ZH scoop GATA and they're reading along with us right now?

Bay of Pigs's picture

In 1999 when GATA launched their organization, they laid out the groundwork of the bullion banks (JPM, GS, HSBC, etc...) the COMEX and Barrick Golds involvement in the gold suppression scheme. That in turn led them to the FED, UST and the swaps and leases between Central Banks. Little by little, and bit by bit, they've been able to piece together ther story and ongoing criminal enterprise that engulfs the entire financial sector.

Now having ZH reach a much wider audienece all these years later can only be a good thing.

Nice work Tyler(s). 

Shigure's picture

In the record you put a link to (C43/323) dated 1st May 1967 to 31st October 1968, the description reads:

"Discussion of New York clearing system; FRB Bulletins for comments; some 1967 devaluation papers; large United States (US) gold shipments; US defence purchases and offset payments; some figures of US banks' Euro-Dollar borrowings."

So, has the Euro been going that long then?

AUD's picture

Eurodollar is $US denominated credit outside of the US.

CrockettAlmanac.com's picture

A good question and an excellent answer.

Shigure's picture

AUD. Thanks for your reply

Orly's picture

Yeah, seriously.  I was five years old and you weren't even born yet.

illyia's picture

Nice investigation job TDs. Under-appreciated in this competitive crowd. But you did real homework on this.


bugs_'s picture

Yamashita's (bad delivery) gold

FeralSerf's picture

It's been claimed that Barrick fixed that.

silverserfer's picture

best way to get your gold is to dig it out of the ground yourself. it wont be 24k but at least the impurities are mainly silver! 

Dig bitchez!

akak's picture


best way to get your gold is to dig it out of the ground yourself.

And why not?  The shit is everywhere, and it only costs $5 to dig from the ground!