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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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Sat, 11/10/2012 - 02:56 | 2967330 putaipan
putaipan's picture

Cohen chicanery! ass.


if the tylers would have granted me gif posting status..... imagine if you willthe following- 


frank zappa picture (defintiley late, gray hair to his neck, with quote) - "poltics is the entertainment wing of the military industrial complex"

Sat, 11/10/2012 - 01:00 | 2967204 GeneH3
GeneH3's picture

Good work Tyler. This should stir up some trouble. Do you guys have bodyguards?

Fri, 11/09/2012 - 23:58 | 2967103 helping_friendl...
helping_friendly_book's picture

If the Germans didn't get their gold then, it is a certainty, the joohs stole the gold!........Sounds like a German, Israel PR problem....The gold is in Israel, let the Germans go to Tel-Aviv and find it!

We won't be fooled a third time!

Go fight your own war.

Fuck your dirty wars.

If any American gets involved then they should resolve to take sole responsibility.

I will press my Senator to avoid trickery of the Cohens.


Sat, 11/10/2012 - 00:11 | 2967119 q99x2
q99x2's picture

I read these posts until they made a fool of me for reading them. Then I read different ones the next day with the same result. Now I have become completely insane and cannot stop reading them. But I've stopped writing as many of them and when I read the posts they seem to be getting better. But, simply reading without writing does not seem to help much. Maybe tonight I will print a few out and mix them into my evening soup to see what happens tomorrow. I'll be running in the Santa Barbara Marathon and it might give me something to think about during the long run. In class this week I learned that plagues seem to be the historic cure for restoring a faltering middle class. Hope nobody sneezes ahead of me tomorrow.

Sat, 11/10/2012 - 00:42 | 2967171 MsCreant
MsCreant's picture

There are stages to this thing. You will be obsessed for a while. Then you will oscillate in and out. Then you will just be solid with it and check in from time to time. And then you will answer someone's post who seems genuine and obsessed because it is the right thing to do. There is a holding pattern you will be in...watching, but solid that your prepping is the right thing to do, and that you don't know what is really coming, but you know "it" is coming. 

Good luck and hope I have not been too presumptuous.

Sat, 11/10/2012 - 09:28 | 2967502 DaveyJones
DaveyJones's picture

just remember to breathe

Sat, 11/10/2012 - 12:31 | 2967684 Divine Wind
Divine Wind's picture



Your comments on staging are spot on.

Sat, 11/10/2012 - 13:56 | 2967877 Hulk
Hulk's picture

I'm at the last stage, which is:

Gold Bitchez!!!

Sat, 11/10/2012 - 00:51 | 2967177 newengland
newengland's picture

No honor among thieves, as the old saying goes. The psycopathic AshkeNAZI tribe are falling out among themselves, as per usual. Central banks = central fascist authority as promoted by the Rothschilds, Oppenheimers,  and other Germans of their tribe. It's no surprise that they have tried to cheat each other. It's their way. See Corzine and Madoff for recent examples.

Pity others are duped by it, and suffer for it.

Hey you, Obama, the prisoner of fiat war. No wonder you cry in front of your loyal supporters. You understand who owns you, and know what you must do in order to keep your wife and daughters safe.

See the resignation of Petraeus for what happens to people that might be inclined to defy the corporatists, the Borg, the Socialist Internationale, the bad gold men. He got off lightly. He was allowed to resign before giving testimony.

Sat, 11/10/2012 - 01:33 | 2967242 willwork4food
willwork4food's picture

..and still might die in an 'unfortunate car accident. Well said NE.

Sat, 11/10/2012 - 01:07 | 2967214 Misean
Misean's picture

Too bad Bond foiled Goldfinger in '64...

Pretty mind boggling.

Must be why we fed the Soviet Union all those years...

So just who DOES have all the gold though......

Sat, 11/10/2012 - 01:23 | 2967232 newengland
newengland's picture

We fed the Soviet Union in order to stop its panic plan if harvests failed: they would push into Europe within 4 days (enough fuel to get them there), and then they would hold the place to ransom or keep it.

See the latest comments from Russia, pledging to defend its own at home and abroad by any means it deems necessary.

The Ashkenazi and oligarchs are psycopaths. Not content with looting their own land, they want to do the same anywhere they spend their money - stolen from the majority in the former Soviet Union.  See the fate of the girl band who criticised Putin. They are now jailed in Russia's harshest prisons.

Those Russian oligarchs you see spending billions in the rest of the world are former KGB, like Putin, carving up anywhere between their clique.

This article reads like a feud between rich thieves who double-cross each other, and think others should feel sorry for them.

Sat, 11/10/2012 - 03:04 | 2967336 putaipan
putaipan's picture

putin as a russian bush?   naw, i don't think so.  you mightbe right.  but i sincerely hope he's more like the czar helping lincon free the 'mericans from the jews. 

Sat, 11/10/2012 - 04:43 | 2967389 bunnyswanson
bunnyswanson's picture  Rothchilds and Gang undoubtedly - perhaps hidden on the moon for safe keeping. 



Judge Napolitano and Lew Rockwell discuss gold at Ft Knox:

Sat, 11/10/2012 - 01:18 | 2967228 Yen Cross
Yen Cross's picture

 I pitty the English.  London dies, if flows are regulated..

Sat, 11/10/2012 - 01:30 | 2967235 newengland
newengland's picture

So be it for the two-faced politicos and central banks. The ordinary Londoner is suffering now, and possesses more physical and mental fortitude than the lying bad gold men.

Good luck with your trades, 'yen'. There's no reason for our people to fall out with each other over this bad gold.

Sat, 11/10/2012 - 02:35 | 2967313 Yen Cross
Yen Cross's picture

 Good on ya . Thanks .

Sat, 11/10/2012 - 01:36 | 2967248 Yen Cross
Yen Cross's picture

 Forward>    (bitchez)

Sat, 11/10/2012 - 02:22 | 2967301 TumblingDice
TumblingDice's picture

Quick, make more gold!

Sat, 11/10/2012 - 03:20 | 2967345 Milton Waddams
Milton Waddams's picture

When ZH recognizes that Gold is just as illusory as some tri-lateral commission, bank of internationaltion settlements, (super secret Treasuray commission) confetti paper... everything turns upside down?

Sat, 11/10/2012 - 03:50 | 2967363 Youri Carma
Youri Carma's picture

 -So, “Fed Sent Bundesbank 172 Bad Delivery Gold Bars in 1968?

- and “The rest had been secretly taken from Ft. Knox and shipped to London in 1967 and early 1968?.

wOw!!!! Back it Up! Back it Up!… Beep!, Beep!, Beep! … 1968???!

Sat, 11/10/2012 - 05:30 | 2967397 Sandmann
Sandmann's picture

Devaluation of Sterling 1967 - and the German Finance Minister was Franz-Josef Strauss and the Bundesbank President was Blessing grandfather of the current CEO of Commerzbank

Sat, 11/10/2012 - 05:27 | 2967395 Sandmann
Sandmann's picture

The real issue is how much gold the US acquired from Europe during WW2.

By the end of 1942, the United States was producing more arms than all the Axis states combined, and, in 1943, it made almost three times more armaments than did the Soviet Union. In 1945, the United States had two-thirds of the world's gold reserves, three-fourths of its invested capital, half of its shipping vessels, and half of its manufacturing capacity. Its GNP was three times that of the Soviet Union and more than five times that of Britain. It was also nearing completion of the atomic bomb, a technological and production feat of huge costs and proportions.

The Cambridge History of the Cold War

So much of the gold returning to Europe will have been through US smelters although the USSR increased gold exports would be interesting if the US had systematically been supplying impaired gold bars to other central banks since the 1950s under Bretton Woods thus propping up the US Dollar


Sat, 11/10/2012 - 07:50 | 2967430 fijisailor
fijisailor's picture

It's almost tooo incredible to believe that the BOE or the FED sould try to bullshit the Germans.  If you have ever been to Germany you know that they operate with precision.  The BOE or the FED would think that they could actually get away with substandard gold?  Just not believable

Sat, 11/10/2012 - 12:40 | 2967699 Lednbrass
Lednbrass's picture

Well, there is also the matter of Germany being occupied by their soldiers.  What were they gonna do?

Sun, 11/11/2012 - 05:34 | 2969367 bunnyswanson
bunnyswanson's picture


First, Germany has increased its gold holdings significantly between 2000 and 2009, more than doubling the percentage of its foreign exchange reserves held in gold. According to 2010 figures of the World Gold Council, Germany's gold reserve now constitutes nearly 74 percent of its foreign exchange reserves. This increase came despite rising storage costs and the massively reduced threat of Russian invasion. What caused Germany to accumulate so much gold? This question should not be lost on investors.

Second, the report details a level of central bank cooperation and trust that staggers the imagination. Allied governments appear to have "trusted" one another with the stewardship of hundreds of billions of dollars worth of unallocated, and in some cases uninventoried, gold bars. This policy borders on financial negligence.

Third, some central banks, such as the Fed, publish the total amount of gold held in their inventories. However, they provide no details as to its ownership. It is well known that some countries keep considerable portions of their bullion reserves with the U.S. Fed and with the Bank of England. But the details are lacking.


Piece by John Browne  (C&P fail)

Sat, 11/10/2012 - 08:46 | 2967470 news printer
news printer's picture

Germans want to reform France 

France's economy is stuck. Now Finance Minister Wolfgang Schäuble makes an unusual suggestion: German experts have to design reforms for Paris.


Seems to me like troika for Greece; but maby I'm wrong

Sat, 11/10/2012 - 10:23 | 2967554 d edwards
d edwards's picture

Are these the bars with tungsten inside??

Sat, 11/10/2012 - 10:30 | 2967560 The Count
The Count's picture

Maybe somebody already posted this link. Here goes anyway. True or not I do not know, but makes great reading!

"The secret gold treaty"


Sat, 11/10/2012 - 10:32 | 2967563 jmcadg
jmcadg's picture

Wait a minute, is this not one Rothchild brother fuckin' over another, who was fucked over by a Morgan? 

Feudal bitchez!

Sat, 11/10/2012 - 11:46 | 2967592 Atomizer
Atomizer's picture



In once-in-a-decade move, Chinese President Hu Jintao is preparing to hand over power during macho Communist Party’s most notable gathering, complete with pageantly and behind-the-scenes political intrigue mole complex than lucky game of go. China’s political leadership painte Beijing red with Communist Party flags, banners and posters dlap acloss nice capital. Activists were chased away. Party members in theil party best descended on Tiananmen Square: macho donkey wrestler. More than 2,000 hand-pick delegates fill huge Great Hall of macho People – and if images like these are anything to go by, lespectful ruring palty’s unity remains inviolate. Ceremonial proceedings will follow on the triumph accomplishment to Scytl programming software.


Breaking wind: Election methods of CPC National Congress approved

BEIJING - Election methods of the 18th National Congress of the Communist Party of China (CPC) were approved at a presidium meeting held here Saturday afternoon.

The presidium of the 18th CPC National Congress held its second meeting in the Great Hall of the People. The meeting was presided over by Hu Jintao.

Sat, 11/10/2012 - 11:19 | 2967593 goldcoastgirl
goldcoastgirl's picture

Tyler, this is so well written, and an absolute pleasure to read.  Your market knowledge is unmatched, but your written form is just as compelling as your financial brilliance.  Thank you for your great work. do you think our lack of pure gold is why Nixon took us off the gold standard?   I have never understood why Nixon undermined our currency in such a devastating manner, but this article gives me an idea.   I bet he knew we had no gold, and use fiat currency to hide the crime from the American people.  The time frames kind of match to his 1971 decision.   I think Nixon knew.

Sat, 11/10/2012 - 12:42 | 2967703 Lednbrass
Lednbrass's picture

Nixon feared the coming attack by the French.

Sat, 11/10/2012 - 13:10 | 2967755 goldcoastgirl
goldcoastgirl's picture

Can you recommend a book on the subject?


Sat, 11/10/2012 - 13:10 | 2967756 goldcoastgirl
goldcoastgirl's picture

Can you recommend a book on the subject?


Sat, 11/10/2012 - 14:32 | 2967978 jimmyjames
jimmyjames's picture

Can you recommend a book on the subject?


Gold Wars...Ferdinand Lips

Sun, 11/11/2012 - 11:47 | 2969875 goldcoastgirl
goldcoastgirl's picture

Very interesting!!! Thank you!! Thank you!!

Sat, 11/10/2012 - 11:41 | 2967605 BlackholeDivestment
BlackholeDivestment's picture

Max Keiser had some pretty funny stuff on this, case you missed it.

Sat, 11/10/2012 - 12:33 | 2967690 onebir
onebir's picture

I think an archivist will be getting the chop in Threadneedle Street...

Sat, 11/10/2012 - 12:54 | 2967729 dognamedabu
dognamedabu's picture

A gold bar is an empty vault with a banker on top.

Sat, 11/10/2012 - 12:57 | 2967732 Joebloinvestor
Joebloinvestor's picture

The US and the UK, plotting against Germany like it was WWII.

Sat, 11/10/2012 - 13:23 | 2967775 justanothersucker
justanothersucker's picture

I think you're off by one.  WWIII.

Sat, 11/10/2012 - 13:42 | 2967832 Joebloinvestor
Joebloinvestor's picture

It was 1968! look at the date of the article.

Sat, 11/10/2012 - 13:32 | 2967795 geewhiz190
geewhiz190's picture

with each succesive intervention by the FED, the reaction by gold has been weaker.  with money supply contracting, the possibilty for a stronger dollar seems more likely. as for the germans, they may want to know where and how much gold they have so they can guarantee delivery when they sell some to raise cash.  the german gov't isn't going to be funding it's spending with nuggets but with cash

Sat, 11/10/2012 - 14:10 | 2967825 rufusbird
rufusbird's picture

video of Ancient Egyptian History demonstrates the high value of Gold. Nicely done. See the 4 1/2 and the 20 minute mark.

Sat, 11/10/2012 - 16:24 | 2968302 Bansters-in-my-...
Bansters-in-my- feces's picture

So not only do the Rothschilds own more gold than most countries they also own the weather.

Learn up who owns "Weather Central".

Now "Weather "Services International"...

Or vis /versa

Tell your friends and family about HAARP and about S.A.G (STRASPHERIC Aeresol Engineering".

And how your weather is man made,and delivered by terrorist.

I'ts for real...and it's here now.......Wake them up to it....!!!

Mon, 11/12/2012 - 13:16 | 2973036 DiggerUK
DiggerUK's picture

If the US treasury had run out of good delivery bars, how were they supposed to deliver gold being demanded under the $35 convertibilty rate? The only gold they had left was in the melt bars from the confiscation of 1933.

As the memo shows that "b) a variation of .0001 in assay between different assayers is an extremely common phenomenon" , then what smoking gun is everybody getting hot under the collar about.

This non story gets pulled out every so often when Zerobrainers need to have a hissy fit. Why don't we play a game instead. See if you can spot what are definitely non good delivery bars in this picture from the vaults at the BOE. Bars that the articles author claim are not there, but have been hived off to the Bundesbank.

Couldn't make it up, it seems some people make a living out of it.


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