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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TheFourthStooge-ing's picture

akak said:

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


smiler03's picture

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


Dig from the ground? Ha! What a fool! You can just scoop shit up from the side of the road in China.


knukles's picture

Fuckin' move to Heaven, roads are paved with it.

Never One Roach's picture

"Your gold is in a segregated account...no worries."

putaipan's picture

no.  this is pre- "corazined".


poof, bitches!


(edit, to get the "poof bitches" joke right)


in sloooooowww motion.-  pooooooofffff..............beeeeeeaaaaaaaaatchhhhhhhhes~

eddiebe's picture

Are they talking about The Bubba?

DosZap's picture

Oh, and BTW.

Have any of you noticed the colors of the SO called US bars holdings?.

Some(a lot) look like they are mix of wheel weights, and gold, or fools gold.One would expect the color of 0.999 Gold to be Uniform, esp GOOD DELIVERY BARS.

KingTut's picture

It's worth mentioning that when the US confiscated citizen's gold in 1933, the majority of that was in the form of US gold coins.  To make them more durable in circulation, the coins were 22 karat, whereas pure gold is 24 karat.  So if one of these "coin melt" bars was refined into good delivery bar, 400 oz of 22 karat will out-turn at 366 oz of fine, for a loss of 34 oz.  Pretty significant.

The quicky audit of Ft Knox conducted in the 1950's revealed many bars with strange coloration.  This might be explained if they were "coin melt", instead of good delivery.  Why bother purifying it if its just going to sit there for 1000's of years.  You only need good delivery if you're going to sell it (or swap it).

A little spooky none-the-less.

Bob's picture

Damn, Tyler throws down.

Good.  Hope you're all in on this one. 

Poor Grogman's picture

How much more of the jigsaw puzzle does one really need to see before one understands what the picture is ?

Are we simply being conditioned to receive the really bad news?



robnume's picture

What the Fuck? Jump, Central Bankers, Jump!!!!

Bob's picture

The video:


It's funny, watching it three years later--it's as great as it was then . . . yet it ruefully deepens your understanding of how shit has gone in the real world over that time. It's ugly. 

Something tells me we've been slackers on this shit.  It's hard to argue with results. 

Cheesy Bastard's picture

Lots of Zero Hedge readers have real gold, but it you want it you better learn to scuba, buba.

Oleander's picture

The  TSA is sending in screeners from across the country. Will they be houseing the Sandy victims at Fort Dix? Fema Camp? I know a screener who was deployed to NJ.


rosethorn's picture

Mascot bird teaching Fukushima children how to avoid radiation — RT

"A report by Fukushima Medical University first published this April and updated in July revealed that 36% of Fukushima children have unusually overgrown thyroid glands, and could be prone to cancer. Of 38,000 children examined, 13,000 had cysts or nodules as large as five millimeters, the Health Management Survey stated, which made doctors around the globe rate Japan’s reaction to the aftermaths of Fukushima disaster as “ultimately medical irresponsibility.”"

Non Passaran's picture

Rt.com? I think I might get excited if two credible sources post similar news!

Piranhanoia's picture

The deutsche gold is hardly pure.  It has the blood of millions of europeans in it.  That is how they stole it.

Urban Redneck's picture

Most the gold that exists in throughout the world has the blood of millions from hundreds of wars over centuries of "civilization" in it.  You argument is beyond naive.

smiler03's picture

Good point. Those Spaniards killed "quite a few" Aztecs and Incas to make their churches shiny.

willwork4food's picture

Yes, but a shiny gold church erases all sins. Right?

Odin's picture

Fucking Rothschilds...

putaipan's picture

fucking templars....

BattlegroundEurope2011's picture

Looks like Gold actually degrades over time.  Who would'uv thought.

Boxed Merlot's picture

So, is this circa 1968 info the kind of stuff we should expect the new Utah Facility to have at their disposal for dissemination to the free people of the US?  Or will it just be made available for the dorks of the realm busy frisking gramma on the tarmac at Lee Bird Field in North Platte NE?

dexter_morgan's picture

LOL, so much for honor amongst thieves

Smiddywesson's picture

A friend of mine just landed a job with a precious metals dealer.  In preparing him for this topic, I wonder if he will think I am absolutely out of my mind?  How does a rational person describe to another rational person that the world he lives in, the politics, the financial world, the class structure, and all the history he has ever learned is a falsehood?  I might just hand him copy of The Matrix and tell him good luck.

Smiddywesson's picture

I was serious.  He knows NOTHING about PMs.  LOL, good luck!

smiler03's picture

Like countless employers these days, they want them ignorant so that they can brainwash them from the start. Ivy League University Grads into Wall Street, for example.

An observation: a bit like religion.

putaipan's picture

freakin'chicago school boy's......

willwork4food's picture

Unless they are ready to know more, they ain't ready

'throwing pearls to swine' comes to mind

putaipan's picture

the oystee's were delicious....but , what were those hard round white things?

Youri Carma's picture

Exclusive:Gold Fort Knox’s gone! http://www.fgmr.com/we-have-a-right-to-know.html

December 13, 1999 – In the 1970?s a very courageous gentleman named Edward Durrell claimed that substantially all of the US Gold Reserve being stored at Ft. Knox was gone. Only 1,000 tonnes or so of the 8,500 tonnes supposedly being stored there remained. The rest had been secretly taken from Ft. Knox and shipped to London in 1967 and early 1968 for sale by President Johnson in an ill-fated attempt to keep the price of Gold at $35 per ounce.

Mr. Durrell provided a lot of anecdotal evidence to support his claim. These included eyewitness accounts of hundreds of Army trucks leaving Ft. Knox in the middle of the night over a period of many weeks, supposedly loaded with the Gold bounty. Other interesting but circumstantial evidence was the sudden and unexpected dismissal of Gordon Tether, business editor for London’s Financial Times, who published Mr. Durrell’s claims. To my knowledge, no mainstream US newspaper dared to publish Mr. Durrell’s allegations.

Jim Willie (Part 2/2): the rush for physical gold is on http://www.youtube.com/watch?v=lrFCxMSt4ps

Jim Willie (Part 1/2): US recovery is a fairy tale http://www.youtube.com/watch?v=3rFLJ-bMfCs

brak's picture

Simon Gruber'd Bitchez!

JustPrintMoreDuh's picture

Throw internet kill switch in 5 .. 4 .. 3 .. 2 .. 1 .. 

Atomizer's picture

Is the Federal Reserve Act going to expire?



nudge nudge, wink wink

tony bonn's picture

zh has laid a huge malodorous turd the size of hurricane sandy....

the facts presented by james turk and others regarding the dissipation of german gold is, contrary to the assinine opinion expressed in this farticle, based on forensic evidence and subsequent corroboration.....i would urge readers to obtain information elsewhere on this important topic....

germany has little to no gold and its official reserves vastly overstate any remnants it may still posess. for the same reason that barry soetoro refuses to disclose his legal birth certificate - issued no doubt in or near mumbai (kenya - not india) - so the us government and private banking cartel aka the federal reserve refuse to permit german delegations to inspect their gold.

it is laughable that anyone considers a riddle wrapped within an enigma wrapped within wet tissue paper a tangible good. you couldn't get a driver's license with such flimsy evidence of identity and i surely wouldn't extend such faith based gibberish to the gold supply of the german republic.

Almost Solvent's picture

So, the gold isn't there like they say it is?


putaipan's picture

that ain't sarc/ baby..... that's naiiiiiivtee'.

helping_friendly_book's picture

I wasted my time trying to write what I just read!

Right on!

It is a contract issue since the FRBNY is a, private, banking cartel.

Let the Germans sue in Brussels or press Tel-Aviv!

Not our, or Barry's, problem.

newengland's picture

James Turk, a good gold man; trustworthy, imo.

Divine Wind's picture



Tyler, this is excellent work. Pretty ballsy reporting in certain respects.

Be careful, brother.

I am certain there are people at Buba and elsewhere who are saying;

"Who in the F*CK is this Tyler Durden guy?"

helping_friendly_book's picture

Have you ever considered ZH might be a device of TPTB? 

A device to enable the military indusdrial complex?

Think about it?!

Cohen chicanery!

Why should our gov't get involved in a corporate, civil, contract issue?

Let the Germans take it to Brussels or attack Tel-Aviv. NOT OUR PROBLEM!


Divine Wind's picture




Tyler, are you really who you say you are????

helping_friendly_book's picture

That is what I am saying!

What is TDs interest, other than drama, in the Germans gold deposits with a private banking cartel i.e. the FRBNY?

The article is written in such a way as to try and encumber, or make the appearance of encumbrance, the Gov't of the USA when it is a contract between the German Gov't and a (Israeli?) corporation, a private banking cartel.

I protest and challenge the legitimacy of this articles premise.

Is the US Gov't bound to the FRBNYs contracts?

Let us hash this out now before we fight the Germans, on behalf of the banking cartels, a third time!!!!!!!

willwork4food's picture

Good points HF. I kind of like to think along the lines of Les Visable that the logical outcome of evil feeds upon itself..and ultimately destroys itself.

Unfortuanately it takes a few others with them...

helping_friendly_book's picture

I'm not fluent in French, think I know what your saying, appreciate your concurrence, 

Let the Germans sue the FRBNY at the Hague. 

Let the Germans bankrupt the FRBNY and repossess Israel. 

Why should our state be involved?

If the FRBNY absconded with the Krauts  gold; let the Krauts sue the FRBNY (Israeli banking cartel) to recover their property. 

I consider this a civil matter to be resolved in civil court. If the Germans get no satisfaction let them seek satisfaction in Tel-Aviv.

helping_friendly_book's picture

Does it seem strange to you that the Third Reich would attempt to annilate Jewry in western and Eastern Europe then place their gold reserves with a Jewish Banking Cartel?

How is this possible?

The Germans had no gold reserves after their surrender in 1945!

The Allied armies, Russian and Western Europe, seized any gold as spoils of war.

Where did this huge reserve come from?

Why would the victors allow the vanquished to keep ill gotten booty?

If the Germans were so evil then why did we forgo the millions killed and enable the Huns to recapture and build the second largest  Gold reserve in the world?

All gold held in private, Jewish, banking cartel custody? 

Does anyone else realize a huge lie being perpetrated on the living relations of those who were slaughtered?

I know!! I have done my research! My DD. 

If you care to know the truth you will seek the truth.

I am no anti Semite gauging my love for the Palestinian people and work to restore the Palestinian State including self determination of the Palestinians.



jimmyjames's picture


Great post!

Herbert Walker Bush was there-