It Begins: Bundesbank To Commence Repatriating Gold From New York Fed

Tyler Durden's picture

In what could be a watershed moment for the price, provenance, and future of physical gold, not to mention the "stability" of the entire monetary regime based on rock solid, undisputed "faith and credit" in paper money, German Handelsblatt reports in an exclusive that the long suffering German gold, all official 3,396 tons of it, is about to be moved. Specifically, it is about to be partially moved out of the New York Fed, where the majority, or 45% of it is currently stored, as well as the entirety of the 11% of German gold held with the Banque de France, and repatriated back home to Buba in Frankfurt, where just 31% of it is held as of this moment. And while it is one thing for a "crazy, lunatic" dictator such as Hugo Chavez to pull his gold out of the Bank of England, it is something entirely different, and far less dismissible, when the bank with the second most official gold reserves in the world proceeds to formally pull some of its gold from the bank with the most. In brief: this is a momentous development, one which may signify that the regime of mutual assured and very much telegraphed - because if the central banks don't have faith in one another, why should anyone else? - trust in central banks by other central banks is ending.

Much more importantly, it is being telegraphed as such, with Buba fully aware of just what the consequences of this (first partial, and then full; and certainly full vis-a-vis the nouveau socialist regime of Francois Hollande which will soon hold zero German gold) repatriation will be in a global monetary arena, which is already scraping by on the last traces of faith in a monetary system that is slowly but surely dying but first diluting itself to oblivion. And in simple game theory terms, the first party to defect from the prisoner's dilemma of all the bulk of global gold being held by the Fed, defects best. Then the second. Then the third. Until, in this particular case, the last central bank to pull its gold from the NY Fed and the other 2 primary depositories of developed world gold, London and Paris, just happens to discover their gold was never there to begin with, and instead served as collateral to paper gold subsequently rehypothecated several hundred times, and whose ultimate ownership deed is long gone.

It would be very ironic, if the Bundesbank, which many had assumed had bent over backwards to accommodate Mario Draghi's Goldmanesque demands to allow implicit monetization of peripheral nations' debts has just "returned the favor" by launching the greatest physical gold scramble of all time.

From Handelsblatt:

Die Bundesbank hat ein neues Konzept ausgearbeitet, wo sie künftig ihre Goldreserven lagern will. Nach Informationen des Handelsblatts (Dienstausgabe) sieht dieses Konzept, das am kommenden Mittwoch bekanntgegeben werden soll, vor, den heimischen Standort aufzuwerten, in New York dafür weniger Gold zu lagern und überhaupt kein Gold mehr in Paris zu horten.


Derzeit lagert das Gold der Bundesbank ihren Angaben zufolge in New York, London, Paris und Frankfurt. In der amerikanischen Notenbank Fed lagern 45 Prozent der insgesamt 3.396 Tonnen Gold, in der Bank of England in London 13 Prozent, in der Banque de France in Paris elf Prozent und im Hauptsitz in Frankfurt 31 Prozent. Diese Verteilung soll sich nun ändern.

We present it in the original for fear of losing something in translation, but in broad English terms the above reads as follows:

The German Bundesbank is developing a new approach as to where its gold will be stored. According to exclusive information, to be fully announced on Wednesday, the bank will in the future hold less gold in the New York Fed, and no more hold in Paris (Banque de France). As a result, the distribution of German gold, of which 45% is held in New York, 13% in London, 11% in Paris and 31% in Frankfurt, is about to change.

There is no need to explain why this is huge news (for those who have not followed our series on the concerns and issue plaguing German gold can catch up here, here, here, here, and certainly here) . At least no need for us to explain. Instead we will let the Bundesbank do the explanation. The following section is the answer provided by the Bundesbank itself in late October in response to the question why it does not move the gold back to Germany:

The reasons for storing gold reserves with foreign partner central banks are historical since, at the time, gold at these trading centres was transferred to the Bundesbank. To be more specific: in October 1951 the Bank deutscher Länder, the Bundesbank’s predecessor, purchased its first gold for DM 2.5 million; that was 529 kilograms at the time. By 1956, the gold reserves had risen to DM 6.2 billion, or 1,328 tonnes; upon its foundation in 1957, the Bundesbank took over these reserves. No further gold was added until the 1970s. During that entire period, we had nothing but the best of experiences with our partners in New York, London and Paris. There was never any doubt about the security of Germany’s gold. In future, we wish to continue to keep gold at international gold trading centres so that, when push comes to shove, we can have it available as a reserve asset as soon as possible. Gold stored in your home safe is not immediately available as collateral in case you need foreign currency. Take, for instance, the key role that the US dollar plays as a reserve currency in the global financial system. The gold held with the New York Fed can, in a crisis, be pledged with the Federal Reserve Bank as collateral against US dollar-denominated liquidity. Similar pound sterling liquidity could be obtained by pledging the gold that is held with the Bank of England.

And in case the above was not clear enough, below is the speech Buba's Andreas Dobret delivered to none other than NY Fed's Bill Dudley in early November:

Please let me also comment on the bizarre public discussion we are currently facing in Germany on the safety of our gold deposits outside Germany – a discussion which is driven by irrational fears.


In this context, I wish to warn against voluntarily adding fuel to the general sense of uncertainty among the German public in times like these by conducting a “phantom debate” on the safety of our gold reserves.


The arguments raised are not really convincing. And I am glad that this is common sense for most Germans. Following the statement by the President of the Federal Court of Auditors in Germany, the discussion is now likely to come to an end – and it should do so before it causes harm to the excellent relationship between the Bundesbank and the US Fed.


Throughout these sixty years, we have never encountered the slightest problem, let alone had any doubts concerning the credibility of the Fed [ZH may, and likely will, soon provide a few historical facts which will cast some serious doubts on this claim. Very serious doubts]. And for this, Bill, I would like to thank you personally. I am also grateful for your uncomplicated cooperation in so many matters. The Bundesbank will remain the Fed’s trusted partner in future, and we will continue to take advantage of the Fed’s services by storing some of our currency reserves as gold in New York.

Incidentally, what Zero Hedge did provide after this article, was factual evidence that the Buba's very much "trusted partner" had been skimming it on physical gold deliveries on at least one occasion, in "Exclusive: Bank Of England To The Fed: "No Indication Should, Of Course, Be Given To The Bundesbank..."

So we wonder: what changed in the three months between November and now, that has caused such a dramatic about face at the Bundesbank, and that in light of all of the above, will make is explicitly very unambigous that the act of gold repatriation, assuming of course that Handelsblatt did not mischaracterize what is happening and misreport the facts, means the "excellent relationship" between the Fed and Buba, not to mention Banque de France which will shortly hold precisely zero German gold, has just collapsed.

Also, if the Bundesbank is first, who is next?

Finally, once the scramble to satisfy physical gold deliverable claims manifests itself in the market, we can't help but wonder what will happen to the price of gold: both paper and physical?

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Anasteus's picture

Aah, now I understand why gold and silver prices are being held so firmly in the narrow lower range! That's the missing link to understand what's happening these days. The Fed needs to accumulate physical gold to satisfy the repatriation needs and since there is most likely just a very little of it remaining in the vaults (as the main part is being leased, swapped, sold, stolen or otherwise plundered), it must be buying new production like crazy. That would explain why the cartel is so nervous and why it cannot afford to even pretend to follow apparent positive gold fundamentals but smashes rising prices immediately. I would bet that billions of new black dollars, not registered anywhere in the books, are secretly being printed solely for this purpose. The paper gold market is a pure scam to fool the mining companies! Once openly disclosed with all the consequences, it will have dramatic effect on PM's prices.

Good shot, Tyler!

francis_sawyer's picture

 "just a very little of it remaining in the vaults (as the main part is being leased, swapped, sold, stolen or otherwise plundered), it must be buying new production like crazy. That would explain why the cartel is so nervous and why it cannot afford to even pretend to follow apparent positive gold fundamentals but smashes rising prices immediately. I would bet that billions of new black dollars, not registered anywhere in the books, are secretly being printed solely for this purpose."


Jesus Tapdancing Christ...

This is what francis_sawyer has been "not so subtly" telling you all along... Furthermore ~ it's not just GOLD in question here... It's EVERY physical commodity [from metals to lumber, & beyond ~ so, so if you're too poor to buy gold... buy fucking kosher salt ~ In fact, don't buy ANY gold unless you already have a 50 pound bag of salt]...

But remember to keep telling yourself that it's that vague & mystical CARTEL... that's behind the operation... Here... I'll post it again [what will now become my standard line in these affairs]...


"The PROBLEM IS DEBT MONEY... & THE GODDAMNED MONEY DOESN'T JUST PRINT ITFUCKING SELF people... Somebody actually does that & they have their own interests in mind when they do..."


IOW... We're all in 100% agreement on WHAT the problem is... But to go one tippy toe step forward by attempting to make a distinction as to WHO is, [by overwhelming majority & massive statistical improbability if it were viewed as a "natural" occurrence, & thus must be viewed as collusion ], requires Evel Knievel himself to make that jump...

Muddy1's picture

I'd give you 50 thumbs up if I could.  In part because I am ROFLMAO after reading the first half of your comment.  And in part because I empathize with your situation, your tragic loss.  The same effin' thing happened to me.  Imagine that.

AlaricBalth's picture

I feel your pain, my friend. We are not alone. Many here on ZH have experienced a similar loss. Perhaps we should start a support group.

zerozulu's picture

Price of "incandescent" light bulbs is going down in Germany.

natty light's picture

How did Mr. Howell keep from losing all that cash in the storm?

willwork4food's picture

Same here. How many peeps have lost $ in the ponzi commodities market? What about the blue chip stock market after the asshole CEO stood up and lied his ass off?

I did.

jonjon831983's picture

True that... but there is a precedent, they should be able to get most of it back

"US firm forced to return Spanish shipwreck treasure it discovered worth more than $500m (but at least the Spanish military is paying for its transit)"

MeetTozter's picture

It is returning to the Fatherland via Zeppelin, safest way to get it there unmolested.

Supernova Born's picture

Zeppelin accident, bitchez!!!

Into the deepest trenches of the Atlantic...

Who needs tungsten when planes can crash and boats can sink?

Germans should bring it back one ounce at a time, after transfer (one ounce per German passport) at a Bundesbank facility rented in NY [where the transfer and confirmation of authenticity would occur].

andrewp111's picture

The tungsten will be sunk in a  cruise ship hijacking. The gold will be safe.

nmewn's picture

Be careful there Big's...if you press their nose to close to the mirror of their souls they can't see themselves very'll be accused of being razzzist...or sumpin.


What? ;-)

petolo's picture

Big Buba boating accident ?

AlaricBalth's picture

Demented minds think alike!

andrewp111's picture

The gold tungsten goes on a cruise ship accross the pond. Muslims hijack it, kill everyone on board, and sink it.  All according to plan.

Missiondweller's picture

Google translate:


Make the lie big, make it simple, keep saying, and eventually they will not believe it.

Hayabusa's picture

Learn to use google translate:  "Make the lie big, make it simple, keep saying, and eventually they will not believe it."

Hayabusa's picture

Learn to use google translate:  "Make the lie big, make it simple, keep saying, and eventually they will not believe it."

fockewulf190's picture

What has happened within the last 3 months?  Lets take a look....

1)  German elections are coming up.  Merkel wants to keep her job.  She does not want the gold storage issue to be held against her as a political weapon, so she will now use this issue to her advantage.  Many Germans want their gold home.  If Merkel gets the bulk of German gold back home under her current term, she will get all the glory, proving she takes the concerns of Germans seriously, and in doing so, win an additional term in office. Frankly, it´s a brilliant political move.

2)  The question Eric Sprott asked recently, "Do western banks have any gold left???" has caused alarm bells to ring even louder within the CDU (Merkel´s political party), especially since German parlimentarians were all but rebuffed last year from requesting to inspect German gold deposits.  Buba´s efforts to calm the lawmakers by announcing a 50 ton "inspection" withdraw each year for then next 3 years, has utterly failed.  The behind the scene pressure on Buba must have been enormus, especially in-light of unprecedented levels of gold purchases being made from nations around the world, as well as the recent schock Austria just had when it found out that a huge portion of it´s national gold had been leased out.

3) Obama has been re-elected.  The uncontrolled spending within the US continues.  The US is monitizing it´s debt to the tune of $85 billion per month.  The stability of the US financial system is uncertain.  The risk keeping so much gold within the US has become untenable.

Quinvarius's picture

Piers Morgan has absurd and insulting one liners to deal with these problems.

Freddie's picture


The Germans would be insane to leave anything in the USA.  I think the large corporations may start seeing Obam as a major liability and bad for business because the USA and the world are going to go up in flames soon.

It looks like the truth about Benghazi is slowly oozing out.   Retired four start admiral James Lyons is telling the same story.  The retired and ex-intel people know the USA is going to go up in flames.   This is going to get a lot worse.


Karl von Bahnhof's picture

Thanks God, that all German nuclear stations are inland!

Go Tribe's picture

Spain installed imbeciles as kings before its fall, the inbreeding of royalty creating people who were seriously ill, sexually perverse and unstable. Same in the U.S. The inbreeding created W and O - that spells woe. Down we go.

samcontrol's picture

ya right,all spanish kings where imbeciles......learn your history you pheasant.

Lore's picture

Dennis Gartman says gold is in a bear market. He gets lots of airtime, so he MUST be smart.

Supernova Born's picture

He does reach arounds and he squeals like a pig on request. POS. In my opinion.

Spigot's picture

1) If you were anticipating a major global "re-alignment" within and between financial and economic structures and organizations...

2) AND you were concerned to have the best negotiating position as these new arrangments are worked out...

3) AND you, as well as all the other central players, consider PHYSICAL GOLD to be central to the establishment of those multi-lateral relationships...

4) AND you would like to ASSURE that whatever PHYSICAL GOLD is accounted to your national patrimony is WITHOUT DOUBT AVAILABLE to establish said new relations...

5) AND you felt that there were some question as to the ABILITY AND WILLINGNESS of those who CURRENTLY POSSESS YOUR NATION'S PHYSICAL GOLD to agree to your future requests to return said PATRIMONY...due to the MAJOR DETRIMENTAL EFFECTS SUCH A REALIGNMENT MIGHT HAVE ON THOSE IN CURRENT POSSESSION of your nation's patrimony...

6) ...... you might consider getting when the getting is good......

7) after having assured that you had adjusted you portfolio in such as way as to benefit most handsomely from the convulsions which might arrise from such actions...

StychoKiller's picture

I can think of at least 16Trillion more reasons!

AgAu_man's picture

It says:  "Make the lie big, make it simple, keep repeating it, and eventually they will not believe it."

Refers to people's Normalcy Bias.  Politicians and (other) scam artists make constant use of this principle.

Never One Roach's picture

Costa Concordia’s Captain Francesco Schettino was chosen to ship the gold to Deutschland.


“The Costa Concordia disaster was the partial sinking of the Italian cruise ship Costa Concordia[p 1] when it ran aground at Isola del Giglio,[p 2] Tuscany, on Friday the 13th of January 2012 with the loss of 32 lives. The ship, with 4,252 people from all over the world on board, was on the first leg of a cruise around the Mediterranean Sea starting from Civitavecchia in Italy when she hit a reef during an unofficial near-shore salute to the local islanders. To perform this manoeuvre, Captain Francesco Schettino[p 3] had deviated from the ship's computer-programmed route, claiming that he was familiar with the local seabed.”

Jam Akin's picture

Sounds like the ghost of Joseph G is out and about here...

Monedas's picture

"Gold talks .... bullshit walks !"  Monedas 

Freedumb's picture

We can triple our reserves by printing two more of those

philipat's picture

The algos must be asleep (Yeah right!!) because after this Gold is falling WITH the Dollar. JPM must be awake?

palmereldritch's picture

Bernanke should get one of those new 3D printers...


philipat's picture

For printing Trillion Dollar Platinum coins??

palmereldritch's picture

Maybe print some replacement bars too...the technology is getting pretty incredible but I don't think they are there yet.

FEDbuster's picture

Waiting for the Apple Alchemy App.

zorba THE GREEK's picture

More like a suitcase full of IOUs.