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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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Tue, 01/15/2013 - 04:15 | 3153201 Al Gorerhythm
Al Gorerhythm's picture

 I guess you were refering to Fort Knox. That fort should be re-named. Fort Nix is more appropriate.

Tue, 01/15/2013 - 19:30 | 3153398 Al Gorerhythm
Al Gorerhythm's picture

 

"There's a single piece of paper in Fort Know......I has three letters on it......IOU."

There are approximately $1.16 Trillion Fed notes in circulation with the same letters on them; invisible but indellibly marked just the same.

 

Tue, 01/15/2013 - 23:25 | 3156523 Buck Johnson
Buck Johnson's picture

The same IOU that the Social Security accounts have also.

Mon, 01/14/2013 - 23:28 | 3153081 kliguy38
kliguy38's picture

they're trying to find it anywhere now

http://sellyourgoldteeth.com/

Tue, 01/15/2013 - 00:43 | 3153264 A Nanny Moose
A Nanny Moose's picture

Once we have jumped the shark Keynes/Nixon style, what is left?

Tue, 01/15/2013 - 03:11 | 3153412 Silver Bug
Silver Bug's picture

Let the show begin! Good luck trying to get it all back Germany! Price of gold is going much much higher.

 

http://schiffblog.blogspot.ca/

Mon, 01/14/2013 - 23:36 | 3153107 knukles
knukles's picture

Fuck It!
Give 'em shares of GLD

Tue, 01/15/2013 - 07:19 | 3153537 SAT 800
SAT 800's picture

!! LOL.

Mon, 01/14/2013 - 21:41 | 3152781 GetZeeGold
GetZeeGold's picture

 

 

New York.......we have a problem.

Mon, 01/14/2013 - 21:47 | 3152810 CH1
CH1's picture

Plugs being pulled, Bitchez!

Mon, 01/14/2013 - 21:50 | 3152823 GetZeeGold
GetZeeGold's picture

 

 

Gonna be a late night at the BIS. Better order in some pizza.

Mon, 01/14/2013 - 22:10 | 3152880 SDRII
SDRII's picture

Good compendium articles about China redeploying its reserves into offshore companies as Bloomberg reminds everyone that the now C/A deficit Japan will be the Treasury buying savior...Next article will be how the demand for the forthcoming floaters is epic

 

China reserves

http://www.bloomberg.com/news/2013-01-14/china-to-use-forex-reserves-to-...

 

Japan

http://www.bloomberg.com/news/2013-01-13/abe-aids-bernanke-as-japan-seen...

Mon, 01/14/2013 - 23:34 | 3153099 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

china please dump the fuckin usd!

Tue, 01/15/2013 - 02:37 | 3153393 willwork4food
willwork4food's picture

Funny. If they did that you couldn't afford that hot icon unless you gave up your rent & food money.

On the other hand , there would be plenty HERE...

Mon, 01/14/2013 - 23:05 | 3153014 kliguy38
kliguy38's picture

Anchovies BITCHEZZ!

Mon, 01/14/2013 - 23:05 | 3153016 kliguy38
kliguy38's picture

Anchovies BITCHEZZ!

Tue, 01/15/2013 - 06:15 | 3153505 Al Gorerhythm
Al Gorerhythm's picture

Double anchovies 'r gonna cost ya.

Mon, 01/14/2013 - 22:09 | 3152876 balolalo
balolalo's picture

Makes you reallly want to hold on to your puny silver rounds.  Don't forget, 2000 years ago you could end the life of a God for only thirty of 'em.  Now that's some real purchasing power. 

Imagine what could be done with 3,396 tons of gold...   

Shit is hitting the fan.  

Mon, 01/14/2013 - 22:18 | 3152907 SamAdams
SamAdams's picture

That's a lot of metal to print!!!!

Yes, if this really happens, then yes... this is a big SHTF deal.  Germany (on paper) is 2nd largest holder of physical (albeit in foreign banks).  This could be the start of a run.

Tue, 01/15/2013 - 00:01 | 3153168 jeff montanye
jeff montanye's picture

unlike the comex, this will be harder to settle in currency.

Mon, 01/14/2013 - 22:35 | 3152933 moonstears
moonstears's picture

Hey I did the math once on those 30 pieces of silver, most likely Ag composition...13.50 OZT IN TOTAL!

Mon, 01/14/2013 - 22:39 | 3152951 SilverRhino
SilverRhino's picture

Actually it's a lot less than 30 silver rounds .... see the math on Judas and Jesus.   

  • 30 silver shekels (Judas' 30 pieces of silver) were equal to 120 silver denarii (also 120 silver drachma) [Mat17:24].
  • 120 silver denarii (4.5gr silver late Roman Republic) was roughly equal to 120 days pay for a legionnaire [Matt20:9-10]
  • 1 silver denarii was roughly $21 in 2005 dollars for bread purchasing.  (about 20 loaves)
  • Based on weights and purchasing power silver was approximately 146 dollars per troy ounce using the same 2005 dollars as a metric.
  • So Jesus was betrayed for less than 3 grand ($2520).   Judas worked cheap.

Mon, 01/14/2013 - 23:21 | 3153061 mt paul
mt paul's picture

is that

before or after taxes...

Tue, 01/15/2013 - 00:29 | 3153237 Oldrepublic
Oldrepublic's picture

good pay for roman troops!

Tue, 01/15/2013 - 02:30 | 3153389 MisterMousePotato
MisterMousePotato's picture

Someone should be commended for thinking this through; however, $21.00 for 20 loaves of bread? $1.05 per loaf?

Was three or four bucks the last I noticed.

Was bread really a dollar a loaf just eight years ago?

Tue, 01/15/2013 - 02:42 | 3153395 willwork4food
willwork4food's picture

I was making triple what I am now, and spending half on things like pizza, cigs, gas...

That was only 18 years ago.

Tue, 01/15/2013 - 06:51 | 3153521 PhilofOz
PhilofOz's picture

The two biggest supermarket chains in Oz sell loaves of homebrand sliced for $1.00. Casual wages for cleaners here range from $20 an hour to $26.40 an hour for one Filipina friend. Life is good for the lower middle/working class here at the moment. 

Tue, 01/15/2013 - 17:56 | 3155593 moonstears
moonstears's picture

Rhino from wiki, and my point earlier "The Tyrian shekel weighed four Athenian drachma or about 14 grams"

13.50 ozt silver....got silver? 31.25x13.50=$422 today silver has devalued by 80+% using your points.

Mon, 01/14/2013 - 22:44 | 3152966 AGuy
AGuy's picture

"Imagine what could be done with 3,396 tons of gold... "

 

I see a tragic ending to the ship that transport all that gold tungsten across the Atlantic... I hear the Federal Reserve is looking for a group of sailors for the sucide mission. Any Volunteers?

 

Mon, 01/14/2013 - 23:02 | 3153007 nmewn
nmewn's picture

I'm good at underwater recovery...but my labors not cheap ;-)

Tue, 01/15/2013 - 00:23 | 3153221 Acidtest Dummy
Acidtest Dummy's picture

I is not free -- I is expensive! -Firesign Theater

Mon, 01/14/2013 - 23:06 | 3153021 balolalo
balolalo's picture

I don't see them having trouble manning it. Have you ever read about the Bismarck?

Ze Germans are not afraid of some blood.

Mon, 01/14/2013 - 22:15 | 3152895 Bawneee Fwank
Bawneee Fwank's picture

War with Germany?...Germans = Al Qeeeuuudahhh

Tue, 01/15/2013 - 00:34 | 3153248 WonderDawg
WonderDawg's picture

Does that mean we're going to supply them with weapons, too?

Tue, 01/15/2013 - 01:12 | 3153314 sun tzu
sun tzu's picture

We will supply the German "rebels" with weapons so they can overthrow the tyrannical Angela Merkel regime. 

Tue, 01/15/2013 - 03:52 | 3153444 tenpanhandle
tenpanhandle's picture

I can see it now:  The warming oceans cause an old WW11 mine to float to the surface over the deepest trough in the Atlantic.  How ironic, the news story will read, that a ship of the German Navy was lost due to an old Nazi anti-ship mine.  Furthermore, the US had included all its own gold for safekeeping at Ramstein. What an unfortunate end to all that barbarous relic.

Mon, 01/14/2013 - 21:42 | 3152785 UnpatrioticHoarder
UnpatrioticHoarder's picture

Ironically the Bundesbank may not recognise any downside in their decision, they don't think it is a prisoners' dilemma. When the whole house of fiats has fallen it will be clear in retrospect.

Mon, 01/14/2013 - 21:54 | 3152834 Cursive
Cursive's picture

@UnpatrioticHoarder

Yeah, but the first one to sell is generally the last man standing.

Mon, 01/14/2013 - 22:47 | 3152972 PhD
PhD's picture

Yeah, they are probably clueless.

Being able to print trillions of dollars without causing inflation takes no skill, none. Easy as shit.

Yupp, its all just one HUGE fucking coincidence.

Yupp Yupp, no worries!

Nothing sinnister going on here. Juuuuuust cluelessness.

They’ve probably never even heard of the prisoners dilemma! HAH, what a bunch of clueless fucks! This will teach them fuckers!

Mon, 01/14/2013 - 23:36 | 3153106 Uchtdorf
Uchtdorf's picture

Just wondering out loud here, but aren't the words Bundesbank and Rothschild both Germanic in origin?

Mon, 01/14/2013 - 23:59 | 3153163 Cathartes Aura
Cathartes Aura's picture

funny you should ask,

The Rothschild family (pron.: /?r??s.t?a?ld/, German:[??o?t.??lt], French: [??t.?ild], Italian: [?r?t?ild]), or more simply as the Rothschilds, is a family of German Ashkenazi Jewish origin that established a European banking dynasty starting in the late 18th century that even came to surpass leading contemporary banking families such as Baring and Berenberg. The family originates in Frankfurt. Five lines of the Austrian branch of the family have been elevated to Austrian nobility, being given hereditary titles of Barons of the Habsburg Empire by Emperor Francis II in 1816. Another line, of the British branch of the family, was elevated to British nobility at the request of Queen Victoria, being given a hereditary title of Baron.[1][2]

City of London,   *nods*

Tue, 01/15/2013 - 00:15 | 3153206 DaveyJones
DaveyJones's picture

it's good to be the king

Mon, 01/14/2013 - 22:06 | 3152870 F. Bastiat
F. Bastiat's picture

Makes a lot of sense.

Certainly, there is no reason to have any faith in the nonsense that emanates from the despot's regime on a daily basis.

Mon, 01/14/2013 - 23:01 | 3153003 kliguy38
kliguy38's picture

There's more where dis came from..........TRUST US

Mon, 01/14/2013 - 23:51 | 3153140 cynicalskeptic
cynicalskeptic's picture

There was still some Libyan gold left over after sending Chavez back 'his' gold.....

I wouldn't want to be last in line asking for 'my' gold back.....  sooner or later tehy ARE going to run out of gold to steal and then.... tough luck as the charade collapses...

Mon, 01/14/2013 - 23:32 | 3153093 SamuelMaverick
SamuelMaverick's picture

No problem Germany, here is a huge wad of green pieces of fiat, we reserve the right to settle in paper.  Go out and buy your own gold somewhere else.   LMAO

Tue, 01/15/2013 - 00:41 | 3153258 Rogue Trooper
Rogue Trooper's picture

Who wouda thought. Zee Germans.... Bloody Terrist!  I for one, welcome the imminent declaration that they are now part of the new AXIS of EVILTM.  How else can one explain their untrusting and declaration of financial WAR on the reserve currency of the FREE world.

I assume the 1st Armoured Division will be rolling back into Frankfurt this time.

/Sarc tag.... for those without a (sense) of humour.

Tue, 01/15/2013 - 02:19 | 3153375 OldPhart
OldPhart's picture

3,396.0 German Tons of Gold

 

45.0% Stored at the New York Fed

 

1,528.2 Tons at NY Fed

 

305,640.0 Pounds at NY Fed

 

4,890,240.0 Ounces at NY Fed

 

489,024,000.0 ETF Equivalent Ounces

 

$1,671.0 Spot Price of Gold/Ounce

 

$817,159,104,000.0 ETF Equivalent to 'disappear'
Tue, 01/15/2013 - 05:19 | 3153482 Ignatius
Ignatius's picture

How the Germans gonna react when Corzine tells 'em "it just vaporized"?

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