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 - 03:12 | 3153416 Silver Bug
Silver Bug's picture

How many other countries will now follow suit? Western central banks could be in big big trouble.

Tue, 01/15/2013 - 06:46 | 3153519 Henry Hub
Henry Hub's picture

It's a good thing Canada doesn't have to worry about its gold reserves held in other countries. You see Canada sold off all its physical gold ten years ago (at the bottom). But not to worry, the brilliant economists at the Bank of Canada and the Finance Department have backed the Canadian dollar with the U.S. dollar. As some bimbo on Fox News said "gold is not a good investment because it's not backed by anything".

Tue, 01/15/2013 - 22:18 | 3156330 Tompooz
Tompooz's picture

The Dutch should follow pronto. It's now or never.

Tue, 01/15/2013 - 07:01 | 3153526 Glitterbug
Glitterbug's picture

We could give you Swiss francs instead of Gold - Whoops, Swissie in free-fall!!!

Funny, it was linked to the Euro and is supported by FIAT currency reserves of many different countries.

Full faith in the Sovereign Issues and FIAT - Ha ha.  Get PMs and sit tight.

Tue, 01/15/2013 - 08:52 | 3153623 midtowng
midtowng's picture

You mean all your tungsten belongs to us.

Tue, 01/15/2013 - 12:33 | 3154260 Strider52
Strider52's picture

Don't expect to get good delivery bars. This has already happened in 1968:

Tue, 01/15/2013 - 13:05 | 3154372 chaartist
chaartist's picture

I am trying to find out how they are going to do it technicaly so finally the news will be that there is 3k+ new tons of gold in the market because US held it outside their accounting

Tue, 01/15/2013 - 13:58 | 3154531 patrickegan3
patrickegan3's picture

I found the video of the Germans recliaiming their gold from the NY Fed.



Mon, 01/14/2013 - 21:43 | 3152788 jcpicks
jcpicks's picture

Ben is in charge now.  POTUS has nothing on him.

Mon, 01/14/2013 - 21:52 | 3152831 Careless Whisper
Careless Whisper's picture

Actually, Jamie Escobar is in charge.

Mon, 01/14/2013 - 22:59 | 3152998 palmereldritch
Mon, 01/14/2013 - 23:32 | 3153089 Careless Whisper
Careless Whisper's picture

This is real. 1980s. So you can imagine what is going on now.


Mon, 01/14/2013 - 23:56 | 3153151 palmereldritch
palmereldritch's picture

For sure.  Daniel Hopsicker's book Barry and the Boys is a great read IMO.

Video overview here (a great factual doc absurdly playing on UFOTV):

Tue, 01/15/2013 - 05:23 | 3153484 Ignatius
Ignatius's picture

Jeesus, as well 'hidden' as HSBC. 

Mon, 01/14/2013 - 23:32 | 3153092 sullymandias
sullymandias's picture

You mean Esteban right?

Mon, 01/14/2013 - 21:53 | 3152832 Sizzurp
Sizzurp's picture

Cargo Holds ...Bitchez

Mon, 01/14/2013 - 22:05 | 3152860 xtop23
xtop23's picture

I wonder whos Gold they'll be receiving. You can be sure as shit it wasn't theirs originally.

My guess is it won't contain a single gram of tungsten because if it did..... and they're giving it to Germany.....this game is over. 

Probably take them a year + to get enough together to ship.


Tue, 01/15/2013 - 00:55 | 3153283 Rogue Trooper
Rogue Trooper's picture

Your sir are a Terrist.  100% PURE Tungstan it will be and of course fully backed by the "full faith and credit of the Ununited States of Amerkia".  Gotta problem with that? Well FYI we have already re-targeted the Trident II's on an Ohio somewhere in the fuckin' Atlantic.... email a screen shot to the Buba and CC Merkel.  That should do it.

End of discussion



Tue, 01/15/2013 - 03:57 | 3153446 tenpanhandle
tenpanhandle's picture

of course it will be full of tungsten, with a few carefully marked real bars mixed in.  The real bars will serve for the fake audit and the german people will be happy.

Mon, 01/14/2013 - 22:06 | 3152866 GtownSLV
GtownSLV's picture

Dear German citizens, please accept this unique US Mint platinum coin in lieu of your gold being held with us. The full faith and credit of the United States stands behind this platinum coin, as denominated in US Federal Reserve notes equaling the value of your relics. It's really really really as valuable as your gold, really!

Mon, 01/14/2013 - 22:25 | 3152918 Bullwinkle Moose
Bullwinkle Moose's picture

After all, we are not a deadbeat nation.

Mon, 01/14/2013 - 23:24 | 3153073 knukles
knukles's picture

And being a rather unique rare coin we'll only have to with-hold taxes on you at the lower rate for collectables.

(humming tuneless somethings about marching songs)

Tue, 01/15/2013 - 00:17 | 3153209 DaveyJones
DaveyJones's picture

exactly, we beat others to death

Tue, 01/15/2013 - 09:04 | 3153647 krispkritter
krispkritter's picture

 'Hey Rocky! Watch me pull a platinum coin outta my ass!'

Mon, 01/14/2013 - 22:06 | 3152869 PersonalRespons...
PersonalResponsibility's picture

Seems like a first good move if they are to leave the Euro.  Oops, did I spill the beans?

Mon, 01/14/2013 - 23:16 | 3153043 ebworthen
ebworthen's picture

Strongest economy in Europe, they would be fools not to.

Mon, 01/14/2013 - 23:50 | 3153113 AgAu_man
AgAu_man's picture

Actually, the Fed would love this move!  Why?  They would have eliminated the nearest rival for their GRC (Global Reserve Currency) status.   Even a Northern and Southern Euro split would be fine with them.

"Keep 'easing' Ben!  Keep printing Tim-Jack!"  Yah, little is exactly as it first appears.  Except to sheep.

Mon, 01/14/2013 - 23:59 | 3153161 BeerBrewer09
BeerBrewer09's picture

asia will have the next GRC

Tue, 01/15/2013 - 00:33 | 3153243 Acidtest Dummy
Acidtest Dummy's picture

I doubt anyone in Asia would want the "global reserve currency [GRC]." The GRC is very much a 'two edged sword.' Much more likely is Freegold.

Tue, 01/15/2013 - 01:34 | 3153345 Jam Akin
Jam Akin's picture

Disagree.  Who wouldn't want to get something for virtually nothing for awhile with 900 million po' folks rising expectations being the main obstacle standing in the way of your continued grip on power?


China got their USD horde essentially for nothing by exchanging RMB they printed up for USD their exporters and businesses earned.  Even better if they can get some extra gold in exchange for their "People's Currency"

Tue, 01/15/2013 - 01:56 | 3153364 xtop23
xtop23's picture

See, I disagree. I think China would absolutely love the ability to export their inflation just like we have. Payback to the western powers for the opium wars would also be a nice little ancilliary benefit.

Tue, 01/15/2013 - 03:00 | 3153404 Acidtest Dummy
Acidtest Dummy's picture

I think government prizes stability above all else: it is job #1, for government, to insure that tomorrow it will have (at least as much) power as it has today. Hosting the GRC is not stabile, because that currency must be created in excess of local needs. That excess currency hangs over the local economy like a guillotine. That is where the USA is today.

      Prosecuting our war criminals _may_ save us from the executioner. Likely that the USA doesn't deserve to be spared.

Mon, 01/14/2013 - 22:29 | 3152926 hampsterwheel
hampsterwheel's picture

They just were able to make a AR-15 magazine from a 3D printer today - what about we use that printer to print us some bars?


Mon, 01/14/2013 - 23:45 | 3153130 AgAu_man
AgAu_man's picture

So you buy more clips.  Big Whoop!  Takes 3-4 seconds to swap clips.  

Nothing bad happens during that time anyway, as we've all seen in the movies with those cool, sexy chicks with perfect bodies and skin-tight outfits.  ;-)

Mon, 01/14/2013 - 22:48 | 3152975 Silver Garbage Man
Silver Garbage Man's picture

Three words.... UP AND AWAY !!!

Tue, 01/15/2013 - 04:25 | 3153005 Bokkenrijder
Bokkenrijder's picture

"It begins...."

Oh, if only I would have gotten a Troy Ounce of Gold for every time I heard that phrase...

Mon, 01/14/2013 - 23:15 | 3153044 I need more cowbell
I need more cowbell's picture

They need the money for the Fourth Reich, yes, you heard me correctly.

Seems this history professor was traveling in the backwoods of Argentina, and stopped by this little inn. He ordered a beer, sat sipping, when he noticed two older gents huddled in the corner. Gosh, he thought, even though they are so old, I can't help but think, the resemblance is uncanny. He walks over to them , and ( boldly for him ) says, " Err, I can't help but remark, you look like Adolf Hilter and you sir, like Hermann Goring. "That is us, " Hitler said. "Sit down, Join us". The history prof said," I have a million questions, how did you survive, how did you escape and get here, but mostly what are you doing here? Hitler remarked triumphantl, "Why, we are planning the rise of Germany, the Fourth Reich. We shall have the largest army, the best armada, and soon now. And we will kill another 6 million Jews, and three Irish acrobats.

"Three Irish acrobats?" asks the prof. Hitler nudges Goring and says" You see, no one cares about these Jews!"

Mon, 01/14/2013 - 23:39 | 3153112 Rusty Shorts
Rusty Shorts's picture

That's it damnit!!! I'm moving to Uruguay.

Mon, 01/14/2013 - 23:21 | 3153054 knukles
knukles's picture


Remember the Libyan Escapade!

Just days after Mohatmah Dingleberry Chavez announced he was repatriating all his gold from overseas, aka Bunko of England, the rebel troops, the New Long War Enemy of the Democratic Freedom-loving Peoples of the West all of a sudden rushed into Tripoli and secured the Bank of Libya and its gold reserves.  Only to announce that a goodly chunk of which needed be sold in London to make good payment of salaries and outstanding weapons bills for the rebel cause.
One of the first times I can remember a cause such as that being armed by the west, needing to pay hard buckaroos.
And such as is, the business of connecting the dots, the gold available to make good with Hugonut, was almost simultaneously released from the Libyan stash, at the Bunko Englaterre.


How much gold has Mali?

Tue, 01/15/2013 - 01:27 | 3153337 MrSteve
MrSteve's picture

As many legions has the Pope!

Tue, 01/15/2013 - 03:15 | 3153419 BigInJapan
BigInJapan's picture


Mali is the 3rd largest gold producer in Africa, putting out about 45 tons a year. Looks like they have about 2 billion USD in holdings.


Thar's turrists in that thar jungle!

Tue, 01/15/2013 - 10:43 | 3153869 Shitters_Full
Shitters_Full's picture

knukles, I always truly appreciate your posts here.  Just had to drop that in.

Also, USA just added 'logistical' help to Operation Liberate Mali(an Gold).

Tue, 01/15/2013 - 00:09 | 3153187 lasvegaspersona
lasvegaspersona's picture

'paper gold'

Paper has an atomic weight of 79 too? wow so they are like the same thing?!

Tue, 01/15/2013 - 00:11 | 3153197 LongBalls
LongBalls's picture

Thank God I listened to Goldman..Wait...NOOOOOOOOOOO!!!!!!!!

Tue, 01/15/2013 - 03:11 | 3153414 jaap
jaap's picture

As they say: "Heim ins Reich"

Tue, 01/15/2013 - 07:40 | 3153549 paddy0761
paddy0761's picture

Wow. I'm really surprised Business Insider isn't reporting this (unless I missed it). They are normally really quick to piggy-back any ZH story. 


Tue, 01/15/2013 - 08:23 | 3153587 _underscore
_underscore's picture

Gold's entering the rehypatriation phase.

Tue, 01/15/2013 - 08:56 | 3153633 Sueco
Sueco's picture

I am sure most of you have seen this but we should get more signatures to audit the gold in the Fed... Please sign this if you agree....

Mon, 01/14/2013 - 21:35 | 3152755 Verum
Verum's picture

If bank solvency, via derivitive markets, ever fail than Paper Gold to zero. And if you think that you can put a value on physical gold (whether $0 or $10,000) your wrong.

Mon, 01/14/2013 - 21:37 | 3152761 Stuart
Stuart's picture

Bundesbank denials.... ready, wait... 3, 2, 1, ..

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