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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palmereldritch's picture

Wo ist mein Wolfram Detektor?

ABG LINE's picture


bchbum's picture

I assume that those are all a sell?

ricky2's picture


ss123's picture

Does this mean I buy AAPL tomorrow?

CH1's picture

Definitely. See if you can get some Groupon too, and Netflix.

GetZeeGold's picture



That....and load up on FB.

mt paul's picture

long frozen 

orange juice concentrate ...

chaartist's picture

You don't have a credit line with FED on Apple stock? We all have one, it is free. But you can't sell.

samcontrol's picture

no buy at $420 a small position.

jcpicks's picture

For real, this time.......Gold Bitches!

ItchyBeard's picture

Now now how many times must we tell ya that it's 'bitchez' and not 'bitches'?

(Greened ya for getting the message right)

Big Ben's picture

It's not that we don't trust you Americans, but ....

Cursive's picture

@Big Ben

What do Americans have to do with this?  This is one branch of the international banking cabal calling its markers in from another branch of the international banking cabal.

ebworthen's picture

Bundesbank:  "Show me the money!"



The Gooch's picture


edit: March at the latest, bitchez. Get it together.

Stuart's picture

Please god, please, let the Bundesbank audit and find tungsten... please oh please.  I'll go to church, I promise I will and I won't say any more nasty things about Turbo Tim, and Bernanke, and Jamie Dimon, and Jon Corzine, and...well that entire snake pit and friends..ya, I promise. 


CH1's picture

Best comment of the year. + 100

Someone HAS TO make a Hitler Finds Tungsten video. You know the ones!

tekhneek's picture

My god. Brilliant.

I second that motion.

DaveyJones's picture

just the title alone has me coughing up from swallowing wrong and now my loved ones are asking if I'm OK. Yes, but the world isn't



Disenchanted's picture

Couldn't find one like that but this one could be closely related...


Hitler learns he can not divide by zero

re: "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."

Sturm und Drang's picture

As I recall, London and New York proved to be "tougher customers" than Paris.

krispkritter's picture

Well I gave it a shot:


You can try yours out here: 

Make your own Hitler video

Ballin D's picture

If there is a God, He probably wants you to talk trash about that 'entire snake pit and friends'

nmewn's picture

lol...10ct. if they're lucky

Zoltan's picture

Meanwhile only 4,788 Americans have signed the petition to audit their own gold reserves.  Really?  Looks like a youtube count an the videos than have only 1,000 views but 5,000 likes.



Zoltan's picture

Meanwhile only 4,788 Americans have signed the petition to audit their own gold reserves.  Really?  Looks like a youtube count on the videos than have only 1,000 views but 5,000 likes.



dmger14's picture

Defcon 2 or will this be greeted with a yawn?

The Gooch's picture

A yawn and a drone and a hellfire missle.


NoDebt's picture

Magic Eight Ball says yawner.  Covering the debt ceiling pantomime is much more interesting.

Look, if we actually have all the gold we say we do, it's still a heluva story.  If we DON'T, however, it's a REALLY HUGE story- big enough for CNBC to cover it in a 2 minute interview (where Joe Kernen asks the question and then interrups with a bunch of comments instead of letting the guest answer).

CH1's picture

Defcon 2 or will this be greeted with a yawn?

A yawn in public for sure. The sheep must be kept clam until the blade hits them.

Miffed Microbiologist's picture

I'm praying hard for the yawner. If its a true Defcon 2, what would the event be to distract the public? Another 20 children shot ? I'm saddened I wouldn't even be surprised.


Anusocracy's picture

They find life on Mars?

A suitcase nuke is detonated at the NY Fed?

It is disclosed that the last five US Presidents were animatronic robots from Disney World?

Jesus comes back to Earth and admits that he is also Muhammad?

Barney Frank goes straight?

tenpanhandle's picture

I don't know about that.  Kept clams are getting pretty expensive.

NoDebt's picture

They're just not worried about being overrun by the Soviet Union any more since the wall fell not long ago.  What's it been, like a few weeks now?  Anyway, since that recent development they're feeling much better about holding it themselves.  That's all.  No mistrust of other central banks or their governments.  That's just crazy talk.



fonzannoon's picture

The good news is we won't need ships to deliver it. With technology these days an email with an IOU in the subject section should suffice.

ebworthen's picture

"Full faith and credit..."


AgAu_man's picture

Merkel will send Das Boot.

tenpanhandle's picture

Merkel will get das boot.

LongSoupLine's picture

Fuck yeah, release the donkey Kong.

Fuck you Bernanke..checkmate you fucking shit eating crooked asshole.

notadouche's picture

I believe when Bernanke takes a bite out of this giant shit sandwich we will all be taking a bite as well.  Not sure how eager I am to take my bite in reality.

in4mayshun's picture tastes like chicken

surf0766's picture

No honor among thieves

dick cheneys ghost's picture

Who needs gold when you can print trillion dollar coins??????


What say you Krugmann?

AgAu_man's picture

Jerry Seinfeld:  "Not so fast, Newman!"

AgAu_man:  "Not so fast, Krugman!"  I already patriated my Platinum.  :-)