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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AgAu_man's picture

Quick, Buffet, where's that damn Tungsten you got for us, when you bought all those MF'ing Tungsten mines!?

Smuckers's picture

Watch CNN for a pending rash of international boating accidents.

Cabreado's picture

Classic behavior of the Narcissist and Sociopath feeling and fearing loss of control is ratcheting up.

Take it seriously.

As if they do not cause enough damage on their never-ending journey of Control,

when they sense exposure -- when the facade that is their very being is threatened,

strange and dangerous things happen.

NaN's picture

Last one out is a rotten egg... or tungsten.


AgAu_man's picture

Kitco, here we come for our Precious...  and you'd better not screw us because you claim that you got royally screwed by the Royal bloody Aussie Mint and the Royal bloody Canadian Mint!

Bansters-in-my- feces's picture

If you run around with a bunch of phycothpaths,that all lie for a living and you know cause you are one of them which one would you trust to hold your gold...???

DaveyJones's picture

honor amongst thieves

oh, someone already called it

Richard Head's picture

This is clearly bullish for equities.

alfbell's picture

The gold will probably be flown over. Too bad it doesn't go by ship and Somalian pirates hijack them.


It arrives and turns out to be tungsten with a gold leaf covering.


"Fuck you Germany. We considered this gold your WWII reparation payments, liquidated it and distributed the funds to all the countries that you fucked over. Most of those monies are in Israel."

Hmmm... central banks and governments are buying lots of gold lately. And now they are taking physical possession. Wonder what is going on?

Seasmoke's picture

Stay out of tall buildings with gold in the basement

chaartist's picture

as an additional note. After collapse, the gold evaporates. We have proof from NYC..

erg's picture

For whatever strange reason a Monty Python skit came to mind. Confuse a cat.

Rusty Shorts's picture

...just thinking of this, for whatever reason. Cheers.

Atlantis Consigliore's picture

sing along KEEP MY GOLD, MAKE MY GOLD....

take it out real fast, b'fore its sold, be so bold, just move my gold,

forgive us Foible,  ve dont bend ovr;

veer German not Swisstoble,

and vee dont vant to be schtupped like MF Global.........



bugs_'s picture

allright this coin idea IST KAPUT!!!

can you believe those DUMMKOPFS?????

this is the last straw i think we need to get our gold back SCHNELL!!

before they come up with an even more ridiculous plan!

Smuckers's picture

Das ist bullish!

AgAu_man's picture

That's because, in a recent meeting with the Chinese leadership, Germany's Chancellor Angela Merkel was advised about the dangerours fiscal course she was on.

They reminded her of an old Confucious saying: "Woman who fly airplane upside down, will crack up".

Westcoastliberal's picture

strike will, it's has. Thanks for playing.

AgAu_man's picture

Verdammt!  Messed up the naughty joke.  Should have read "Woman who fly airplane upside down, will have crack up." 

j-dub's picture

Hopefully the gun ban won't take effect before Bernanke gets a chance to shoot himself.

hairball48's picture

Timmmmaayyyyyyy, Where are you??? :)

Ignorance is bliss's picture

Gold is a life boat in a world of hyperinflated currencies. I'm fairly certain no one knows the signs of hyperinflation better then the Bundesbank.

the grateful unemployed's picture

so why is german gold in the fed reserve bank in the us? hi neighbor, i am worried that the banks might shut down, can i put my money in your mattress?

logicalman's picture

"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."

Can someone remind me what a 'pledge' is worth in the banking world?


Thanks, in advance.

AgAu_man's picture

It's worth having your Manchurian Candidate in the WH.  Look up IEEPA, i.e.

Ever heard of "Possession in 9/10 of the law?"

nmewn's picture


Trust, is very underrated.

U4 eee aaa's picture

A pledge is the guy trying to get into your fraternity that bends over and takes some whacks to the nether regions

it's pretty similar in banking terms

From Germany With Love's picture

A pledge? Isn't that something they do on kickstarter?

Muddy1's picture

"So we wonder: what changed in the three months between November and now, that has caused such a dramatic about face at the Bundesbank"  ANSWER:  the reelection of Obama

"if the Bundesbank is first, who is next?"  Hugo Chavez was first.


Clowns on Acid's picture

Can't the US just tell Germany that "Thats not how US "diversity" works ?

"Returning your gold is not fair to the poor or to the underserved communties. Why are you so mean and so selfish? "

"Here have an Obama platinum coin that we say is the same value as your gold".

"Thanks man" You are cool".

Ralph Spoilsport's picture

The Fed will send them some radioactive gold from a misguided neutron absorption/alchemy experiment conducted at Oak Ridge in 1959. 


newengland's picture


The WWI AshkeNAZI schemes moved West to the USA, and founded the un-Federal no-Reserve Board of private banksters.

The Zionist Post WWII AshkeNAZI doubled down on their schemes when their pet Hitler lost, and Nazis were drafted in to serve the CIA.

Ordinary Jews and ordinary Christians never voted for that. And there is no reason for anyone to put up with this pretence of Soros, Bloomberg, Feinstein, boy Obama et al crypto-communists and AshkeNAZI corporatist schemes any longer.

Oh, and the Vatican banksters are the worst, also crypto NAZI.

Gold and silver are the people's protection against paper printed fake promises from aggressive self-serving governments, and their apparatchiks.

Long live the Republics, founded by the Judeo-Christian tradition, and too long abused by the crypto-communists, corporatists and Vatican NAZIS.

digalert's picture

German friends, you might want to run the bars through a refinery first. Check for degradation. I've seen solid gold bars deteriorate into 90% tungsten. This phenomena normally occurs from the inside out. Water damage is another concern, especially with New York history of flooded vaults. Gold coming in contact with water may be destroyed, worthless, ruined.

jomama's picture

water/salt water/ocean water cannot and do not corrode gold.

TheFourthStooge-ing's picture


water/salt water/ocean water cannot and do not corrode gold

...but can turn paper gold into a pulpy mess.

Teamtc321's picture

water/salt water/ocean water cannot and do not corrode gold.


MDB, Is that you?

jomama's picture

dafuq are you blathering about?

the only thing that will degrade gold is a high acid solution of 1 part HNO3 and 3 parts 5N HCl.


Acet's picture

I'm curious: did you hear the WHOOSH that the joke made while going over your head at high speed, or did you not notice it?

Budd aka Sidewinder's picture

I soooooo can't wait for the next NEXT Die Hard movie where John McClain stops the terrorist plot led by Hans Gruber III to sink the ship full of German gold and use deep sea vehicles to recover it. 


Not a bad idea

ruffian's picture

The NYF will return Germany's gold or the Bundesbank will dump all their dollar reserves and buy gold in the open market thereby destroying the dollar as the GRC 

earleflorida's picture

'this useless relic has found its glitter... no more a cage'd harlot, but rather an ageless element of our atheistic-darwinism culture, coming to terms in a future where the alchemist must retire his mercurial laurels for a parting glass of hemlock- never no more?!'

does this equation make sen$e? MOU = MAD

thankyou tyler 

yogibear's picture

Check the gold. Tungsten 80% Gold 20%.

ZeroAvatar's picture

Lease rates TO THE MOON, Bitchez!

you enjoy myself's picture

that's what i'm wondering - if 1,600 tons of physical are removed from the asset daisy chain, how many tons of paper gold disappear along with that?

TheFourthStooge-ing's picture


that's what i'm wondering - if 1,600 tons of physical are removed from the asset daisy chain, how many tons of paper gold disappear along with that?

It would be 9/11 times 100!