As Germany Prepares To Repatriate Its Gold, We Hope They Have Learned From The "Monetary Sins Of The Past"

Tyler Durden's picture


As initially reported here yesterday, in what is the biggest news of the week, and possibly the year, the Bundesbank has broken away from its "all is well" posturing exhibited as recently as three months ago, and in a dramatic reversal of its diplomatic position, has demanded repatriation of some of its NY Fed and all of its Paris-domiciled gold. We applaud Herr Wiedmann for this move, although we hope that the German people are allowed to witness, and verify, the arrival of the actual gold as opposed to simply empty crates. Of course, at the end of the day the actual delivery is irrelevant: what matters is this first shot across the bow of the current monetary system - one which juxtaposes sound money versus infinitely dilutable electronic fiat more than ever before - by a major conservative central bank, one in possession of the second largest official gold reserve, second only to the Fed itself. That said, we can only hope that the German request for gold repatriation is not met with the same enthusiastic response that France encountered when it too attempted to repatriate its gold held by London back in the 1930s, just before a whole lot of things in the global economy went horribly wrong...

Specifically, in 1965 The Economist interviewed Jacques Rueff, a French economist and advisor to the French Government. In the following exchange (caught on pages 84-85 of the pdf "Monetary Sins of the Past", which are required reading to anyone who thinks what is going on now is in any way new or different), the Economist blames France for exerting pressure on London during the 1930s, through the withdrawal of sterling balances held at the Bank of England. We thank Martin Sibileau for the reminder about this key exchange.

What is disclosed is enlightening and entertaining, and may well serve as the basis for what the response Buba may encounter today.

Jacques Rueff: In 1930 I was financial attache in the French Embassy in London, and in that capacity I was responsible for the deposits of the French Treasury with British banks. They were the direct result of eight years of the gold-exchange standard, because we had kept the pounds sterling in London, as my colleagues in New York had kept in the American market the dollars that had been pouring into the French Treasury from 1927 onward. Then, in 1931, the failure of the Austrian Creditanstalt caused successive waves of repatriations; and it was this collapse of the gold-exchange standard that, without any possible doubt, transformed the depression of 1929 into the Great Depression of 1931.

The Economist: While you are on this historical episode, what would your comments be on the very widespread view that it was to a substantial extent French pressure on London at that time, through the withdrawal of sterling balances, that was in part responsible for the general collapse later on?

Jacques Rueff: Let me tell you that, unhappily for the world, the French pressure did not exist, or was so mild that it had no effect. There is a very interesting document from this period, a letter from Sir Austen Chamberlain, who was then Foreign Secretary in London, to M. Poincaré, who was Prime Minister and Finance Minister in France; it must be of 1928. Sir Austen said, "We know that you are entitled to ask gold for your sterling, but in the frame of the close friendship between Britain and France we ask you, so as to avoid trouble for the City of London, not to do that." And we were, I must say, weak enough to comply with this request and not ask for gold. The fact that I had such important sterling deposits in London shows that we did not use this right to ask for gold. The adjustment, which would hardly have been felt if carried out on a day-to-day basis, was not made, and we had the fantastic boom of 1927, 1928, and 1929. This explains the depth of the collapse and of the depression, because the adjustment was so long delayed. We were too gentle in complying with official appeals not to convert our sterling balances into gold.

Fast forward to today, and we can't help but wonder if some 30 years from today, an advisor to the Bundesbank will not rewrite the above to something as follows:

BUBA Advisor: ...There is a very interesting document from this period, a letter from William Dudley, who was then Head Of The NY Fed, to Herr Weidmann, who was Head of the Bundesbank; it must be of 2013. Dudley said, "We know that you are entitled to ask gold for your sterling, but in the frame of the close friendship between the United States and Germany we ask you, so as to avoid trouble for the Wall Street, not to do that." And we were, I must say, weak enough to comply with this request and not ask for gold. The fact that I had such important sterling deposits in New York shows that we did not use this right to ask for gold. The adjustment, which would hardly have been felt if carried out on a day-to-day basis, was not made, and we had the fantastic boom of 2013, 2014, and 2015. This explains the depth of the collapse and of the depression, because the adjustment was so long delayed. We were too gentle in complying with official appeals not to convert our USD balances into gold.

We can only hope that the Bundesbank is not quite as "gentle" as Paris was some 80 years ago in complying with London's equally as gentle denial to comply with the French repatriation request. In fact, quite the opposite: we hope Bundesbank pulls all of its gold, as do all other nations because in the aftermath of the "collapse and depression" that will soon follow, he who defected first, will have defected best.

Everyone else will be left with paper promises of repayment by a broke and insolvent government which went as far as suggesting the minting of a trillion dollar coin to absolve it of its own particular monetary sins. Seriously.

h/t Martin Sibileau

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Tue, 01/15/2013 - 14:37 | 3154670 francis_sawyer
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 "Hope" ~ it's a helluva drug

Tue, 01/15/2013 - 14:40 | 3154680 sunnydays
sunnydays's picture

It sure will be fun when they actually try and arrange the shipment.  All of a sudden Germany will become an enemy with terrorist inside the country and the U.S. will have to use drones and start bombing them?

Tue, 01/15/2013 - 14:45 | 3154697 trav777
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fortunately, there is still ample gold production; it hit a new peak in 2011, exceeding 2001.  Production rose, if we accept the data, for 3 years.  This perhaps gives the banks a chance to repatriate with "deep storage gold" lol

Tue, 01/15/2013 - 14:49 | 3154727 CPL
CPL's picture

Knowning Benny though he's wrapped a couple of gold foil surprises in the pile being shipped. 


That's going to piss people off.

Tue, 01/15/2013 - 14:51 | 3154739 fonzannoon
fonzannoon's picture

None of what you see happening is happening off script. None of it.

All part of the play.

Tue, 01/15/2013 - 15:02 | 3154780 strannick
strannick's picture

The first to jump ship is a rat, the last is dead

Tue, 01/15/2013 - 15:03 | 3154782 camaro68ss
camaro68ss's picture

I see a boating accedent in the near future.

Tue, 01/15/2013 - 15:18 | 3154821 Pladizow
Pladizow's picture

If we take que from Buba's prior statement, "all is OK", when it now says it will repatriate "some of" its gold, what is that code for?

Tue, 01/15/2013 - 16:18 | 3155082 THX 1178
THX 1178's picture

Bah! Barbarous relic. Germany likes the color of gold. They like the way it looks. It reminds them of all the stuff they used to have when they were watchacallits. It reminds them of that stripe on their flag, along with the black forest and red armband. They don't intend to issue gold backed anythings in the future. They like the weight of gold. It reminds them of the robust and solid weight of a beer stein. Same goes for eveyone else repatriating gold. They like the way it looks. They don't intend to do with it anything at all ever.

Tue, 01/15/2013 - 16:34 | 3155199 redpill
redpill's picture

Wo ist das Gold, Lebowksi?

Tue, 01/15/2013 - 16:16 | 3155100 giggler123
giggler123's picture



OK, rewind, what happened before with the UK?  Yer that's right, Browns bottom.


Hey you gold bugs, wait a little longer, soon will come Bernanke's Bottom when he tries to do the same.  $300/oz?  buy in the dips!


Wed, 01/16/2013 - 04:56 | 3156942 bentaxle
bentaxle's picture

In reality I suspect germany's gold is going nowhere. Especially if it's not there anyway.

Tue, 01/15/2013 - 15:20 | 3154832 Nothing To See Here
Nothing To See Here's picture

Bernank@Germany : "All your gold reserves are belong to us"

Tue, 01/15/2013 - 15:25 | 3154859 Chief KnocAHoma
Chief KnocAHoma's picture

Interesting theory Fonz... but what is the real script?

I see the Western CBanks as franchises of the same parent, so why would this be allowed?

At some point it is going to be every man for himself, and Germany may realise that day is here. Fuck that franchise agreement, we have people to feed.

The Krauts are tired of paying for those lazy Italians, French and Greeks to play on their dime. Gold comes home, deutchmark relaunched - everyone else fuck off.

EURO fails, dollar surges, and all is right with the World again.

What am I missing?

Tue, 01/15/2013 - 15:33 | 3154878 fonzannoon
fonzannoon's picture

Here is all I know. The 2nd biggest supposed gold owner in the world does not ask the 1st biggest supposed gold owner in the world for delivery in a way that would create any publicity, especially when a lot of people are already skeptical. There is no way they would create a panic.

My guess is

1) No formal answer is given, this goes away

2) A huge public relations stint. The gold gets delivered. Bob Pisani shows us a Kruggerand and that everything is in good order and gold can now continue falling because fears are overblown

3) Germany comes out and denies the whole thing

If they really wanted their gold they would have watched a few Schiff/Bass video's and asked for it a long time ago in a much more secretive manner.

Tue, 01/15/2013 - 15:38 | 3154906 francis_sawyer
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4) Asians keep buying...

5) You figure it out...

Tue, 01/15/2013 - 15:39 | 3154913 fonzannoon
fonzannoon's picture

I honestly have no freaking clue.....

Tue, 01/15/2013 - 15:53 | 3154975 knukles
knukles's picture

Damn good thing I read you.
If I showed my wife one of the Krugerrands we don't own she'd fucking spend it. 
Talk about paper gold!

Tue, 01/15/2013 - 16:13 | 3155080 stocktivity
stocktivity's picture

That was funny Fonz

Tue, 01/15/2013 - 23:54 | 3156598 Spigot
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...

Tue, 01/15/2013 - 15:41 | 3154920 CPL
CPL's picture

Everyone is switching places.

Tue, 01/15/2013 - 19:45 | 3154946 francis_sawyer
francis_sawyer's picture

EveryTHING is switching places... [phyzz is being repatriated EAST ~ hOPIUM is moving WEST]...

Tue, 01/15/2013 - 15:56 | 3154992 Philo Beddo
Philo Beddo's picture


Not having the gold is the first step in the Federal Reserve being found naughty?  Throw on things like paying for drug cartels, paying for middle east coup, printing bennie bucks for their buddies, and you have a really naughty federal reserve.   Then at the same time throw in a global depression and maybe a false flag and you have all the justification for a one world bank.  

 Really...unless you have a reason to get rid of the Fed, how are you going to consolidate?

Tue, 01/15/2013 - 18:40 | 3155730 Ghordius
Ghordius's picture

fonz, China first buys, and then, later, talks about
What if Germany's gold is already back?

Plenty of aircraft and bunkers, and it does not need that much space anyway

Tue, 01/15/2013 - 23:37 | 3156561 Divine Wind
Divine Wind's picture



I dunno. The Germans, like most sane Americans, think Bamster is a smooth talker in a nice suit and completely worthless. They see national relationships eroding, a foolish Congress and a super power in decline. They see tremendous debt and a brain-dead American public getting more and more stupid by the day.


I would not dismiss the seriousness, at least until morning.

Tue, 01/15/2013 - 16:13 | 3155077 Jayacts
Jayacts's picture

6) Merkel PR reelection stunt

Tue, 01/15/2013 - 18:51 | 3155789 koncaswatch
koncaswatch's picture

Does BuBa really have any gold?

I thought Kelly's Heroes took it at the end of WWII...

Wed, 01/16/2013 - 02:17 | 3156851 IllusionOfChoice
IllusionOfChoice's picture

fonz, I don't think you could be more right. Whenever I'm thinking down a line it always comes back the that. If we know, they want us to know, but then what is the next play?

Tue, 01/15/2013 - 14:54 | 3154752 kliguy38
kliguy38's picture

There will be NO significant gold returned to Germany other than a few "Gordon Brown" bars that may serve to perpetuate the myth that Germany still has its Gold stored in "Safe Keeping" Western vaults. Of course there are massive stores of gold.....but most of the Sovereigns will see NONE of it EVER.......China knows this and is scrambling for what loose morsels it can extort and that will be closed off soon.....enjoy the charade peeps

Tue, 01/15/2013 - 15:37 | 3154899 Cap Matifou
Cap Matifou's picture

Germany, as you think of it between the current borders, didn't regained sovereignity after the war. Told you by the friendly Schaeuble a year ago.

Dr. Schäuble: Germany not sovereign since 1945

This has also profound consequences to the supposed gold holdings.

Germany’s sovereignty restricted by US and allies, insider’s book claims

Tue, 01/15/2013 - 15:51 | 3154958 francis_sawyer
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As far as anyone fucking knows... the 'Rothschilds' could have clandestinely funded the entire Apollo project, launched it up, & had Neil Armstrong & Buzz Aldrin bury the fucking shit in a hole in the 'Sea of Tranquility' using a goddamned 6-iron as a shovel...

Tue, 01/15/2013 - 15:55 | 3154989 knukles
knukles's picture

Just as I suspected, the Annanuki gold rush gone full circle.

Damn you're great when you're good!

(Honey, did I enjoy that as much as you did?)

Tue, 01/15/2013 - 16:02 | 3155001 francis_sawyer
francis_sawyer's picture

My prediction is that it's all COMEDY from here on out... I hope eveybody has a good sense of humor... [& some popcorn to pop]... NOTHING is funnier than kicking back & watching the last remaining "witches" on the planet conniving around in an effort to procure the last morsel of gold on the planet...

Tue, 01/15/2013 - 16:20 | 3155114 knukles
knukles's picture

Abstatively, my man.
Matter of fact, last night the wifie and favorite number one son watching a movie and I'd thought to myself..."popcorn... yummy popcorn... must have much buttered popcorn for rest of financial meltdown show"

Like somebody said here yesterday, this (ZH) anymore is somewhere in the Venn Solution Set of real news, entertainment and therapy.

Bad news is when it gets to the Null Set.

Tue, 01/15/2013 - 17:15 | 3155404 francis_sawyer
francis_sawyer's picture

The "null set" = DELIVERANCE...


I just hope most people have the 'cojones' to live in the 'post-DELIVERANCE' era... I'm not sure even if francis_sawyer qualifies, but I'll give it my best shot... I'm just hoping that I have the fortitude & discipline to REFRAIN from starting a religious cult & calling my tribe 'CHOSEN' people when it happens...

Tue, 01/15/2013 - 20:49 | 3156101 max2205
max2205's picture

If 11 12 and '13 are so great, I'd hate to see shitty

Tue, 01/15/2013 - 16:34 | 3155200 Mr Pink
Mr Pink's picture

Maybe the lunar lander was made of gold to protect the astronauts from the Van Allen belt. It's all making sense now

Tue, 01/15/2013 - 17:23 | 3155445 francis_sawyer
francis_sawyer's picture

The Van Allen Belt!... (0:39)... Brilliant!


Tue, 01/15/2013 - 19:18 | 3155848 Jam Akin
Jam Akin's picture

Awesome reference y'all.

Tue, 01/15/2013 - 17:59 | 3155579 Argentbilly
Argentbilly's picture

Or they could have had Stanley Kubrick direct it for them.

Tue, 01/15/2013 - 20:19 | 3155678 francis_sawyer
francis_sawyer's picture

Kubrick movies had more things to say about MIC [Full Metal Jacket], Gold & Money [The Shining], Illuminati perverts [Eyes Wide Shut], & calling European Jewry to the carpet [Barry Lyndon] than they did about faked Moon Landings [2001: A Space Odyssey], or social class warfare [A Clockwork Orange]...

Tue, 01/15/2013 - 16:23 | 3155132 stocktivity
stocktivity's picture

Naaa...I usually agree with the Tylers but I don't see this as a huge event. They'll get their gold back...otherwise the whole Ponzi scheme would fall apart. Rally on!  Until the printing stops, It's all Bullshit!

Tue, 01/15/2013 - 18:12 | 3155647 Cap Matifou
Cap Matifou's picture

Name one thing Putin can do at any hour of the day, if he wished, but not Obama?

Tue, 01/15/2013 - 18:32 | 3155703 tenpanhandle
tenpanhandle's picture

call Michelle an ugly bitch?

Tue, 01/15/2013 - 19:31 | 3155889 mjcOH1
mjcOH1's picture


Look another head of state in the eye?

Tue, 01/15/2013 - 21:11 | 3156161 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

say "allright folks, let's just admit it already.  This is not a deadbeat nation, it's a Totalitarian regime, and you'd better behave or else we'll crush you."

Wed, 01/16/2013 - 20:11 | 3160358 Tompooz
Tompooz's picture

Right. Don't call us  deadbeat but beat (you/them) dead

Tue, 01/15/2013 - 14:58 | 3154765 fijisailor
fijisailor's picture

Hey aren't you the guy the says it only costs 5 bucks an ounce to mine silver?  When will the price collapse?

Tue, 01/15/2013 - 15:16 | 3154815 Temporis
Temporis's picture

That was MathMan.... I miss that fucker... =(

Tue, 01/15/2013 - 15:01 | 3154778 NotApplicable
NotApplicable's picture

Ample production?

Better hope those 100 claims for that 1 bar don't come in to the LME too fast!

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