A Year Later, The Bundesbank Has Repatriated Only 37 Tons Of Gold (Of 700 Total)

Tyler Durden's picture

Procuring physical gold seems to be a rather problematic and time-consuming process, as the Bundesbank is learning.

Recall that it was almost exactly one year ago in mid-January, when the German central bank, in a shocking development expressing the bank's lack of trust in its central banking peers, announced that it would proceed with the repatriation of 700 tons of gold held by its "partners" the New York Fed and the Banque de France, by the end of 2020.

Since we had posted numerous articles on the topic of German official gold just prior to this announcement, many of which speculated about its quality and existence, it seemed like a shocking confirmation that the most hawkish of European central banks was taking its commitment to hard-money so seriously, especially after just weeks prior it swore up and down it has confident about its gold where it currently was.

This is what we said at the time:

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....

* * *

The question of Buba's relationship with other central banks still remains open, however one thing we have just learned is the pace at which the German Central Bank has been able to repatriate its gold. It would make a snail proud.

Yesterday Buba head Jens Weidmann told Bild that gold valued at €1.1 billion has been repatriated so far. Putting a weight to this number: to date the Bundesbank has received shipments of a paltry 37 tons of gold from its existing storage place in either New York or Paris to Germany: "The gold reserves of the country will be stored in Frankfurt because it has a special storage with the corresponding equipment,” said Carl-Ludwig Thiele, a Bundesbank board member. 

The repatriated amount over the course of all of 2013 represents just over 5% of the total stated target of 700 tons, and is well below the 87.5 tons that the Bundesbank would need to repatriate each year if it were to collected the 700 tons ratably ever year in the 8 year interval between 2013 and 2020.

So the question begs: since the price of gold has tumbled in 2013 (according to many driven in part by the Buba's own demand, which would make procuring gold in the open market for the US and French central banks that much easier for subsequent dispatch to Frankfurt) and one would assume there would be many more sellers than buyers of physical, why would the Bundesbank not be able to obtain a far greater share of the gold? Unless, of course, neither New York nor Paris actually have free, unencumbered physical gold in their possession -with most of it leased out to various even closer "partners" - and are scrambling to procure as much physical as they can find at the new low, low prices (thank you paper gold ETF dumping).

However, a snag seems to have emerged: unlike in the "west" where momentum is the only driver of "value", buyers out of China (and of course India, especially when one considers the black market attempt to circumvent the Bank of India's capital controls on gold imports) are hoarding as much physical gold as they can get. Could it be that the Bundesbank is unable to repatriate more just because China is already buying up every marginal tons of physical gold in the market, and is making physical gold purchases by the Fed next to impossible?

In other words, is China now holding Germany's gold hostage, and if so when and what price would it release it to the New York Fed and the Banque de France? One look at just the pace of imports by China reveals that if indeed this is the case, then there may be a few snags in this hardly best laid plan of central bankers and men.


Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
VD's picture

imagine if one paid the IRS thugz taxes at similar 'repatriation' rate¿¿¿

BoNeSxxx's picture

I hope the Annunaki have learned to speak Chinese during their hiatus... they're gonna need it.

giggler321's picture

So 37ton isn't enough, 700/(2020-2013)=100tons.  So they should have got back 100tons pa.  It seems someone's a little short even at $1200US/oz

Pseudonymous's picture

Germany lost most of its gold in a very unfortunate choice of custodian accident...
To everyone thinking of holding paper gold: don't be like Germany. One should be responsible even in the event of losing their money. If you lose your gold in an unforeseen boating accident at least then you are not funding criminal behavior in the process. On the other hand, if you lose your money to a thief or a conman, then not only are you out of money, but you are doomed to suffer again in the future when the thieves or conmen come back better prepared and more motivated, looking for more.

BaBaBouy's picture

TYLER, Don't You Know The FED ET AL Are Empyting The GLD Etf As Fast As They Can!!!

Give TheM A Break Will You,

The Germ's Will Get Their GOLD By At Least 2077...

Buckaroo Banzai's picture

In Olden Tymes, when one had difficulty procuring something at a given price, the price for that thing would rise accordingly, until the "market cleared" (an ancient Term of Art).

Now, of course, we have much more modern and scientific methods of allocating resources.

kreso's picture

If I would expect DB to default on its CDOs, wouldn't I prolong the delivery of physical gold which could serve as a colateral?

Kind Regards,

zaphod's picture

I've said it before here and I'll say it again.

Germany was allowed/forced to store their gold with the US, England and France after WWII and given paper certificates to enable trade only. They essentially lost all real claims to that gold when they lost the war. There was never an expectation that the gold would be returned and they most definitely will not receive it back.

The slow repatriation is just to mask over this fact, Germany will receive a token amount slowly over time, that is all.

nope-1004's picture

So exactly how does the "free gold" theory fit in with nations or sovereigns having their gold stolen / re re re rehypothecated?

Doesn't' Freegold assume everyone possesses what is rightfully theirs?


CH1's picture

It takes time to unwind all those leases and re-hypothecations!!

krispkritter's picture

I had some fun with this when it first appeared here:  

Hitler Learns German Gold is Tungsten
the question's picture

"To be more specific: in October 1951 the Bank deutscher Länder, the Bundesbank’s predecessor, purchased its first gold for DM 2.5 million"

So I have to ask, if gold was first purchased in 1951 (after the war), would they still be required to loan it over to France and the US? What am I missing?

runswithscissors's picture

Das ist alles...geld macht nicht


Cap Matifou's picture

The current german gold accounts have nothing to to with any war, they were cumulated in the economic miracle years of the 50 and 60s.

midtowng's picture

Not to worry. I'm sure they can convince Germany to take GLD shares instead.

PR Guy's picture



This is what happens 'When Big Projects Go Bad' ;-)




DavidPierre's picture
Conspiracy of the Titanic: First staged 9 11


J.P.Morgan cancelled his trip on the Titanic (or should I say the Olympic?)

Kinda like Lucky Larry Silverstien having a doctors appointment the morning of 911.

thunderchief's picture

So Germany's gold is in custodian with the worlds biggest paper manipulator and hater of gold, the USA.
Where is your gold Germany?
Go Hang!

GVB's picture

Dear Mr. Weidmann. Merry christmas. Ben B.

Xibalba's picture

Good thing the price keeps going down.  Sooner or later someone will panic sell 700 tons of physical and bail out the system...or so the logic goes. 

Antifaschistische's picture

and the Chinese raise you a ton..


but I have a question I'm sure some ZH'er fully understands.   These freaking "We Buy Gold" retail operations have popped up all over the place in the last 4 years.  There's even one in my grocery store.   They buy....they do NOT sell.

Where is this gold going?  What money is behind all these operations to vacuum up American gold from the crevices of society?   Is it the Chinese or the Fed?  Or...someone else?

Have Americans been dropped into the giant economic sluice box?  We don't want your dollars..but we'll take your gold thank you?

jaxville's picture

  I have been operating a gold and silver exchange for ten years now. I used to refine our scrap purchases and sell the resulting pure gold to goldsmiths. As our volume of scrap increased, we received far more than than we could sell to local goldsmiths. For the last eight or so years we have shipped our scrap to a refinery for processing. The gold we provide is ultimately turned into gold coins or bars at the mint.

 There are now "so called" refineries springing up that do little more than pour scrap gold into a dore bar then sell it to a wholesaler. XRF technology allows for accurate assays of such bars to be done quickly and without loss of material. Wholesalers can generally provide enough material to meet the minimum threshold amounts that major refineries will purchase. In the case of US scrap, much of it is being exported from Florida and sold to the Rand Refinery in South Afrika. The Rand Refinery, like most European refineries; is producing fine gold kilobars for the Asian market. They also produce the Krugerrands which are in great demand in Europe. The Rand refinery has a great deal of excess capacity as South Afrikan gold production has declined sharply.

 Many of the cash for gold operations you are now seeing will soon be going out of business. The low hanging fruit has been picked and regions with shops such as mine are forcing remaining ones to pay higher prices to the public. Lower volumes and higher buy prices are leading to many operators to close or focus on other things as margins are narrowed.

   My shop is in an mid sized city of about 100,000. Although our volumes are down we still ship a considerable amount of scrap to the refinery. We do sell bullion coins and bars and our sales still exceed our purchases by well over threefold. I am guessing you can extrapolate that to most other centres and will find that there are more than enough local buyers to offset what the community is loosing to scrap buyers. Nearly every city will have a coin dealer or two that offer bullion product. There are also the internet venders although they, like the local coin dealers; rarely have visible outdoor advertising the fact they sell glod bullion.




Buckaroo Banzai's picture

Thanks for the insightful commentary. When you say "We do sell bullion coins and bars and our sales still exceed our purchases by well over threefold" does that mean that even during the peak of the "Cash4gold" craze, you were selling more coins to customers than scrap you were buying? From all the advertising that the "Cash for gold" guys did, one got the impression that there was more scrap being bought from the public than coins getting sold to the public. What you wrote implies the opposite.

jaxville's picture

The issue is one of margins. Our scrap recovery has about an 18% margin whereas bullion sales is generally about 2%. Bullion sales have always exceeded scrap purchases. Because of the higher margins in scrap recovery it is what most newer vendors focus on. When you consider that some gold buyers pay as little as 33% of melt you can see why they don't want to do anything else. The lower margins in bullion sales mean less capital expendenture on advertising. Even though we only make about 2% on gold sales, our volumes make it a profitable trade.

DavidPierre's picture


Great info.

Merry Christmas to you and yours !



jaxville's picture

Merry Christmas David, to you and all the folks here at Zero Hedge

silvermail's picture

XRF technology NOT allows for accurate assays of any bars to be done quickly and without loss of material.

XRF technology allows for accurate assays only the surface of bars to a depth up to 8-10 microns.

jaxville's picture

If you are the one pouring the bar and know that it is a homogenous mix, XRF units are the cat's ass for quick and accurate tests. We have other tests as well for buying bullion across our counter. Counterfeit detection requires a plethora of tests especially if you don't want to destroy or damage the item being tested.

silvermail's picture

@ jaxville

Yes, I understand what you mean. Ultrasonic Tester of course will detects tungsten inside gold bar.
But I would like to ask you for advice:
How to check gold bullion or gold coin in the package without destroying this package?
I mean such a standard plastic package, what have  the certificate inside:

You open the package for tests of such products?
If yes, then how after this, do you sell these products with damaged packaging?

jaxville's picture

  Thats a tuff one. If we have an item in stock we can visually compare it with what is being offered, that will sometimes suffice. Generally we make an offer but is pending authenticating the bar or coin by removing it from the packaging. If the client doesn't like that, he or she can call it a day.A lot can be hidden by packaging, especially on slabbed coins.


  My suggestion is to to be extremely knowledgable about the item you are considering. Most counterfeits can be detected by a visual examination. If you have any doubts or concerns about the product, don't buy it unless you can closely examine it first. As a dealer I would have no qualms about a customer removing a product from packaging as long as he or she had agreed to buy it once authenticated.


  We have no problem selling a bar that has been removed from it's packaging.. Our clients know that we have closely scrutinized it and that it is authentic. As counterfeiting becomes more ubiquitous, any dealer buying your bar will likely want to remove it from it's packaging. Graded coins are a little more problematic as a goodly portion of their value is based on the grade assigned on the packaging and there is no guarantee it will get the same grade when resubmited.



TheAntiGov's picture

Good luck Germany in getting your gold before the system collapses.

JLee2027's picture

Paper Gold doesn't bounce too well.

PR Guy's picture



This is what happens 'When Big Projects Go Bad' ;-)




22winmag's picture

Lie down with dogs... get fleas.

Soda Popinski's picture

Everyone knows HSBC is having the gold protected by Smaug in Erabor.  The German dwarves are trying to reclaim it.  They are up against fire breathing dragon bankers.  Good luck getting your gold back Deutschland.

D7z's picture

Wo ist unser Gold?

Guess most of it is long gone(sold) anyway...

Colonel Klink's picture

It's been Rehymiepothicated 92 times over.  Good luck getting your phyzz back!

I believe Clinton shystered China out of several billion dollars of physical silver, only to repay them with paper.

EDIT:  Since everyone like links for assertions: http://jessescrossroadscafe.blogspot.com/2011/01/explanation-of-china-si...

Frank N. Beans's picture

"a paltry 37 tons of gold..."

I mean what can one do with 37 tons of gold, right?


Xibalba's picture

Not issue a backed, stable, currency.  If that's what you mean. 

Panafrican Funktron Robot's picture

It would actually be very easy to have a currency backed by 37 tonnes of gold, even if the underlying economy was, say, $14 trillion in USD value.  Simply set the USD exchange value of that gold at $378 billion per tonne.  

"Yeah, but the price is $1200/oz, this wouldn't work!!!"

No, it's not, and yes it would, dipshit.

Yancey Ward's picture

You guys- there are real technical issues in moving 700 tons of material in less than 10 years from New York and Paris to Frankfurt.  Sheesh!!!

icanhasbailout's picture

in a boating accident... just like all my gold and guns too... very common problem I hear

Panafrican Funktron Robot's picture

If you believe the official explanations of how "eligible" and "registered" gold works for the Comex (eligible = stored at the depository facility, but not available for physical settlement; registered = stored at the depository facility, and available for physical settlement), it would stand to reason that the sharp reduction in registered stocks is due purely to price dislocation, ie., at current spot price, the big holders of physical gold are unwilling to part with said gold, under the expectation of a significantly better spot price in the future.  

It is worth noting that the registered stocks are at a level where if a mere $100 mln is deployed with a demand of physical settlement, the Comex gold market would break.  That is a pretty miniscule amount.

Main point:  even if you believe the mainstream explanations regarding the gold futures market, the Comex gold exchange is on the verge of default, because the price is bullshit.  

Colonel Klink's picture

It's tradition of Central banks.  Baffle'm with bullshit!