Is Greece About To "Lose" Its Gold Again?

Tyler Durden's picture

When it comes to the topic of Greece, most pundits focus on two items: i) when will Greece finally run out of confiscated cash, and ii) will Greece fold to the Troika (and agree to another bailout(s) with even more austerity) or to Russia (and agree to the passage of the Russian Turkish Stream pipeline, potentially exiting NATO and becoming the most important European satellite of the USSR 2.0) once that moment arrives.

And yet what everyone appears to be forgetting is a nuanced clause buried deep in the term sheet of the second Greek bailout: a bailout whose terms will be ultimately reneged upon if and when Greece defaults on its debt to the Troika (either in or out of the Eurozone). Recall that as per our report from February 2012, in addition to losing its sovereignty years ago, Greece also lost something far more important. It's gold:

To wit:

Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal.

The "new deal"referred to is the Second Greek Bailout, which either will be extended and lead to a third (and fourth, and fifth bailout, each with every more draconian terms until finally Greece does default), or will collapse at which point the Troika will indeed have the right to seize the Greek gold reserves.

What makes this case particularly curious, however, is that it won't be the first time Greece will have "lost" its gold. In The Tower of Basel, citing the BIS archive from Febriary 9, 1931, Adam LeBor writes:

In February 1931, Gates McGarrah, the [BIS’s] American president, wrote to H. C. F. Finlayson, in Athens, asking about the Bank of Greece’s gold. Finlayson, a former British financial attaché in Berlin, was now an adviser to the Bank of Greece. Some of the Greek bank’s gold may have gone missing. Rather like nowadays, it seemed the accounting at the Bank of Greece left something to be desired. “What has ever happened to the gold of the Bank of Greece, some of which you thought might be left in our custody in Paris or elsewhere?” inquired McGarrah, who, as the president of the BIS might have been expected to know what it held and where. It might, McGarrah suggested, be a good time to find the Greek gold and place it with the BIS.


The BIS, wrote McGarrah, could give the Bank of Greece “all sorts of facilities, rather greater than those of a local Central Bank.” For example, if the Bank of Greece held gold at the Bank of France and wanted to buy another currency, it first had to buy francs from the Bank of France. The Bank of Greece then converted the francs to the second currency, with all the usual losses of exchange rates and commissions. However, if the Bank of Greece held gold at the Bank of France in the name of the BIS, the BIS could “give the Bank of Greece any currency it desires at any time and can fix an agreed rate without going through the actual exchange operation.” And, the BIS did not charge any commission.

And all Greece would need to do to get these copious and generous "benefits"would be to hand over its gold to the Bank of International Settlements. Of course, it would have to find it first...

But most importantly, and what ties everything together is that other historic event which took place in 1931.

For those who may not be gold history buffs, this is what happened: in September of that year the Bank of England decided to formally (and for the final time) abandon the gold standard. And, as the chart below first posted on Zero Hedge many years ago, that decision, coupled with the great depression and the loss of confidence in the pound, ultimately ended the reserve status of the British currency, ushering the reserve currency status of the US Dollar.


A few months ago, when the Minutes from the Bank of England's court were published for the first time in January, we learned precisely what happened months after the BIS casually inquired about the lost Greek gold. The Telegraph summarized it as follows:

At the time, sterling was pegged to bullion. This meant that the pound was worth a fixed amount compared to other currencies and gold itself. In order to ensure that sterling retained its value, the Bank of England was obligated to exchange gold for pounds at the specified rate. 


However, as political turmoil engulfed the UK, the country’s first national government – a coalition between Labour and the Conservatives – presided over a budget crisis that triggered a run on the pound.


Minutes from the Bank’s court in 1931, published on Wednesday, detailed how foreign exchange reserves were being drained to such an extent that the gold standard had to be abandoned. 


Up to that point, the gold standard had been preserved by loans from the Federal Reserve and the French central bank, with the Bank’s bullion reserves used as collateral. But Threadneedle Street decided in September that its reserves would run dry if New York and Paris withdrew support.  Ernest Harvey, the Bank’s deputy governor at the time, wrote to Ramsay MacDonald, the prime minister, and Philip Snowden, the chancellor, on September 19, 1931, saying that reserves worth more than £100m were close to running out.


Mr Harvey wrote: “I am directed to state that the credits for $125,000,000 and Fcs 3,100,000,000 arranged by the Bank of England in New York and Paris respectively, are exhausted, and that the credit for $200,000,000 arranged in New York by His Majesty’s Government, together with credits for a total of Fcs 5 milliards [5bn] negotiated in Paris, are practically exhausted also." “The heavy demands for exchange on New York and Paris still continue. In addition the Bank are being subjected to a drain of gold for Holland.


“Under these circumstances, the Bank consider that, having regard to the above commitments and to contingencies that may arise, it would be impossible for them to meet the demands for gold with which they would be faced on withdrawal of support from the New York and Paris exchanges.


“The Bank therefore feel it their duty to represent that, in their opinion, it is expedient in the national interest that they should be relieved of their obligation to sell gold under the provisions of [the Gold Standard Act 1925].”

In other words, the Bank of England became insolvent in hard money terms, and was forced to back the currency with nothing but its "faith and credit." No wonder at that moment the sun had set on the British Pound.

40 years later, Nixon finally did the same with the US Dollar (but not before FDR confiscated all gold as the US also devalued its currency by 40% in "hard money terms" on January 30, 1934 with the Gold Reserve Act), but in the absence of any gold-backed currency to arise (oh, hi Beijing), the dollar still remains the one-eyed king in the land of blind fiat.

Still, one wonders: the last time Greek gold was "lost" a historic event for the world's reserve currencie took place. Is Greek gold about to be "lost" once more, and will monetary history rhyme?

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Tinky's picture

Hoo boy. When the public finally wakes up to the significance of the distinction between collateral and "good" collateral, the howls of dismay well resonate far and wide.

7.62x54r's picture

What the fuck else do they have in collateral? The peasants won't pay tax, so they are screwed.

I wouldn't lend them a thin dime unless the loan was collateralized with gold held in escrow ( and certainly not gold held in Greece ).

Manthong's picture

yeah, right, like after the last 40 years of kleptocracy there, they any Au left.

smlbizman's picture

this will shed a little more lite on 1931 and the gold confiscation

Wolferl's picture

Throw those pathetic Greeks out of Europe already.

cnmcdee's picture

They can divide the gold between the people now or let Blackwater take it by force in 6 months to a year after *another* color revolution.. like they did in the Ukraine or Libya (90 tons).. If the people in the greek government have even half a brain get that gole out! of the central bank vault now!!

If the Ukraine just inked a deal with Putin for a pipeline when US interests are heavy in the Israeli Leviathan gas pipeline I can garantee they are already in country setting up for mass riots but probably on standby to see if the EU stick thrashing against the Greek government will be productive ..

Sure they do not pay there taxes nor there debts but nobody should be lending governments money anyways.. It is like lending heroin to a drug addict and expecting them to pay it back??!!! Seriously!??

Excursionist's picture

A fool and his gold are soon parted.

And the Greeks have been beyond foolish the past half century or so.  You can blame bankers, industrial moneyed interests, trans-national organizations, Illuminati or whatever boogeyman suits your conspiratiorial need.  But ultimately it is the average Greek voter on the street who has to just look herself in the mirror.

An engaged, informed voting public versed in the Austrian school of thought would not have let its country devolve to such a pitiful state.


indygo55's picture

Really! I want a full audit and purity check. I want photos and numbers. Its easy to do and its the only way to know.


DonutBoy's picture

Funny how the big boys want the gold after trying to tell all the little guys they're idiots for buying it.

Sudden Debt's picture


If the public where to realize how low all the countries gold reserves are and what the actual meaning of gold is they’d all panick.

But all countries have made a pact and that pact says to store the gold and hide it so there may never be any monetary use for it.


All these morons do these days is mock the fact that other people lose their jobs and they cheer for others misfortune because it makes them feel less as a loser they are.

Our economies will implode but gold won’t ever be a rescue. It can only be a personal safeguard of wealth. To take your wealth to the Next economy. Don’t buy it as a investment because that’s not what gold was used for. 

And there will be a very very short time when gold will increase in value so much it will be mindbogling but greed will prevent anybody from selling. And when they do sell, the fiat will have lost so much value it will only be worth what it’s worth now. But you’ll be of the few who will still own anything.

WhackoWarner's picture

At some point the little gold holders will sell. To maintain some life beyond homelessness.  Advice years ago was sell when oz.= Dow.

That would be $17K at the moment.  I think the number is not important.  It is buying power.


Oh please excuse Dow went over 18K when I blinked.








SubjectivObject's picture

Be prepared for the right asset at the right time to make the right trade

mvsjcl's picture

Where, oh where, is all the world's missing gold?

indygo55's picture

Yup. you need to find the right NEXT asset. One goes up and another goes down. Timing is crucial. I heard a story of a bell boy in Germany who bought the whole hotel for a few ounces of gold during the Weimar debacle.


Tarzan's picture

When the NWO has reduced every human to a number and dictates how you buy and sell, through an international digital currency tied to your identity, our gold and silver will only be useful on the black market. 

The ship is being sunk on purpose folks.

Kirk2NCC1701's picture

I hear that boating and gold don't mix, and that Greeks are about to increase their boating/fishing activities.

Manthong's picture

A particularly nasty concept from that old Bond movie..

I wonder if a pubescent Hitlery had anything to do with it.

Manthong's picture

move that sled jig on the laser saw another meter and THEY will be gone.

Bankster Kibble's picture

There's "lost" and then there's "lost."  What if the bullion gets moved to another floor/building/city?  Just to let the cleaning lady mop up the vault, you understand.

lordbyroniv's picture

fuck everyone


so disgusted by our species

Fukushima Fricassee's picture
Fukushima Fricassee (not verified) lordbyroniv Apr 25, 2015 3:47 PM

You are disgusting, agreed.

Seasmoke's picture

Why does everyone seem to want this metal, that just goes down in price ????

7.62x54r's picture

It's taking a while for the peasants to realize the price in fiat is being manipulated down, and the stuff is fucking on sale.

Meanwhile, those peasants are buying stocks and bonds that smart people are bailing the fuck out of.

mvsjcl's picture

Can you please point out those peasants who are buying stocks and bonds? Perhaps these stocks and bonds are being bought FOR them?

A82EBA's picture

that depends on which currency you're pricing it in  at the moment

Fukushima Fricassee's picture
Fukushima Fricassee (not verified) Apr 25, 2015 3:46 PM

Until this shit collapses no good can exist no justice will be found and no peace can begin. The sociopathic monster bastards are currently in control. US ponzi scheme runs while  EBT cards control the stupid slaves.

debtor of last resort's picture

In the end, there's only one. Greeks: take YOUR gold and start your own state. Name it GREECE.

7.62x54r's picture

Yea, that would be the smart move. Bail out of the EU, declare default, base the Drachma on gold, and institute austerity measures to stay within budget.

But they can't do that. They were elected on a bread and circuses socialist platform, so they will ride this plane into the crater, and blame the rest of the EU.

debtor of last resort's picture

THEY are irrelevant. As is the euro(zone). I'm talking to the citizens.

glenlloyd's picture

That sounds a lot like what .gov helped GM do to bond holders. Take the good assets and go start another company called GM.


Hail Spode's picture

So much trouble to get ahold of a barbarous relic. It is almost as if the ruling class had a different view of gold than the one which their compliant media organs routinely expouse.

Soul Glow's picture

If anyone wants to question b the reasons from everything to gold price manipulation or the justification of war look no further than the tactics used by the power elite to confiscate gold.  If a nation-state defaults on a loan from the IMF, their resources (minerals especially) are used as collateral.  If a nation-state questions the petro-dollar financial system war is declared against them and their gold confiscated accordingly.

The bankers want gold first and foremost, they always have and they always will.

Bay of Pigs's picture

Iraq, Libya, Ukraine and now Greece's gold is taken away.

Pretty clear pattern going on here...

Soul Glow's picture

Did they take Cyprus' gold or just loot the unallocated accounts?  I can't remember....

tony wilson and saturn zion devils's picture
tony wilson and saturn zion devils (not verified) Apr 25, 2015 4:07 PM

i mete churchill many years ago.
at the astor rothschild family home cliveden near maidenheads.
victor rothschilds who ran mi5 at the time was out of his skull so was adolf sorry winstone.
herr churchill was in a very bolshy mood as earlier i had asked him about galipoli and the filthy traitorious turk.

the battle one of hundreds of failures during young and old winstones life was really cataclisimic
he flatly told me in a monotone that the galipoli campaign was a massive success and never before in human contricks had so many goy been slaughtered for the benifits of so few already.
one would have to assume he was looking at it from a goy population control problem reaction solution that or some blood soaked talmudick masonic rituals.

later victor provided the great british american man with some cohiba cuban cigar and a child to rape and slaughter.

cliveden was such fun in those days.
pimms on the lawn cucumber sandwich and the begging and howls of the kinder childrens .

tarabel's picture



Back to the Jew, Jew, Jew broken record thing, I see.

The Duke of New York A No.1's picture

Hide the Gold before the Troika get there!!!!!

Bill of Rights's picture

Proof once again, those who hold the gold makes the rules.

exartizo's picture

Bravo Tylers! ... a particularly fun and ironic page turner still to be played out no doubt.

DutchBoy2015's picture
DutchBoy2015 (not verified) Apr 25, 2015 4:36 PM

Remember Keiser and his  ''Buy Silver , Crash JP Morgan''?

Well instead of stacking I sold all my silver at that time when it was 40 bucks  ROFLMAO