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Repatriation Of Gold From Fed Suggests Historic Vote Of No Confidence
Submitted by Seth Mason via Solidus.Center blog,
Since 2012, there’s been an unprecedented call from foreign nations to repatriate their gold from Federal Reserve vaults in the U.S. This is an incredible development given many countries’ 71-year reliance on the Fed as a custodian for their bullion. Over the last few years, countries including, but not limited to, Germany, the Netherlands, France, Belgium, Austria, Poland, Ecuador, Finland, Switzerland, Venezuela, and Romania have either formally requested repatriation of their gold or are in discussions with the Fed about it. Some of these nations, mind you, have held more than 50% of their entire reserves of bullion in the U.S. since 1944, when the Dollar became the world’s reserve currency.
Something huge must of happened in the last few years to prompt such action. That something may be a break in foreign gold holders’ trust in the Fed as a custodian of their precious metals.
There’s evidence that, in recent years, the Fed has been leveraging some of its foreign gold holdings to lower skyrocketing gold prices as part of its grand scheme to “engineer” an economic recovery from the 2008 Financial Crisis. This is to be expected. After all, the Fed has spent the past 7 years throwing everything but the kitchen sink at the chronically-ill American economy and its epidemic of long-term unemployment and underemployment: It’s bailed out the Too Big to Fail banks to the tune of $14 trillion. It’s printed more than $4.2 trillion. It’s crushed down interest rates to zero and has kept them there. Naturally, the good people at the Eccles Building would include leveraging their foreign gold holdings in their campaign to prop up the economy. After all, high gold prices are a proxy for fears about the future of the economy, and prices reached generational highs in late summer 2011–3.5 years into the Fed’s post-crisis “recovery”.
(Interestingly, gold prices began their long journey downward from their summer 2011 peak just after the Economic Cycle Research Institute called a double dip recession and the Bureau of Economic Analysis–if you believe government data–reported that we narrowly missed a second recession due to GDP growth hovering just above zero.) Gold prices are supposed to rise when economic data are bad!
So, if the Fed has been leveraging its foreign gold holdings in order to lower the price of bullion, it’s quite possible that it simply doesn’t have in its possession the amount of foreign gold it should. Again, this isn’t a stretch. In fact, it’s Occam’s Razor: Hypothecation is a common practice in the precious metals world, and, recently, the Fed has been flat-out refusing foreign nations from auditing their gold and will only return large holdings on installment plans.
Pretty suspicious behavior, particularly given the long history of foreign nations continuing to store their gold in Fed vaults during times in which repatriation would have made more sense.
Consider the following:
The Fed became a popular custodian of foreign gold during World War II, when threats of appropriation of valuable assets by invading empires were an unfortunate reality in much of the Allied world. In 1944, through the Bretton Woods Agreement, much of the globe came to the consensus that the U.S. Dollar would become the world’s de facto reserve currency and that the Dollar would be backed by foreign and domestic gold physically held by the Fed.
Then, in 1971, Bretton Woods was repealed, and the Dollar was decoupled from gold. One would think that the foreign nations that held gold at the Fed would have recalled much of their bullion at this time. Not only was the gold not needed to back the world’s reserve currency any more, but the threat of appropriation by foreign empires had diminished significantly. Three decades had passed since WWII, the Khrushchev Era of the Cold War had ended years earlier, and the West had begun to develop diplomatic and trade relations with the Soviet Union and China. But, despite these favorable conditions for repatriation, few nations called for it. It wasn’t worth the cost or effort: The price of gold at the time was at an inflation-adjusted 20th Century low of $210. (2015 dollars – See chart at end of article. Prices likely higher due to use of Bureau of Labor Statistics data, whose methodology has been altered several times to discount inflation.)
But the financial incentives for repatriation significantly improved by the end of the 1970s, to say the least. By January 1980, with the Fed’s home country mired in stagflation and shocked by an oil crisis, the price of gold skyrocketed to an all-time record inflation-adjusted high of $2100 (a record that remains today, even after the Financial Crisis). Decades removed from the threats of appropriation of WWII and early Cold War-era empires, the late ’70s and early ’80s would have been a great time to repatriate bullion from the Fed. But there were simply few calls.
More astonishingly, there were few calls for repatriation in the early 2000s, when Alan Greenspan’s post-tech bubble recession and Al-Qaeda’s devastating attacks on the world’s then-largest financial complex–LOCATED JUST BLOCKS FROM WHERE THE FED WAS HOLDING THE GOLD–sent bullion prices skyrocketing. If there were an ideal time for mass calls of repatriation, it was then. But the calls just didn’t come.
Nor did they during the 2008 Financial Crisis, an event which plunged the U.S. into its worst recession since the Great Depression and sent gold prices skyrocketing again…after a 10 year run-up since Greenspan’s tech bubble. Nor did they come when it appeared that Greece’s collapse was imminent and was going to jeopardize the future of the EU. Nor did they come when it appeared that the U.S. was going to go over the Fiscal Cliff.
No, they’ve only come recently, during a period of time in which the possibility that the Fed has been depressing gold prices has come to light and in which the Fed has been suspiciously prohibiting foreign nations from auditing their gold.
(Click to enlarge chart.)
Given all of this history, the recent massive calls for repatriation suggest that foreign gold holders have lost trust in the Fed as a custodian of their precious metals.
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sure, there's gold in there! why would you want to see it anyway?
People saw that the emperor had no clothes... In this case the emperor had no gold. POOF! aaannnddd, its gone!
" Something huge must of happened "
Nope. Something is GOING to happen fairly soon. There are a few financial leaders out there who must read ZH.
Yep, fuck those assholes!!!
How many do you need to screw in a light bulb?
All of them, ,unless it meant for a screwing up the anus.
One and fucking done.
Fuck those assholes!!!
I wish this article would have been less vague and listed what countries are known to have asked for their gold and how much each country had requested. It would lend credibility to the story.
It did and even though everyone was watching, nobody saw it.
https://www.google.com/?gws_rd=ssl#q=12%2F21%2F2012
My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can't believe how easy it was once I tried it out. This is what I do... www.jobs-review.com
Anyone who thinks the dollar is the cleanest dirty shirt is chowing on Janet Yellens dollar muff.
Dirty bastard. Even for Spitzer.
TRUST
the only true currency
I'm sure they have a receipt for very bar that's been "loaned" out.
Just try and get them back, LOL
Cue flase flag nuke attack in NYC
Fed says "Well we DO have your gold, but, it's under 90 feet of water and radioactive, so sorry!"
They're a little late for that. Maybe when there's nothing left as a cover, but you'd think they'd prefer to keep the gold and lie about it.
Nice to hear the rotten FED is coming under attack from different parties. Be equally amusing to hear Sodomy Arabia pleading with the UK for their own PM's ( sorry you'll have to come back later i'm doing the dishes, comes to mind ).
Meanwhile ISIL ( IciaIL ) have opened their first hotel in Iraq.
Must adhere to sharia law ( sounds like a prison already ) but promises 5 star entertainment probably in the form of beheading's.
" Something huge must of happened "
I can't continue reading an article when I see this. There's just no way.
Who says the straw that breaks the camel's back is huge?
The motivation not to remove gold from the NY FED is very straightforward, especially in times of crisis. If you call William Dudley and ask for your gold, he will most likely threaten to close your QE-matic® account if he has to close your gold account. There's no need to even involve the little Oompa Loompa Chairman or have Loretta Lynch threaten to lynch local branches or your banks. The nominal amount of fiat aid that the FED passed around during the last crisis was larger than the market value of the entire world's gold supply.
Long tungsten.
What does chuck Norris have to say about this?
Chuck Norris is the reason Waldo is hiding?
His beard gave birth to the Legend of the Golden Fleece?
This is strictly what-if:
Wouldn't it be interesting IF the Fed did sell a great deal of foreign owned gold, shipped that gold to the new buyer without removing identifying marks on the gold because the buyer promised to melt the gold down. But the buyer of that gold realized this gold was held by country X. Then, the new buyer of the gold went to the old owner of the gold and handed a bar or two over as, say, a Christmas present. And the old owner of the gold realized the gold was sold by the Fed without their permission.
And then the old owner of the gold went to other countries and told the other countries what had happened. And the new buyer gave out many more gifts that Christmas.
Interesting, but only a what-if.
Edit: OR
New buyer obtained a list of identifying marks a country has on gold held by the Fed. So New Buyer has a bunch of bars made with those identifying marks, then goes to a country and makes a present of the bars.
Country has a fit and goes to the Fed demanding an audit. Meanwhile, New Buyer is busy. Fed stops allowing audits, there are so many demands.
This game of Reputation and War is fun.
The FED and the US continue to lose it. Crumbling empire.
there is gold in a gold mine, too ...so they say. perhaps there is an opening to the shaft of a gold mine behind the doors of the fed vaults, I am sure that would satisfy the germans. greedy germans, anyway, ...for even asking.
Gold is irrelevant in modern monetary policy – maybe the foreign gold owners just don’t trust the USA regime to NOT sell or loan-out other people’s gold.
You know, when the century turned over 15 years ago, a GREAT EVENT must have taken place. Apparently someone took out a revolver, fired two bullets, and mortally wounded TRUTH and HONESTY. And now for the rest of the 21'st Century, these two Guys are stone cold dead.
Let's go to defintions ...
A CUSTODIAN:- A person entrusted with the custody or care of something or someone
WOW!! Someone entrusted to do something right. A person put in a position of TRUST.
How on Earth can the Fed insist on KEEPING peoples' gold, if the Fed is a "CUSTODIAN" ???
Sorry Mr. Fed, apparently you have the wrong job description. If you wish to mind peoples' gold, but NOT give it back, you need to put the words "BANK ROBBER" on your desk. Give yourself an accurate job description!
if there's one good case for the fed raising interest rates suddenly and to dramatic effect---it is the fact that this was previously done in the 80's to deal with the 70s.
could it happen? yea, its happened before.
is it likely to happen . no.
I think this is less a no confidence vote and more an indication we're moving into the every man for himself phase, e.g. cohesion among central banks is breaking down.
Thank the Bernank.
Maybe he'll splain it in the blog.
He's looking for better comment moderators , a little bird told me.
Tyler....English dude......must HAVE happened or must've happened....not must "of" happened.
Thanks for caring
Sorry...guess that comment was for Seth...the author.
Get it instead from The Bank of Hawaii,they apparently got lots and lots of it...
http://www.silverdoctors.com/dollar-valueless-about-to-crash-170000-tons...
https://www.youtube.com/watch?v=_8sMMjpVUak
Imagine the inflation adjusted gold price if they used a real inflation numbers?
".....and Al-Qaeda’s devastating attacks on the world’s then-largest financial complex–LOCATED JUST BLOCKS FROM WHERE THE FED WAS HOLDING THE GOLD......"
If he thinks "Al-Qaeda" is respnsible for 9/11, he is not relevant. I stopped reading right there.
Foolish countries trusting the Federal Reserve with their gold. When does this whole damn thing come to an end?
"Al-Qaeda’s devastating attacks on the world’s then-largest financial complex"
Yeah, okay.
Perhaps they just became aware of what the FED actually is, previously they were just happily totally oblivious to its origins and private ownership and manipulation mechanisms and relentless deliberate usurpation of control of the entire US treasury market, legislative chambers, and State finances, and USD itself?
Would you leave your gold (or anything else valuable) in the hands of that pack of scheming banking-criminal rat bastards?
That might do it.
http://i.imgur.com/gSmVoiE.png
Dumb and Dumber IOUs ^^^
This is the second time ZH has used a chart from my site without any attribution whatsoever. For the record, the chart in this article came from: http://www.macrotrends.net/1333/historical-gold-prices-100-year-chart.
I like what these guys write for the most part but outright plagiarism is freaking lame. It is beyond me what the motivation is to not provide a backlink to the original source...
Did you construct it or is it from LBMA?
The data is from the LBMA but the code for the interactive charts and the inflation-adjustments etc... are all custom written. Heck, all of the data on the site is publicly available...the tough part is turning it into something useful. Clearly he didn't want to spend the time to go to to the LBMA, register for data download, download CPI data from the BLS, put all of it into excel and build his own chart....just got lazy and stole mine.
Well, the author is Seth Mason from Solidus center. You might want to remind him there as well.
Also helps if you stamped a little "source: xxx, compiled by: xxx" to your charts, just to sign your work so credit goes to where credit's due automatically if others borrow it.
Thank you for that chart. I actually made it my desktop background so I can ponder it for the next few days.
Great charts!
I really don't understand the "Economy addicted to debt"
We didn't write off that much debt did we?
http://www.macrotrends.net/1301/an-economy-addicted-to-debt
The Rothschilds are bringing it closer to home.
Great charts!
I really don't understand the "Economy addicted to debt"
We didn't write off that much debt did we?
http://www.macrotrends.net/1301/an-economy-addicted-to-debt
That one actually shows the 5 year growth in debt and GDP, so by late 2013 the debt growth over 5 years actually turned negative for a brief time as the increase in new Government debt couldn't keep up with the destruction in mortgage, corporate and ABS credit.
A good article.
I disagree with this bit though
Then, in 1971, Bretton Woods was repealed, and the Dollar was decoupled from gold. One would think that the foreign nations that held gold at the Fed would have recalled much of their bullion at this time. Not only was the gold not needed to back the world’s reserve currency any more, but the threat of appropriation by foreign empires had diminished significantly. Three decades had passed since WWII, the Khrushchev Era of the Cold War had ended years earlier, and the West had begun to develop diplomatic and trade relations with the Soviet Union and China. But, despite these favorable conditions for repatriation, few nations called for it. It wasn’t worth the cost or effort
Until the early 1990's the threat posed by the USSR to central and western Europe was real. Given that the Soviets removed physical assets from the territories it captured between 1943-1945, it made sense for sovereign European nations to continue to store their gold in the USA up to the time when the threat from the USSR had ceased in the early 1990's.
"Lost trust"? I have no idea why any nation would have trusted the US with its gold reserves to begin with. Don't they know that letting a hyena have possession of the bones of your treasury is stupid thing to do? It is very obvious to me that the so called trustee used gold that was not their\s to use in effect the US defrauded all those nations that had trusted it. This fraudulent activity is so American that it makes me laugh at the foolish nievety of foreign leaders.