Austria Confirms Faith In Fiat Fading: Repatriates 110 Tons Of Gold From BOE

Tyler Durden's picture

Six months ago we warned that Austria was considering it, and now, as Kronen-Zeitung reports, with no rigged Swiss-like referendum required, Austrian Central Bank Governor, and the person many claim is in Mario Draghi's inner circle of trust (soon to be revised) Edwald Nowotny has committed to repatriating 110 tonnes of gold. This is part of Nowotny's new "gold strategy" and with his position (on paper) as one of Draghi's foremost lieutenants, appears to be a big stab in the back for super money printing Mario. 

While gold withdrawals from the NY Fed have been incessant over the past year...

 

... this time it appears the Bank of England faces the trust-fall as 80% of Vienna's gold is held there.

+

 

  • CENTRAL BANK TO BRING MOST GOLD RESERVES BACK TO AUSTRIA: KRONE
  • KRONEN-ZEITUNG REPORTS ON AUSTRIAN CENTRAL BANK'S GOLD PLANS
  • AUSTRIA TO TRANSPORT 110 TONNES GOLD BACK TO AUSTRIA: KRONE

Austrian central bank plans to keep 50% of its gold reserves in Austria vs 17% now, Kronen-Zeitung reports, citing governor Ewald Nowotny’s unpublished new “gold strategy.” Bloomberg adds,

  • 30% of gold reserves to be kept in U.K., down from 80% now
  • 20% to be kept in Switzerland vs ~3% now
  • Intention is “risk diversification:” Krone

Overall, Austria has 280 tonnes of gold reserves, according to central bank’s 2013 annual report.

As Kronen-Zeitung reports,

For the population that is good news, because polls show that this corresponds to the wishes of the majority.

 

Since 2007, no gold has been sold, and also according to the Central Bank's new strategy, this "emergency reserve" will not be touched.

Following the repatriation, Austria will have at least half of its gold located on its own territory, with gold held at Threadneedle Street tumbling from 80% of total to just 30%, with the remaining 20% will be held in Switzerland. According to Krone, the 110 repatriated tons will be "transferred back" in small tranches over the coming months.

So to summarize: so far the following recent gold repatriations have taken place:

As for what this ever more aggressive scramble by official monetary authorities to repatirate their gold means, we hardly need to comment what that means for the future of "non-6000 year old, non-traditional" fiat currencies.

 

So why is Austria engaging in a move that will be seen as merely the latest slap in the face of a crumbling fiat regime? "Risk diversification" accordig to Krone, which also adds that "that is good news for the Austrian population, because polls show that this corresponds to the wishes of the majority." After all, Krone adds, "the German Bundesbank - in late 2013 - decided to bring half of its gold reserves to Frankfurt, the rest remains in New York and in London."

But what "risk" is there to diversify? After all there is a saying: "As safe as the Bank of England." Well, as a reminder - this is what happens when you hand your gold over to The Bank of England for "safekeeping"...

 

“The Bank for International Settlements is the bank which sanctions the most notorious outrage of this generation— the rape of Czechoslovakia.”

      — George Strauss, Labor MP, speaking in the House of Commons, May 1939

 
 

“the Bank for International Settlements should be liquidated before it
furnished any more sinews of war to Germany, and that the odd
relationship between the British government and the Bank of England
should be re-examined without delay.”

      — “Sees British Hands Tied on Czech Gold,” New York Times, June 6, 1939

When Nazi Germany annexed the Czechoslovak border province of the Sudetenland in September 1938, it immediately absorbed a good part of the country’s banking system as well as most of Czechoslovakia’s strategic defenses. By then the country’s national bank had prudently transferred most of its gold abroad to two accounts at the Bank of England: one in the name of the BIS, and one in the name of the National Bank of Czechoslovakia itself. (Countries had deposited some of their gold reserves in a sub-account at the BIS account in London to ease gold sales and purchases.) Of the 94,772 kilograms of gold, only 6,337 kilograms remained in Prague. The security of the national gold was more than a monetary issue. The Czechoslovak reserves, like those of Republican Spain, were an expression of nationhood. Carved out of the remains of the Austro-Hungarian Empire in 1918, the Czechoslovak Republic was a new and fragile nation. A good part of the gold had been donated by the public in the country’s early years. Josef Malik, the governor of the national bank, and his fellow Czechs believed that, even as the Nazis’ dismembered their homeland, if the national gold was safe, then something of the country’s independence would endure.

They were wrong. The Czechoslovaks’ faith in the probity of the BIS and the Bank of England was tragically misplaced. The gold was sacrificed, with barely a second thought, to the needs of transnational finance and the Third Reich.

The Nazis’ first demand came in February 1939 when Berlin ordered Prague to transfer just over 14.5 metric tons of gold, supposedly to back the German currency now circulating in the Sudetenland. This was certainly an innovative idea— first invade a neighboring country, annex part of it, and then demand that the newly truncated state supply the gold to pay for the loss of its territory.

The following month the question became academic. On March 15 the Wehrmacht marched into Prague. The German protectorate of Bohemia and Moravia was declared, and Czechoslovakia no longer existed. But the gold reserves did. Three days later a Reichsbank official was dispatched to the National Bank of Czechoslovakia and  ordered the directors, under the threat of death, to issue two orders. Thanks to diligent detective work by Piet Clements, the BIS archivist, we have a clear picture of what happened next. The first order instructed the BIS to transfer the 23.1 metric tons of Czechoslovak gold held at the BIS account at the Bank of England to the Reichsbank BIS account, also held at the Bank of England. The second order instructed the Bank of England to transfer almost 27 metric tons of gold held in the National Bank of Czechoslovakia’s own account to the BIS’s gold account at the Bank of England.

Malik and his fellow directors hoped that it would be obvious that the instructions had been issued under duress and so would not be implemented. The Nazis had just invaded Czechoslovakia and would obviously target the national gold reserves. But Malik had not reckoned on Montagu Norman. The governor of the Bank of England had no interest in whether Czechoslovakia was free or a Nazi colony. “Political” considerations must not affect the BIS’s transactions. The transfer order, he said, must go through.

Meanwhile, in Basel, Johan Beyen, the Dutch president of the BIS, wavered. Beyen discussed the matter with the BIS’s legal adviser, Felix Weiser. But like Norman, Weiser took the most formalistic approach possible. As long as the paperwork was in order, the monies must go through. Weiser argued, somewhat bizarrely, that there could be no legal grounds to claim that the transfer order had been issued under duress, as such a plea could be brought before a Swiss court only by the persons who had acted under duress. Clearly, the directors of the National Bank of Czechoslovakia were unlikely to travel to Switzerland to present their case. Therefore any decision not to authorize the transfer would be one of BIS policy, rather than administration. The board of the BIS made policy. Thus Beyen would have to consult the board to stop the payment. (This was poor advice for another reason— under the terms of the BIS statutes the Swiss authorities anyway had no jurisdiction over gold transfers between states.)

Beyen was unwilling to take a decision without authorization. But who could he ask? The chairman of the BIS board, Sir Otto Niemeyer, of the Bank of England, was traveling to Egypt and so was incommunicado. At 6 p.m. on March 20, Roger Auboin, the bank’s general manager, told Beyen that the governor of the Bank of France had discussed the matter with London. The Bank of England and the Bank of France would not be taking any action to stop the transfer, because they felt that there were no grounds for action. The BIS transfer order went through.

With London, Paris, and Basel’s compliance, Nazi Germany had just looted 23.1 metric tons of gold without a shot being fired. More than two-thirds of that gold was traded with the Dutch and Belgian national banks and was eventually transported from Amsterdam and Brussels to the Reichsbank’s vaults in Berlin. Czechoslovakia’s diligent planning to safeguard its national gold reserves, together with its misplaced faith in the integrity of the new international financial system, had come to nothing. The second transfer order for the 27 metric tons held in the National Bank of Czechoslovakia’s own account at the Bank of England did not go through. Sir John Simon, the chancellor of the Exchequer, had instructed banks to block all Czechoslovak assets. But Czechoslovak gold held in a BIS account at the Bank of England, it seemed, was not defined as a national asset and was beyond the reach of UK laws.

Norman and Beyen’s decision caused despair and incomprehension in Prague and uproar in London. The loss of the Czechoslovak gold was all “Norman’s fault,” exclaimed the Daily Herald. Paul Einzig, of the Financial News, ran a stream of stories exposing the complicity of both the treasury and the Bank of England in the affair. Einzig demanded to know why the treasury had not stopped the transfer, as it was in clear violation of the law known as the Czechoslovakia Act. Brendan Bracken, a journalist and ally of Winston Churchill, declared in the House of Commons that “the Bank of England after what has happened may no longer be looked on as the safest place in the world and the phrase ‘Safe as the Bank of England’ may no longer apply.” Churchill himself demanded to know how the government could urge people to enlist in the military when it was “so butter-fingered that six million pounds of gold can be transferred to the Nazi government.”

The real villain of the affair was Norman. Beyen, who later served as Dutch foreign minister and as executive director of the International Monetary Fund, was an ineffectual bureaucrat, paralyzed by the idea that he might have to take responsibility for a decision. Norman could have stopped the transfer immediately. He was the governor of the Bank of England, which held the two BIS accounts involved. At the very least he could have asked for the transfer to be referred to the BIS board for a decision, which would also have been a face-saving measure. He chose not to do so. It was clear that war was coming, one that Britain would have to fight. The Nazi invasion of Czechoslovakia had destroyed the last hopes of peace. That country’s gold reserves, held in London, were now a British national security issue.

Yet Norman’s priority was not the best interests of his homeland, but rather the independence of his beloved BIS. Even as the shells were loaded into the German tanks, Norman still believed that for the bankers it could be business as usual. Nothing could interfere with the bankers’ sacred neutrality and gentlemanly trust in one other, not even the coming conflagration with a regime whose evil was now plain to see. The Bank of France had refused to stop the transfer but had also asked Norman to block it. Norman was adamant. There could be no political interference in the operations of the BIS, even, it seemed, when they were ordered at gunpoint.

Norman did not express any regret at all over the Czech gold transfer. In fact, he was positively indignant at the very idea that the British government might have some say in the bank’s actions. He wrote, “I can’t imagine any step more improper than to bring government into the current banking affairs of the BIS. I guess it would mean ruin. I imagine the Germans would never have paid any interest to the BIS, and at the board we would have then likely have found the Germans, Italians, and Japs standing together!” Norman then lied to Sir John Simon, the chancellor of the Exchequer, albeit with a very telling falsehood. Simon asked Norman if he could not have warned the government that, thanks to the BIS, Germany was about to acquire “large additional financial strength.” Norman told Simon that while the Bank of England held gold for the BIS, it did not know if the gold was actually owned by the BIS or was held by the BIS for other central banks. This was untrue, as Norman later admitted. Norman then made a significant, even shocking, admission. He told Simon that “he was very doubtful that he would have thought it his duty, as Director of the BIS, to make a statement about its transactions to the British government.”

Norman even wrote to Beyen to clarify the matter and to assure the BIS president where his ultimate loyalties lay in Basel. Norman did not want to publicly correct the minutiae of what was being reported in the press and Hansard, the British parliamentary journal— that the Bank of England did not know whose gold was held in the BIS accounts— as that would expose him. “The difficulty is that if I point out to the Treasury that this is incorrect, I lay myself open to being asked details of BIS transactions, which I do not consider the Treasury are entitled to know.”  This was little short of treason. As Norman’s compatriots were enlisting in the military, preparing to risk their lives for the freedoms and luxury that he enjoyed, as his country prepared for the war against the Nazis that all knew was coming, Norman blithely announced that his primary loyalty was not to Britain, but to a hyper-privileged, international bank that was not even a decade old.

The mistake of Malik, the director of the National Bank of Czechoslovakia, was to believe that either Norman, Beyen, or indeed any of the BIS management could conceive of any moral or political dimension to their decisions. The world’s most powerful international bankers were not only unwilling to obstruct the Nazi seizure of Czechoslovak— or Austrian— assets. They simply could not conceive of any reason why they should do so. As long as the formalities were observed, the necessary papers were stamped and the gold was re-assigned. Norman’s precious independence for both the Bank of England and the BIS had been bought at a high price— in mountains of gold ingots to pay for steel to build bombs that would soon rain down on London.

* * * * *

... the affair had highlighted the deeply unsettling connections between the Bank of England, the British government, and the BIS. There was a good deal of cross-party feeling in Britain, reported the New York Times, that “the Bank for International Settlements should be liquidated before it furnished any more sinews of war to Germany, and that the odd relationship between the British government and the Bank of England should be re-examined without delay.”  The New York Times then was able to assume that its readers would understand a classical allusion. The word “sinews” was a reference to an epithet of Cicero, the Roman philosopher, who had said, “The sinews of war are infinite money.” Cicero’s observation was as prescient then as during the late 1930s. But those who wanted the BIS to be liquidated were too late. Thanks to the BIS the “sinews of war” and the flow of near-infinite money were about to be immeasurably strengthened.

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TeamDepends's picture

Trust but grab back that stack!

knukles's picture

Quick! 
Who's got 110 tons?
We'll invade them and .....

ParkAveFlasher's picture

Barbarians and their relics, they never learn.

BaBaBouy's picture

AND The Drone Of The NYC Keynesian Daily Sale (Or Shorting) Of PAPER-GOLD Continues, Unrelentingly...

Dame Ednas Possum's picture

If Austria want to diversify risk then they would be well advised to ship the whole fucking lot home...but then again, Vicky Nudelman and John McInsane are likely to pay a visit soon after.

kliguy38's picture

this decision was not made in a vacuum

crazytechnician's picture

This is OT but you asked me about what I thought about bitcoin , I did respons but was not sure if you saw my post , here it is again.

As a software electronics engineer and industrial robotics technician I see this technology as being nothing short of absolutely  revolutionary. I beleive bitcoin's blockchain (the globally distributed de-centralised consensus ledger) technology will totally change the world of fiat money and finance within 1 - 2 decades. It will absorb the entire FOREX market , the stock markets , the bond markets , the commodites markets and property / asset and  land registration. It will create a singularity for all global financial transactions. And that is just for starters. Whoever created this system was a genius operating on multiple levels with multiple cutting-edge technological and financial disciplines.

 

Captain Debtcrash's picture
Captain Debtcrash (not verified) crazytechnician May 22, 2015 12:35 PM

Crazytech, 

Thanks for your insight, I hope you're right.  I don't think the believers and non believers should be nearly as advirsarial as is normally the case, and very evident on zerohedge.  If you are right in that bitcoin "will totally change the world of fiat money and finance within 1 - 2 decades. It will absorb the entire FOREX market , the stock markets , the bond markets , the commodites markets and property / asset and  land registration." would it not be sufficient to put a small speculative investment into bitcoin such as .1-1% of a portfolio?  If you are right, and it takes over commerce, even such a small investment would be more that sufficient to make the holder very rich.

I have my doubts about bitcoin but could be wrong.  I would be happy to post your rubuttal to my piece outlining my concerns about bitcoin on my site if you were interested. 

 

Thanks again.

macholatte's picture

 

Why do Central Banks hoard as much gold as they can get?

Why is the gold in a Central Bank one of the first things to be taken by  a conquering Army (or the IMF)?

MonetaryApostate's picture

Food & Water are the new gold, bank on that peeps....

COSMOS's picture

But where will the BOE find that much gold?

crazytechnician's picture

Feel free to use it. I have been studying this technology since 2012. When I first looked at the source code and realised what this was I actually lost sleep for a couple of nights. What has been invented here is the best possible version of money the world has ever seen. It's almost as if the internet was invented as a precurser so this system could exist. It will be the largest transformation of finance ever seen since the collapse of the Roman Empire.

jefferson32's picture

Separarion of money and State is the key challenge of this generation. The Bitcoin protocol is a necessary stepping stone towards that objective.

jefferson32's picture

"Give me control over a nation's money and I care not who makes it laws".

That's right, give the people control over their nation's money and they won't need to care about the sociopathic freaks who write the laws.

We'll all be John Galt.

crazytechnician's picture

"Give me control over a nation's money and I care not who makes it laws".

Absolutely - 100%.

Anybody who does not understand this statement should think again what it actualy means.

Waylon Bits's picture
Waylon Bits (not verified) crazytechnician May 22, 2015 12:58 PM

You are correct crazytechnician!

(fonestar is with you ;0 )

walküre's picture

Austria has several ticking debt time bombs (Corinthia, Alpe, Hypo etc)

When they're up to their eyeballs and they've potentially got the IMF or ECB breathing down their necks, it would be too late to repatriate anything.

Historically Austria and Germany are very close. Maybe this is part of a larger strategy.

Interesting that 40%+ of Greek debt is held by Spain and Italy. If Greece defaults it would drag both I and ES down with them. Making way for the Club Med Pesirachme. (Peso, Lira, Drachme).

AIIB's picture

Translation ~ The 'TUNNEL' between the Bank of Austria vaults & Rothschilds Blvd in Tel Aviv is finally complete.

KnuckleDragger-X's picture

Being Pro-Barbarian it sounds like a great idea...If you don't hold it, you don't own it.....

847328_3527's picture

"Best to be prepared now, then sorry later."

 

~ Old Chineee Proverb

Dame Ednas Possum's picture

I suggest that 'then' should be spelled 'than'.

One little letter makes all the difference.

Consuelo's picture

Do they have an updated proverb for foreign countries piddling around with surveillance   planes, making idle threats to send warships to the area in order to maintain 'safety' from an imaginary enemy...?

Dame Ednas Possum's picture

Confucius say:

Fuck off Yankee.

CPL's picture

Man that go through turnstile sideways going to Bangcock.

DutchR's picture

knukles, Greece does have 112.5 , close enough.

SHEEPFUKKER's picture

Is this what Austrian economics looks like?

CPL's picture

Only if someone actually ships the gold, which is about as likely as pigs flying.

Hitlery_4_Dictator's picture

Too little too late...the PTB got it all figured out and are winning 

ZH Snob's picture

You can't get blood from a rock, and you can't get your gold from the BOE.

CPL's picture

They've had an impressive track record of unsending gold back, the only other one that's more diligent in their unsending of gold would be the USA, followed by the third in Vatican City.  Because, that's what the Vatican is...it's a huge fucking bank.

VinceFostersGhost's picture

 

 

 

The US has how much gold?

 

Let's see it.

quasimodo's picture

It's right there on that official (somewhat) looking table. It's all accounted for.......no really, it is!

 

Kaiser Sousa's picture

knowledge bitches.....

 

"In the Cabinet meeting I said that, even if our balance of payments program was successful, we could look forward to the loss of $300 to $350 million more gold in the second quarter.4   $175 to $200 million of this can be expected in April. This is largely due to a one-time $80 million purchase by Italy. When the Italians were in trouble last year they were forced to sell $200 million of their gold. Beginning last summer they have been doing very well in their balance of payments and have built back their dollar holdings. They now feel it necessary to reconstitute their gold holdings to the total owned prior to last spring's sale. The Bank of Italy has apparently been able to find in their own commercial banking system all but $80 million of the amount needed to reconstitute their holdings.

 

The annual report of the Bank of Italy will be published in May and they wish to show their gold holdings up at that time. They intend to explain in this report that they have simply reconstituted their stock and will expressly disassociate themselves from French policy and express their faith and confidence in the dollar. Italy now holds about $1.7 billion of their reserves in dollars. Their gold ratio is about 55 percent, the lowest of any of the major European powers. The Italians have been very cooperative and cannot be criticized in any way for their forthcoming gold purchase.

I have warned my colleagues here in the Treasury of the possibility that the French may well decide that their current working balances of $400 to $450 million are larger than they need and may therefore decide to purchase another $150 million in gold at any time."
Document 56

Dame Ednas Possum's picture

Ask the Chinese, Russians and the ZH faithful...they will all show you the US's gold.

I suspect some of the smaller bars and the coins may be laying at the bottom of several lakes though. It's tough keeping those little dinghies upright.

Consuelo's picture

I got a hunch that fateful day may not be far off.   Escalation in someone else' sandbox could be the trigger.

Kaiser Sousa's picture

what happened before is happening again...the U.S. and the dollar r dead...

 

PRESIDENT NIXON'S TRIP TO EUROPE

February-March 1969

FRANCE

International Monetary System

Warning:

Conversations on monetary reform with the French pose special dangers:

1. The basic French attitude towards the international monetary system is fundamentally different from ours. Their persistent underlying objective has been (a) a substantial increase in the price of gold, large amounts of which are in French hoards, and (b) the imposition of very stern discipline on the U.S. through severe limitations on the future of the dollar as a reserve currency. Recent hints to U.S. officials of French views on reform maintain these two elements.

2. Certain elements in the French regime especially eager to see a rise in the official price of gold will deliberately stir speculation to their advantage. Great care must be taken in any allusions to monetary “reform”, as the French will tend to associate “reform” with an increase in the official gold price. If at all possible, attempts may be made to imply your endorsement of such an approach in any Communique. Leaks to the French press designed to promote this objective following your talks are likely unless the U.S. team is alert with denials.

3. We believe there is some danger that the French might undertake at some time in the future, possibly this year, a large unilateral devaluation of the franc aimed at disruption of the monetary system and achieving a higher price of gold. They may hint at the desirability of some package deal with the United States to avoid such disruptive action on their part. Any such proposal should be approached very cautiously, even though some elements might be acceptable."

Document 116

Winston Churchill's picture

I swear it was here last week old boy.

Fancy dinner at my Club ?

knukles's picture

(through clenched teeth, deminimus lip movement, much wiggling of great handlebar)

I so enjoy White's old man.  Say 6 ish?   Jolly good!

quasimodo's picture

This means very little until they actually have it back in Austria.

Otherwise it's just window dressing.

carbonmutant's picture

Austria is signaling an EU wide threat about the Britain's EU referendum...

GMadScientist's picture

Of course you can't trust them...they sold it all years ago.

Dr. Engali's picture

So I'm watching CNBS this morning and they have former commerce secretary Carlos Gutrierrez on talking about U.S.S.A/ Cuba relations and guess where the conversation led. Go ahead guess....You know the answer, Yep, establishing a banking system in Cuba.

Winston Churchill's picture

Better be quick, the Castros might get a better offer.

CPL's picture

The only country left to export inflation to.

Philo Beddoe's picture

Hasta la victoria siempre - Jamie Dimon