• BullionStar
    05/30/2016 - 21:24
    The US Gold Market is best known as the home of gold futures trading on the COMEX in New York. The COMEX has a literal monopoly on gold futures trading volumes worldwide, but very little physical...

China's Largest Bank Is Mystery Buyer Of Massive 1,500 Ton Gold Vault In London

Tyler Durden's picture




 

Back in June 2013, when Deutsche Bank opened a gold vault in Singapore which could hold up to 200 metric tons, the German bank was euphoric about the prospects for storing physical gold: "Gold has traditionally been stored in London, Zurich and New York, but there is a serious shift in dynamics going on as the global financial crisis continues to evolve," Mark Smallwood, Deutsche Asset & Wealth Management's head of wealth planning in the Asia-Pacific region, told The Wall Street Journal.

This is what the outside, and inside, of the state of the art Singapore vault looked like:

 

Mark was correct and thanks to the ongoing decline in gold prices, Chinese and Indian demand for the metal, the physical metal that is, not its various paper manifestations, has risen to record levels. Alas, one thing Mark did not know is that in early 2014, a German regulator would reveal that "precious metals manipulation was worse than the Libor scandal" and as a result the largest German bank (and largest bank in the world by notional derivative exposure) - which has been probed and found guilty for rigging virtually every market, including gold - would quietly liquidate its entire physical precious metals trading group.

Which meant that Deutsche Bank's Singapore gold vaul, was about to be sold.

But while the sale of DB's Singapore gold vault was to be expected with China's ravenous apetite for warehousing physical gold around the Pacific Rim, what may have escape popular attention is that Deutsche Bank's even more massive, and even newer, gold vault in London was also "on the block" as of December 2014 when we reported that Deutsche Bank is "open to offers for its London-based gold vault following the closure of its physical precious metals business." As Reuters noted: "If the right offer came along, then the bank would sell the London vault," one source close to the situation said. 

Most curiously, the bank's London gold vault only became operational in June of 2014, more than two years after launching the project. It can store some 1,500 tonnes of gold and was built and managed by British security services company G4S.

As Reuters further noted, with other banks withdrawing from the commodities business to cut costs and reduce their regulatory burden, it might be difficult for Deutsche Bank to find buyers amongst its nearest peers. However, one possible buyer is general LBMA-member, Chinese bank ICBC, which we said at the end of 2014, was trying to build a presence in London.

In any case, the list of potential buyers for DB's brand new vault lease remained a mystery, and perhaps our revelation of the exact location of this vault, something potential buyers tend not to appreciate especially when said vault will house up to 1,500 tons of gold, or over $50 billion worth of "inventory", may have dissuaded some. As a reminder, the "secret" location of the Deutsche Bank vault, which as revealed in the G4S building application, is located in the Park Royal complex, and specifically at the 291 Abbey Road, London NW10 7SA location.

As it turns out, one persistent buyer failed to be dissuaded.

According to Reuters, as was rumored one year ago, China's largest bank - and in fact the world's largest bank - by assets, ICBC Standard Bank, is buying the lease on Deutsche Bank's London gold and silver vault, enlarging its footprint in the city's bullion market, four industry sources close to the companies told Reuters.

China's ICBC, which took a controlling stake in Standard Bank's London-based Global Markets business last year, has also applied to become a clearing member of the London gold and silver over-the-counter business.

From Reuters:

The Chinese and South African lender is aiming to fill the gap left by Western banks, which are retreating from commodities to cut costs and reduce regulatory burden. "They (ICBC Standard Bank) have taken on the lease for the vault," the first source said.

 

Currently, five banks - JP Morgan, HSBC, Bank of Nova Scotia, Barclays and UBS - settle daily bullion transactions between dealers, amounting to more than $5 trillion worth of metal each year in the London over-the-counter market.

 

These banks are shareholders of the London Precious Metals Clearing (LPMCL) company. They will decide whether to accept or reject ICBC Standard Bank's application within the next few months. The LPMCL declined to comment.

 

"They are applying for clearing membership at the moment, but that's still subject to a vote, which has not taken place yet," the source said.

Should the vote go in its favor, ICBC will be ready with what may be one of the largest gold vaults in London, if not the world, to park local gold which will then be promptly shipped over to the mainland to be dealt with as seen fit. Unless, of course, the vault is there for the reverse migration: to house quietly escaping Chinese gold as part of the local oligarchy's attempts to circumvent China's capital controls, a task so far accomplished relatively painless with bitcoin.

Only time will tell.

What is perhaps most surprising is how cheaply ICBC acquired the massive gold vault: "The figure that was initially talked about may have been around $4 million, but it's way lower now," a second source said, without disclosing the figure paid for the vault.

So what does "way less" than $4 million buy you nowadays? Here is the answer, courtesy of Google Maps:

 

Finally, for those curious, here is precisely where the brand new gold vault of the world's biggest bank will be located.

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Fri, 01/08/2016 - 13:35 | 7017650 Big Beta Bill
Big Beta Bill's picture

What is bitcoin?

Fri, 01/08/2016 - 13:42 | 7017683 BaBaBouy
BaBaBouy's picture

Makes Sense... CHINA Has big Plans For PHYS GOLD...

Fri, 01/08/2016 - 14:01 | 7017763 krispkritter
krispkritter's picture

...

 

Fri, 01/08/2016 - 14:09 | 7017839 mvsjcl
mvsjcl's picture

"Duck and Cover"

 

Holy crap! You gotta be kidding me, right?

Fri, 01/08/2016 - 14:16 | 7017875 Soul Glow
Soul Glow's picture

Does it have an underground tunnel leading to the BoE?

Fri, 01/08/2016 - 14:37 | 7017950 HenryHall
HenryHall's picture

>> Makes Sense... CHINA Has big Plans For PHYS GOLD...

Not in London though. Are they going to ship gold from China to store it in London? I don't think so.

Maybe they are going to store something else precious there. Not sure what.

Fri, 01/08/2016 - 14:57 | 7018028 TerminalDebt
TerminalDebt's picture

I'll buy when its below $600

Fri, 01/08/2016 - 16:41 | 7018589 random999
random999's picture

What is a $ dolloar?

Anyone else wanna team up and meet outside abbey rd when the shit hits the fan?

I sure respect mr. Bundy, but there are better things to risk your life for!

Fri, 01/08/2016 - 16:56 | 7018658 Morbid
Morbid's picture

haha i been raving in that building few years back when it was squatted. good times.

Fri, 01/08/2016 - 17:07 | 7018726 thesonandheir
thesonandheir's picture

Is that the old Guiness brewery?

Fri, 01/08/2016 - 18:22 | 7019143 RafterManFMJ
RafterManFMJ's picture

Why would you store worthless relics in such an expensive secure facility? It's like building a massive facility to store driveway gravel. It makes absolutely no sense to me.

Fri, 01/08/2016 - 22:12 | 7020049 Save_America1st
Save_America1st's picture

wonder how deep the actual vault really is below the surface.  300 feet?  500?  Probably a lot more down there than just a vault. 

Sat, 01/09/2016 - 07:19 | 7020975 old naughty
old naughty's picture

just a piece of real estate in a declining market.

Nothing to see here.

Sat, 01/09/2016 - 09:23 | 7021142 PT
PT's picture

Surely they're smarter than that.  Why would China store their gold outside of China?  Maybe that's where they plan to store some tungsten.

Sat, 01/09/2016 - 10:44 | 7021319 fockewulf190
fockewulf190's picture

Start looking for various antennas and sensors to start popping up on the roof in the near term.  That faciity could easily double as a nice and secure vacation home for Chinese intelligence.  What a deal.

Fri, 01/08/2016 - 17:39 | 7018919 The central planners
The central planners's picture

So then you will buy it when is above $5.000

Sat, 01/09/2016 - 10:04 | 7019934 Slomotrainwreck
Slomotrainwreck's picture

A paltry 48,000,000 Gold ozt vault? My socks drawer will hold at least twice that anount in BitCoins (if I had some)

Fri, 01/08/2016 - 18:48 | 7019228 no1ninja
no1ninja's picture

You still think your dollar will have TWICE the buying power it currently has...  might be quite the wait. 

Fri, 01/08/2016 - 17:25 | 7018855 Dugald
Dugald's picture

 

Recall that some months back I suggested Goldfingering China's gold deposits

would upset thing quite a bit, so now, the US is going to nuke London....Nah!

There is the Silk Road, soon now the Gold Road to London.

Fri, 01/08/2016 - 18:20 | 7019140 Commodore Decker
Commodore Decker's picture

They'll store everyone elses gold in London as custodian. After it is replaced with tungsten, of course.

Sat, 01/09/2016 - 12:56 | 7021862 thetruthhurts
thetruthhurts's picture

What else might they store there?

It will probably be rated in the 'megatons'......

Fri, 01/08/2016 - 15:00 | 7018034 Troy Ounce
Troy Ounce's picture

 

Great comment, Soul.The smoke and mirrors will remain the same, the fuckers will remain the same and so will the tunnels.

Let's hope Wikileaks et all will expose these scams for another nail in their coffins.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sat, 01/09/2016 - 08:06 | 7021018 mc225
mc225's picture

yeah, i'm sure wikileaks is really on the case, man. maybe snowden can 'do something' too...

Fri, 01/08/2016 - 14:16 | 7017771 knukles
knukles's picture

The irony of it all; "The Chinese and South African lender" ....
Linked at the hips by birth from the one who mines to the ones who buys

Fri, 01/08/2016 - 15:04 | 7018056 Troy Ounce
Troy Ounce's picture

 

Standard Bank was one of the owners of those fake warehouse receipts in Quingdao, China, which exploded last year.Never heard a follow up up on that story again.

 

 

 

 

 

 

 

 

Fri, 01/08/2016 - 14:40 | 7017960 doctor10
doctor10's picture

Prolly all just another layer of machinations by the Gnomes of Threadneedle St.

Sat, 01/09/2016 - 19:16 | 7018849 Grave
Grave's picture

"CHINA Has big Plans For PHYS GOLD"

yes they do, in cooperation with russia and india

and they have been buying up millions of bitcoins over past two years,
i wont be surprised if they start using gold backed bitcoin blockchain, that is out of the corrupted hands of moneychanger scum :D

(after all its the fastest secure way of doing transactions)

Sat, 01/09/2016 - 08:09 | 7021023 JRobby
JRobby's picture

"The Duke's are trying to corner the market, let's get in on it"

Fri, 01/08/2016 - 13:48 | 7017719 TheGuru
TheGuru's picture

Not too sure if serious ? .... ;-) Read all about it here. https://goo.gl/IBhZ0N

Feel freel if you think its worthless. I am accepting donations. Promise to take good care of them for you...15nut3xGxhkE8Urc4KXwCsNbi72dWPn1cQ 

Fri, 01/08/2016 - 13:48 | 7017720 TheGuru
TheGuru's picture

Not too sure if serious ? .... ;-) Read all about it here. https://goo.gl/IBhZ0N

Feel freel if you think its worthless. I am accepting donations. Promise to take good care of them for you...15nut3xGxhkE8Urc4KXwCsNbi72dWPn1cQ 

Sat, 01/09/2016 - 07:57 | 7021008 Robert.Paulson
Robert.Paulson's picture

You know. That think with _no_ tungsten inside.

Fri, 01/08/2016 - 13:37 | 7017660 ZeroPoint
ZeroPoint's picture

Interesting. Makes you wonder if all the gold bought by the Chinese in London ever truly left London.

Fri, 01/08/2016 - 13:45 | 7017700 KesselRunin12Parsecs
KesselRunin12Parsecs's picture

I just wonder if all the gold bought in London was actually gold.

Fri, 01/08/2016 - 14:17 | 7017879 knukles
knukles's picture

I wonder who keeps selling the gold thst doesn't exist.

Fri, 01/08/2016 - 14:59 | 7018037 SumTing Wong
SumTing Wong's picture

And who keeps buying said nonexistent gold???

Sat, 01/09/2016 - 08:12 | 7021026 JRobby
JRobby's picture

It could only leave if it was still there

Fri, 01/08/2016 - 13:38 | 7017664 cossack55
cossack55's picture

Abbey Road?  Too Cool

Fri, 01/08/2016 - 13:49 | 7017726 GeezerGeek
GeezerGeek's picture

Too bad it's for gold. Maxwell won't be able to stash his silver hammer there.

Fri, 01/08/2016 - 13:55 | 7017772 bamawatson
bamawatson's picture

".......teacher gets annoyed.

wishing to avoid...."

Fri, 01/08/2016 - 13:51 | 7017740 DetectiveStern
DetectiveStern's picture

Sigh better if they had it on Penny Lane in Liverpool.

Fri, 01/08/2016 - 13:40 | 7017670 Omega_Man
Omega_Man's picture

better to store it at the embassy 

Fri, 01/08/2016 - 13:41 | 7017672 Quebecguy
Quebecguy's picture

Does it come with an in- law apartment?

Fri, 01/08/2016 - 13:41 | 7017673 Omega_Man
Omega_Man's picture

but paper gold can be stored on your hard drive... these chinamen are crazy

Fri, 01/08/2016 - 13:58 | 7017783 bamawatson
bamawatson's picture

loved mike hammer series with stacey keach. he was trying to learn computers. hot cleavage babe leans over n asks him difference between floppydisk and hard drive. he says, two drinks

Fri, 01/08/2016 - 13:41 | 7017676 BarnacleBill
BarnacleBill's picture

These days, custody is far, far, more important than price, for precious metals. This comment below dates from 2012, but it's still valid.

http://barlowscayman.blogspot.com/2012/12/how-to-buy-gold.html

 

Fri, 01/08/2016 - 13:42 | 7017680 RaceToTheBottom
RaceToTheBottom's picture

WB could create a picture of a nice group of people walking across that road.  I believe at some point, that was done somewhere...

At first I was thinking  retro, but upon reflection parodies of the central Banksters might be more representative.... 

Fri, 01/08/2016 - 13:42 | 7017681 taketheredpill
taketheredpill's picture

beneath the blue suburban skies...the gold lies

 

 

Fri, 01/08/2016 - 13:58 | 7017780 RiverRoad
RiverRoad's picture

Now that we all know where it is, makes it easy to drop a bomb on it.......

Fri, 01/08/2016 - 13:48 | 7017686 LawsofPhysics
LawsofPhysics's picture

The Chinese invented FIAT. They DO NOT want to be the reserve currency as they would have to be TRANSPARENT.

They want as much physical as they can get while people still accept their paper!!

Pretty much every central bank and their puppet government is now on the same page.

Hedge accordingly.

Fri, 01/08/2016 - 13:43 | 7017687 Cacete de Ouro
Cacete de Ouro's picture

G4S...a truly evil company that runs prisons and detention centers

Do NOT follow this link or you will be banned from the site!