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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BaBaBouy's picture

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

mvsjcl's picture

"Duck and Cover"

 

Holy crap! You gotta be kidding me, right?

Soul Glow's picture

Does it have an underground tunnel leading to the BoE?

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.

TerminalDebt's picture

I'll buy when its below $600

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!

Morbid's picture

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

thesonandheir's picture

Is that the old Guiness brewery?

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.

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. 

old naughty's picture

just a piece of real estate in a declining market.

Nothing to see here.

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.

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.

The central planners's picture

So then you will buy it when is above $5.000

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)

no1ninja's picture

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

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.

Commodore Decker's picture

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

thetruthhurts's picture

What else might they store there?

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

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

mc225's picture

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

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

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.

 

 

 

 

 

 

 

 

doctor10's picture

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

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)

JRobby's picture

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

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 

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 

Robert.Paulson's picture

You know. That think with _no_ tungsten inside.

ZeroPoint's picture

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

KesselRunin12Parsecs's picture

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

knukles's picture

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

SumTing Wong's picture

And who keeps buying said nonexistent gold???

JRobby's picture

It could only leave if it was still there

cossack55's picture

Abbey Road?  Too Cool

GeezerGeek's picture

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

bamawatson's picture

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

wishing to avoid...."

DetectiveStern's picture

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

Omega_Man's picture

better to store it at the embassy 

Quebecguy's picture

Does it come with an in- law apartment?

Omega_Man's picture

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

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

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

 

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.... 

taketheredpill's picture

beneath the blue suburban skies...the gold lies

 

 

RiverRoad's picture

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

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.

Cacete de Ouro's picture

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