Deutsche Bank Refuses Delivery Of Physical Gold Upon Demand

Tyler Durden's picture

While the trading world was focused on the latest news involving Deutsche Bank, namely that the troubled German bank had been contemplating a merger with Germany's other mega-bank, Commerzbank as part of a strategy to sell all or part of a key business to speed up its flagging overhaul, a more troubling report emerged in a German gold analysis website, according to which Deutsche Bank was unable to satisfy a gold delivery request when asked to do so by a client of Germany's Xetra-Gold service.

But first, what is Xetra-Gold?

According to its website, the publicly traded company "provides investors with an efficient instrument to participate in the performance of the gold market. Xetra-Gold’s combination of features – cost-efficient trading and the right for physical delivery of gold - makes it an attractive product."

Among its highlights, Xetra-Gold lists the following:

Cost-efficient trading: No mark-up fee, no transportation or insurance costs such as those incurred when purchasing physical gold. Only the standard transaction fees that are charged for on-exchange securities trading are payable at the time of acquisition. The spreads that apply to purchase and sale correspond to the standard conditions on the global market and are considerably lower than those for traditional gold-based financial products. Furthermore, management or administration fees relating to Xetra-Gold are not incurred. The investor pays the amount of custody fees which he/she has agreed upon with the depository bank.


Physically backed: The issuer uses the proceeds from the issue of Xetra-Gold to purchase gold. The physical gold is held in custody for the issuer in the Frankfurt vaults of Clearstream Banking AG, a wholly-owned subsidiary of Deutsche Börse AG. In order to facilitate the delivery of physical gold, the issuer holds a further limited amount of gold on an unallocated weight account with Umicore AG & Co. KG.


Transparent:  Xetra-Gold tracks the price of gold on a virtually 1:1 basis, and is always up to date.


Tradeable in euros per gram: While in the past, gold was mainly denominated in US dollars per troy ounce, you trade Xetra-Gold in euros per gram.


Stable/Constant holdings: The investor’s right to receive delivery of the certificated amount of gold is not reduced by management costs or other fees, unlike other investments in gold. 1,000 units of Xetra-Gold will still represent a kilogram of gold in 30 years' time.

The company makes the following promise:

Redemption for gold: Investors always have the possibility of demanding delivery of the securitised amount of gold per bearer note against the issuer. If the investor is not able to exercise this right due to legal restrictions effective for him/her, he/she can demand the cashing of Xetra-Gold from the issuer. In this case, a settlement fee of EUR 0.02 per Xetra-Gold bond will be charged.


Delivery of gold: If an investor asserts his/her right to the delivery of the certificated volume of gold from the issuer, the gold will be transported to the respective point of delivery by Umicore AG & Co. KG, which is responsible for all physical delivery processes. The issuer will also have delivery rights of gold from Umicore AG & Co. KG, as the gold leaf debtor. Investors can find information on delivery and the alternative payment claims that are relevant for investment and insurance companies in the PDF document entitled 'Information on the process for exercising Xetra-Gold'.

And yes, Deutsche Bank is involved, as the fund's Designated Sponsor.

In other words, Xetra-Gold is an Exchange-Traded Commodity which differentiates itself by "representing that every gram of gold purchase electronically is backed by the same amount of physical gold" and its principal bank is none other than Deutsche Bank.

And with Germans recently rushing to buy safes or find sound money alternatives in a country where the interest rate is negative, the ETC, it is not surprising that the population has flocked to its offering.

According to recent report by LeapRate, the gold held in custody by Deutsche Borse Commodities for the purpose of physically backing the Xetra-Gold bond has risen to a new record high of 90.67 tons, an increase of more than 50% since the beginning of the year. "For each Xetra-Gold bond, exactly one gram of gold is deposited in the central vaults for German securities in Frankfurt" the report parrots the company's website.

Among all exchange-traded commodities (ETCs) tradable on Xetra, Xetra-Gold is by far the most successful in terms of turnover. During the first seven months of the year, order book turnover on Xetra stood at approximately €1.5 billion. The assets managed by Xetra-Gold currently amount to €3.5 billion.


In September 2015, the German Federal Fiscal Court (Bundesfinanzhof) had ruled that after a minimum holding period, any profits from the sale or redemption of Xetra-Gold are not subject to the capital gains tax. From a fiscal point of view, the purchase, redemption or sale are thus to be treated equal to a direct purchase or sale of physical gold, such as in bullions or coins.

But what is most notable, is that, as noted above, Xetra-Gold investors are entitled to the delivery of the certified amount of physical gold at any time, and adds that "since the introduction of Xetra-Gold in 2007, investors have exercised this right 900 times, with a total of 4.5 tons of gold delivered."

However, something appears to have changed.

As Oliver Baron reports, those who ask for gold delivery at this moment, "could encounter difficulties." The reason is that according to Baron, a reader of GodmodeTrader "sought physical delivery of his holdings of Xetra-Gold. For this he approached, as instructed by the German Borse document, his principal bank, Deutsche Bank."

At that point then he encountered a big surprise: the Deutsche Bank account executive informed the investor that "the service", is no longer offered, namely exercising physical delivery at Xetra-Gold, for "reasons of business policy" and therefore the order form provided by Clearstream Banking AG for exercising Xetra-gold is no longer available.

Baron writes that since Deutsche Bank is no longer serving the physical exercising of delivery request of Xetra-Gold is remarkable, as Deutsche Bank is the "designated sponsor" as well as fiscal, principal and redemption agent of Xetra-Gold according to its prospectus, and as the explainer of how to exercise physical delivery also reveals. Even if one is a customer of another bank, Xetra-Gold should - at least on paper- guarantee delivery by way of Deutsche Bank, as the Deutsche Borse Commodities GmbH explains in its "process description for exercising units"

Step-by-step description of exercise


Together with a representative of his principal bank, the investor creates the transaction and sends it to the principal bank's custodian with the relevant process data described above. The custodian in turn instructs its custodian, stipulating all process-relevant data, until a bank which is a customer of Clearstream Banking is authorised.


The customer may use the attached exercise form to instruct the designated sponsor (here Deutsche Bank AG, Frankfurt) to deliver a specified number of gold bars to the point of delivery. The process is similar to that for the delivery of physical certificates.


The customer should send the original exercise form to the following address:


Deutsche Bank AG
"Ausübung Xetra-Gold" CIB-Global Banking
Trust & Securities Services
Grosse Gallusstrasse 10 – 14
60311 Frankfurt am Main


To transfer the required amount of Xetra-Gold units to the blocked account of Deutsche Börse Commodities, the customer should also place an FoP instruction via CASCADE or File Transfer/SWIFT.


Delivery will be initiated if Deutsche Bank receives the securities and the application form by 10:00 CET. As a rule it takes one to two weeks to deliver retail gold bars and four days for London Good Delivery gold bars from date of ordering. As soon as the delivered gold arrives at the point of delivery, the Xetra-Gold® units are removed and recovered from the "Ausübungskonto DBCo" (DBCo exercise account).


Due to the provisions of the Money Laundering Act (Geldwäschegesetz) only the branch of a bank may be used as point of delivery. Investors expecting a large delivery of gold should contact their principal bank to discuss the transfer of the gold to the point of delivery.

The article goes on to note that it was not clear whether the exercise and physical delivery at other banks is actually still possible. Baron said that Deutsche Borse Commodities advised to transfer the Xetra-Gold shares in a cooperative/Raiffeisenbank since physical delivery is allegedly still possible here. The Deutsche Borse also announced that it is currently working on the "possibility of delivery regardless of bank branch." However, since this process was not described in the prospectus of Xetra-Gold, it would have to be legally tested, which could take considerable time.

The article's conclusion: anyone who wants to easily convert their Xetra-Gold holdings into physical gold - at least for clients of Deutsche Bank - can do so only by selling their shares, and then buying gold coins or bars directly elsewhere. Which leads the author to the logical question: what is the worth of the Xetra-Gold service, which certifies the right to redeem physical gold, if said delivery is no longer possible?

In other words, what was supposedly an ETC which promised physical delivery upon demand, is nothing more than yet another "paper only" play.

We, on the other hand, have a more focused question: is the inability to deliver physical gold an incipient issue with Xetra-Gold, or with the company's "designated sponor" Deutsche Bank, and if the latter is suddenly unable to satisfy even the smallest of delivery requests by retail clients, just how unprecedented is the global physical gold shortage?

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

If you don't hold it, you don't own it. Good luck to you bro. 

SMG's picture

I'm sure this means everything is fine.   Please continue enjoying the recovery.

nope-1004's picture

Nostradamus: (Cent. 8 Quat. 28)

Les simulacres d'or & argent enflez,
Qu'apres le rapt au lac furent gettez
Au desouvert estaincts tous & troublez.
Au marbre script prescript intergetez.

Translates as:

The copies of gold and silver inflated,
which after the theft were thrown into the lake,
at the discovery that all is exhausted and dissipated by the debt.
All scripts and bonds will be wiped out.



This is MONEYCHANGER fraud, plain and simple.  Bankers need to HANG.


Troy Ounce's picture



Must be Putin who is behind this.

What about the idea of the Dept of Home Security to run the banks? Critical infrastructure, you know. 

remain calm's picture

It is interesting how they have monkey spanked gold fro 1375 to 1305 in a couple of weeks, however, I just looked at my stack and it just as high as ever and even a little shinier tonight, and its just where I left it. Who is fucking dumb enough to leave it in a bank, esp DB. Rut Roh Shaggy

CheapBastard's picture

I'm trying the best I can to remember exactly where my boat capsized.

I agree with the comment above. It would be like storing your guns somewhere else; you can be sure when the SHTF, they will not hand over your gear.


Just like the oldest most prestigious fund, The Reserve, failed to make good on its pledge so they went bankrupt. People had to wait months before they got their money and I am not sure everyone was made whole. Interestingly, Ameritrade was telling people that holding their money in The Reserve's treasury bond fund "is as safe as holding the treasury itself." Of course, that's a lie as many investors found out. But I think those people were eventually made whole but I am not sure about The Reserve's stawk funds.

Bottom line as said above, "If you don't hold it..."

wee-weed up's picture

OMG! This is hugh & series.

3Wishes's picture

Thw word is "significant" Pot head

Billy the Poet's picture
Another Gold Shortage? Dutch ABN To Halt Physical Gold Delivery


Mar 24, 2013 4:44 PM
Saddam Miser's picture

The physical gold is [NOT] held in custody for the issuer in the Frankfurt vaults of Clearstream Banking AG, a wholly-owned subsidiary of Deutsche Börse AG.

There. Fixed it for them.

jeff montanye's picture

i dare say you haven't as well you know.  

this is the investment decision of the early twenty-first century: bonds or gold? 

and, in addition, i could be wrong but i think the thread on the dhs taking over the election is being attacked now. see below.

particularly note the audio snippets.


BaBaBouy's picture

Sooooo ~~~

How Many out There Think They Could "Stand For Delivery" At The Paper CMX ???

Mister Ponzi's picture

Not being able to fulfill one's obligations is called a default.

Manthong's picture


ABN Amro… Rabobank… now Xetra/Douchebank

Do I detect a trend here?


Sure some trends take a bit of time to develop, but three instances seem to indicate a trend.

onewayticket2's picture

Interestingly, DB released this note TWO DAYS AGO....GOLD SHOULD BE $1700....

The Gun Is Good's picture

Awe, come on! It's just banks doing what they do! Fractional reserve "banking" = fun! /s

Fraud legalized = fraud institutionalized.

jeff montanye's picture

i think the thread on the dhs taking over the election is being attacked now. see below.

particularly note the audio snippets.

Montani Semper Liberi's picture

I am getting "page not found" when I click on the link.

Slomotrainwreck's picture

not found

Funny ... that's what the DB customers are experiencing when they try to get their stash. The mainstreet media will be on this in 3 .. 2.. 1.. 3.. 2.. 1..3  2..

hmmm.. Gold and Silver is retreating at this very moment. I can'tunderstand why.

BetterRalph's picture

OP  clipped off at the "st" for state-election-infrastructure

JohninMK's picture

Too late, now page not found.

sessinpo's picture

That is because Jeff provided a bad link (full link that is not cut off).

HopefulCynical's picture

"Page Not Found."

If Obama tries to shut down the election, the Day of the Rope will be upon us. This isn't a threat; it's an observation of which I am almost certain. Folks have had enough of Soros & Pals.

11b40's picture

page not found.



TheDutchDude's picture

I sincerely believe the physical gold is there.
The bank is accumulating gold for free by stupid investors and will repay them with zimbabwian euros at that time while they keep the precious metal. Hang em, hang em high

Crawdaddy's picture

are you elliterates? It series! Shit just got Series!

flaminratzazz's picture

damn... is that bad?..whaf do we do whaf do we do?

laisla's picture

Shit just got Series! lol- for how many yrs now Suka!

archon's picture

They don't want any more of that barbarous relic getting into the hands of the barbarians... otherwise, who knows what might happen?

J S Bach's picture

Paper gold still trades as actual currency until................................................

Here2Go's picture
Here2Go (not verified) J S Bach Sep 1, 2016 5:11 AM

Oh look ~ here it is... It had been inadvertently sewed into a few peoples garments... Go back to watching Dancing the Hava Nagila with the Stars...

e_goldstein's picture

I'm sure this news is going to drive the price down $75, $100, at least.


chunga's picture

Hugh and series is a long running joke on freerepublic, a staunch red team hangout that went down the tube with the red team...and the blue team.

McCormick No. 9's picture

Douche Bank doesn't have any fucking gold! The Fed doesn't have any fucking gold!  Chase, Bunk America, etc etc, no FUCKING GOLD!!! Comex, no fucking gold!!!

Where's all the fucking gold??????

Ask Lord Rothschild.

BaBaBouy's picture

You Forgot FT. Knox ...

NO Audits Allowed ...

Who Has That GOLD ???

It Sure Feels Like Theres A Lot Of Fantacy GOLD trading Out There ~~~

More Ammo's picture

Or more simply put:  There is a lot of Fantacy Out There!


Maybe somebody was peddling Fiction???

SWRichmond's picture

I have some.

...until that damned unfortunate boating accident.

onewayticket2's picture

Mine fell off my boat.....dangit.

JohninMK's picture

He ain't stupid.

Its at the bottom of his lake!

sdmjake's picture

Of all the dumb gold articles i've read that might be the dumbest.