World's 2nd Largest Stockpile Of Gold Leaves The United States

Tyler Durden's picture

Submitted by Simon Black via SovereignMan blog,

About 20 years ago when I was still a cadet at West Point, my economics professor organized a class trip to the Federal Reserve Bank of New York.

The part of the trip that I remember most was touring the Fed’s high security vault, 80 feet below street level beneath the bank’s main office building downtown.

This vault houses the largest known depository of gold in the world.

None of that gold, of course, belongs to the Fed. The Federal Reserve doesn’t own a single ounce of gold.

Almost all of that gold is owned by foreign governments and central banks.

It’s been that way since the end of World War II—European governments wanted to store their wealth overseas, out of the reach of the Soviet Union.

As a kind of professional courtesy among governments and central banks, their gold has been stored for free by the Fed for the last 70+ years.

Even after the Soviet Union fell, most governments still chose to keep their gold in New York.

It was safe. America was a rich, trusted ally. Why bother moving it?

Fast forward a few decades and the world has clearly changed.

The US government is in debt up to its eyeballs. It has been caught blatantly spying on its own allies. And it’s much less predictable than ever before.

Germany was among the first out the door.

Even as early as 2013, the German government announced that they would bring back at least half of their country’s gold reserves (the second largest in the world) by the end of 2020.

They’re ahead of schedule.

Late last week the German government moved $13 billion worth of gold from New York to Frankfurt.

That shipment puts them nearly at their goal, almost four years earlier than planned.

It’s easy to understand why.

The entire global financial system requires having a great deal of trust.

If you have an online brokerage account, you may be surprised to know that you don’t actually own a single stock in your portfolio.

When you log in to your account and buy, say, Apple shares, the brokerage will typically register those shares in its own name, not your name.

Apple has no idea who you are. The shares are effectively owned by your broker. It’s their asset, not yours.

Now that’s putting a LOT of trust in a complete stranger.

It’s the same when you deposit your money in a bank. It’s no longer your money. It’s the bank’s.

The bank, in turn, uses your savings to make loans and buy bonds, thus entrusting your savings to yet another group of people.

This is how the system works; your money keeps getting passed around, which means there’s an entire daisy chain of other people, or “counterparties”, standing between you and your savings.

“Counterparty risk” is the risk that something goes wrong with one of the many, many counterparties in this daisy chain.

Imagine that you deposit money with X.

X invests the money with Y. Then Y deposits the money with Z.

If something goes wrong with Z, you’re all screwed.

This is the nature of counterparty risk. Someone far down the chain can cause consequences for everyone else.

Now, ordinarily, this isn’t a problem. When the system is functioning normally, institutional counterparty risk is low.

But counterparty risk becomes a BIG deal, and QUICKLY, when the system stops functioning normally.

We saw the effects of this during the 2008 financial crisis. As one bank went down, it dragged multiple others with it.

No one ever thinks about counterparty risk until it becomes a problem… and by then it’s too late.

The simple way to reduce this risk is to reduce the number of counterparties.

Germany used to place a lot of trust in the US government and central bank to store its gold.

But there are obvious signs that Uncle Sam is no longer the reliable, credible, trusted counterparty he once was.

Germany hasn’t quit cold turkey; they’re still going to store a minority portion of their gold in the US.

But they have taken a major step to reduce exposure to a counterparty that’s obviously bankrupt, which hence reduces the risk.

You can do the same thing; it’s why we regularly discuss holding physical cash.

Keeping some physical cash ensures that there’s no more middle men (i.e. counterparties) standing between you, and at least a portion of your savings.

When you eliminate the counterparty, you eliminate the risk.

Having some cash means that if some major crisis should ever befall the banking system, then you’ll at least have some emergency savings that’s not at risk.

But even if nothing happens… even if there’s never a single problem ever again in the banking system… you won’t be worse off holding a bit of cash.

Do you have a Plan B?

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dow jones 20000's picture

A valentines day poem:

Roses are red,

Violets are blue,

Buy the fucking dip. 

Déjà view's picture

Goldfinger plan up and 'Running'...

Buzz Fuzzel's picture

“The entire global financial system requires having a great deal of trust.”

 

This is the part people at the top fail to heed and the people at the bottom will only learn about too late.

Manthong's picture

World’s second largest heap of gold-plated tungsten?

I understand none of that gold includes the original deposited bars.

J S Bach's picture

"The Federal Reserve does not own a single ounce of gold".

Perhaps so... but, they technically control all of it.  Can someone tell me what the difference is?  "Control" is the only power that matters.

headdishwasher's picture

Possession is 9/10 of the law

beemasters's picture

With so many foreign enemies the government is making, America isn't safe to keep gold. All it takes is for one real or false flag attack to declare it's all gone.

SoilMyselfRotten's picture

Roses are red,

Violets are blue,

Buy the fucking dip

And the all time high too

 

(sorry it seemed incomplete)

Fisherman Blue's picture

Or a nuke that renders it all radioactive.

onthesquare's picture

The Golden Rule:  He who has the gold makes the rules.

 

Elco the Constitutionalist's picture

Exactly. How else would we trade gold without the fiat intermediary that is almost completely controlled by the Fed?

Chupacabra-322's picture

@ Buzz,

Trust? Don't tell me about trust. You know what the two biggest lies in the world are?

"The check is in the mail."

&

"I won't come in your mouth."

Pfffft. Trust. Yea, right.

OceanX's picture

Does anybody still write checks?

logicalman's picture

Then there's the world's lamest excuse....

It was an angel, Joseph, HONEST!

Gold...Bitches's picture

Germany was among the first out the door.  Even as early as 2013, the German government announced that they would bring back at least half of their country’s gold reserves (the second largest in the world) by the end of 2020.  They’re ahead of schedule.

 

He who panics first, often panics best.

 

HenryHall's picture

Germany got little to none of the physical Nazi gold that had been stored in USA.

What they got was gold that had been stored in (mostly) Paris, (some) London. Together with gold that had been gifted by Ukraine to USA and physical gold that was loaned by Venezuela as collateral for a loan (so-called leased gold).

Grave's picture

and the poor countries like czechoslovakia that got robbed of their gold reserves by nazi germany.

disappeared right into "allied" vaults never to be seen again.

BarkingCat's picture

Britain stole Poland's gold after the government took it there to save it from the Nazis.

They probably did it to other countries foolish enough to trust them

Lizardking's picture

Follow the gold, keep an eye on where it goes. It's very important, nothing else matters all that much. More gold will be moved but not reported.

r0mulus's picture

I wonder how close an ally of the USA Germany will be when they have finished repatriating their gold?

SILVERGEDDON's picture

Roses are crap, 

Violets are shit,

Show her real love on V day  

By buying the dip.

Poetry, Part Two.  

dow jones 20000's picture

Honey, I couldn't buy you anything for Valentines this year, I spent our savings on Apple stock

Likstane's picture

OK, I'll try...

Roses are red
I couldn't find violets,

Screw buying the fucking dip,
I went to the coin shop instead.

GreatUncle's picture

Gimme a go ...

Roses are red,

Violets are blue,

HRC is purple and out to ***** you.

Couldn't make up my mind on ***** but could be = screw, shoot, murder, fuck etc.

MaxThrust's picture

viloets are blue

Roses are red

Hillary's gone

The witch is dead.

natty light's picture

Hi ho the merrio

Sing it high, sing it low

Ding dong the wicked witch is dead

The central planners's picture

It doesn not even rhyme. But i dont give a shit, i buy it.

Friedrich not Salma's picture

There ought to be an additional 143 tons in Ft. Knox as safekeeping for the people of Libya.

CheapBastard's picture

I guess Hillary and Obama took only their gold and left the pile of 300,000 dead bodies behind.

silverserfer's picture

Hillary ONLY collects gold fillings. Theyre all so unique like little snowflakes.

Nobodys Home's picture

That's funny you sick fuck!...lol
I had the choice of a gold or porcelain cap...I asked the price difference...none...gimme da gold....I'll be worth something until I die!

chubbar's picture

And of course let's not forget this little gem, when Pres Clinton had fake gold bars made out of Tungsten.   

http://news.goldseek.com/GoldSeek/1258049769.php

eh_geee_gmail's picture

Hence no audit of the Fort.

I wonder if Germany will be verifying their delivery with more rigorous metallurgical examination.

walküre's picture

you bet your ass

Germany has a long history of metallurgy

 

Nobodys Home's picture

Bavarian mint....also a history of the first mint to be burned to the ground!

SubjectivObject's picture

As said in a similar context; At their level, configuation and calibration of a water immersion ultrasonic scanner can very easily detect acoustic velocity variation within simple geometric shapes.  No drilling required, but similar destructive methods will likely be used for identified inconsistent materials/items.

Northern Flicker's picture

shhh - "If the American people knew what we were doing, we'd be hung from the nearest lampost."

yogibear's picture

There is a reason that's not obvious to the public yet to why governments want their gold back.

eh_geee_gmail's picture

All the reasons for having gold are known.  The purposes of repatriation can be inferred -- this all pre-dates Trump.  The motives of the USA when it comes to gold are straightforward: the fed corporation doesn't want gold as money (it is, always will be) and doesn't want a competing reserve currency.  That's how Gaddafi got himself assasinated -- trying to sell oil priced on gold and introduce a reserve currency for trade and debt.  This would have ended the USA empire.  Nobody else, including bitcoin, is going to try that stunt again any time soon, but by the time it's possible, it will be too late for countries to get their physical gold if it's not already in their country to audited in their physical possession.

natxlaw's picture

Uh no, there are definitely some folks who will try it again soon, it just won't be a 3rd world dictator. It will be a nuclear power. 

yellensNIRPles's picture

Natxlaw you are correct. It is actively happening.

Everyone who has not seen it should watch this video: https://www.youtube.com/watch?v=GEwuGHFF7qE

I'm not affiliated with the author of the video in any way and I think I'll stop linking to it now since this is time #3, but man it really needs to be seen.

Good luck everyone.

techpriest's picture

I think that ZH could become an alternative social media platform by letting people put up their own lists of must-see content on their profile. That, and a list of replies to my comments so that I know I got a response.

Albertarocks's picture

Yup... except for my own stupid ass country.  Trudeau sold every last ounce of gold owned by Canada.  What a clueless bastage.  Mind you, there is still plenty of gold in the ground in Canada but it belongs to the miners who found (find) it.  

In the meantime, only four countries... Russia, China, Turkey and 'I forget the last one'... in the past 4 years have bought up an equivalent of every ounce of gold mined on the entire planet during those 4 years.  The countries that have gold during the next crash will come out the winners, no question about it.  Canada and USA are up shit creek.

Déjà view's picture

Great 'Slave' Lakefront property might be appropriate...

Snaffew's picture

if the shit hits the fan, all those gold miners will be nationalized, and not willingly.

silverserfer's picture

they already are. The illusion is making them think that they own their mines. When you control gold price, oil price, tax rates, land reguation, yeah you pretty much own that mine. Why do you think so many mines are runing nearly at break even all the time?

sacredfire's picture

How come no one talks about silver? What would you possibly buy that cost an oz of gold?