Germany Has A Generous Proposal To The Broke PIIGS: "Cash For Gold"

Tyler Durden's picture

Back in February, as part of the latest Greek bailout of European banks, we noted that the most subversive part of the German-led proposal was nothing short of a gold confiscation scheme.

the European bailout of Greece, is now formally a Greek bailout of Europe, funded by the country's already negative primary surplus, or better said - deficit (don't try to make mathematical sense of that - a scene out of Scanners is guaranteed). Hence, negative bailout. But the piece de resistance, and the reason why Greece is the in situ version of bankster heaven is the news from the NYT that Greece is also about to have negative gold.

Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal.

Well, they may be broke, and they may be bailing out Europe, but at least they'll have no gold: sounds like a sweet deal - it makes perfect sense that Greeks are taking every incremental humiliation from a syndicate of few fat, bald types who have access to a digital money printer, with the supine determination of an Oliver Twist.

Today, courtesy of The Telegraph, we learn that Germany is quietly reminding the world that the stealthy, but voluntary, accumulation of gold is what it is all about. As part of a renewed push for quasi-Federalism, whereby Germany would fund a "European Redemption Pact", in which Berlin would, in the form of Germany-backed joint bonds, be responsible for any sovereign debt over the 60% Maastrtich limit, but with a big catch. The catch is that "a key motive is to relieve the European Central Bank of its duties as chief fire-fighter. "We have got to get the ECB out of the game of distributing money, and separate fiscal and monetary policy. Germany has only two votes on the ECB Council and has no way to control consolidation," he said. Germany would have a lockhold over the fund, able to enforce discipline. Each state would have to pledge 20pc of their debt as collateral. "The assets could be taken from the country’s currency and gold reserves. The collateral nominated would only be used in the event that a country does not meet its payment obligations," said the proposal.

In other words: a perfectly legitimate, and fully voluntary scheme in which sovereign gold is pledged to a German "pawn broker" until such time as the joint bonds are extinguished, and if for some "unpredictable" reason, a country fails to meet its obligations, read defaults, all the pledged gold goes to Germany!

But why Gold? Why not spam. After all gold is selling off, spam is stable, and the dollar is soaring. Couldn't Germany merely demand that broke countries simply pledge all their USD reserves, and keep their worthless, stinking yellow metal?

Apparently not.

More from The Telegraph:

This demand could enflame opinion in Italy and Portugal. Both states have kept their bullion, resisting the rush to sell by Britain and others. Italy has 2,451 tonnes of gold, valued at €98bn in March.


Alessandro di Carpegna Brivio, a gold expert at Camperio Sim in Milan, said Italy should treat such proposals with care. "Everything being done at a European level is in the interests of Germany and France, to save their banks. It is not in the interest of Italy," he said.


"We should use our gold to take care of our own debt, collateralizing bonds above 100pc of GDP. That would be a far more targeted approach," he said.


David Marsh, author of books on the euro and the Bundesbank, said Germany is not yet ready for the redemption fund. "The Germans have to do something, but I don’t think it will happen before the elections next year. Spain will have to go through storm first," he said.


Ultimately, a sinking fund cannot tackle the root cause of the eurozone crisis. It may cap debt costs but it does not alter the intra-EMU currency misalignment between North and South, or help the Latin states close the chasm in labour competitiveness.


The South would still face the long grind of "internal devaluation" -- or wage deflation -- breaking societies on the wheel. Yet the Redemption Pact is at least a first step back from Purgatory.

All of this of course, leads us to another post from February, where we again correctly predicted, that it was all about the PIIGS gold holdings:

Projected PIIGS Pillage: 3233.5 Tons Of Gold To Be Confiscated By Insolvent European Banks


While hardly discussed broadly in the mainstream media, the top news of the past 24 hours without doubt is that in addition to losing its fiscal sovereignty, and numerous other things, the Greek population is about to lose its gold in a perfectly legitimate fashion, following amendments to the country's constitution by unelected banker technocrats, who will make it legal for Greek creditors - read insolvent European banks - to plunder the Greek gold which at last check amounts to 111.6 tonnes according to the WGC. And so we come full circle to what the ultimate goal of banker intervention in the European periphery is - nothing short of full gold confiscation.


So just how much gold will be pillaged by the banker oligarchy (it is amusing how many websites believe said gold is sacrosanct by regional national banks, and thus the EUR is such a stronger currency as it has all this 'gold backing' - hint: it doesn't, as all the gold is about to be transferred to non-extradition countries)? As the World Gold Council shows in its latest update, between all the PIIGS, who will with 100% certainty suffer the same fate as Greece (which has shown that unlike during World War 2, it is perfectly willing to turn over and do nothing) there is 3234 tonnes of gold to be plundered. And likely more as further constitutional amendments will likely make the confiscation of private gold the next big step. how much does this amount to? At today's prices this is just shy of $185 billion. Of course by the time the market grasps what is going on the spot price of the yellow metal will be far, far higher. Or, potentially far, far lower and totally fixed as the open gold market is eventually done away with entirely in a reversion to FDR gold confiscation and price fixing days.


The chart below shows total gold holdings for the top 40 countries. Little Ireland is off the chart with just 6 tonnes of gold.

So there you have it: Europe's broke countries may be broke, and may demand Germany bail them out, and Germany is even willing to do it... in exchange for one small thing: just over 3000 tons of gold.

Check to your broke European countries.

Or, actually, check to the world's biggest gold vault located 80 feet under Liberty 33, where all of the above gold is situated.

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tekhneek's picture

Brilliant. All this time I've been doing the "gold for cash" thing.

Gold, bitchez.

THX 1178's picture

I think they call this desperation.

nope-1004's picture

Once again Germany proves to be behind the times.  Dr. Bernanke said that central banks hold gold because of "tradition" - a barbarous relic.  LOL.

Silly Germany..... still caught up in tradition.


Winston Churchill's picture

So its Spam thats the barbarous relic ,and all

this time CNBC has been telling everyone its


Manthong's picture

“assets could be taken from the country’s currency and gold reserves”

Certainly, they would be wise to unload their cumbersome tail risk non-money relics so that they can preserve all of their valuable excess currency.

Pladizow's picture

As we type, secret vaults are being prepped!

strannick's picture

Germany wants French, Spanish and Italian gold (Greek gold has of course already been confiscated and sold) because the Fed wont return its gold. Seems Jim Richards has morphed from ridiculous radical to precient prophesizer, and its only been less than 3 months since his 'Currency Wars' was published.

As unallocated gold holders, allocated gold holders, Comex gold contract holders -ala MF Global-, and gold certificate holders have already found out; if you dont hold it you dont own it. GLD owners will soon be joining this elite group of golden bag holders.

hoos bin pharteen's picture

Greece will happily ship their barbarous relics to Germany.  The courier ship will be lost somewhere at sea...

Piranhanoia's picture

Aegian or Ionian, right offshore, somewhere.

onelight's picture

They'll be able to clinch the deal when folks have it all explained to them by none other than Mr. T of "Mr. T GoldPromise

That is, when they're tired of all that EU Jibba-Jabba, as Mr T surely is..

onelight's picture

They'll be able to clinch the deal when folks have it all explained to them by none other than Mr. T of "Mr. T GoldPromise

That is, when they're tired of all that EU Jibba-Jabba, as Mr T surely is..

dbomb12's picture
Spam spam spam spam. Lovely spam! Wonderful spam! Spam spa-a-a-a-a-am spam spa-a-a-a-a-am spam. Lovely spam! Lovely spam! Lovely spam! Lovely spam! Lovely spam! Spam spam spam spam!

I'll have your spam. I love it.I'm having spam spam spam spam spam spam spam baked beans spam spam spam and spam!
schoolsout's picture

Are they going to value gold at the current price or will we possibly see a true value come about when 1oz of gold equates to $3,000+ Euros of debt?

topshelfstuff's picture

it was nailed in this quote:

""" (don't try to make mathematical sense of that - a scene out of Scanners is guaranteed).""""

they only show the Discounted, or Pawned, amount, for the gold, not the actual double+ amount it covered

illyia's picture

Oh this is so timely and rich and priceless and they will not allow gold to see its full valuation until they own it - as much as is nationally possible - along with their fellow co-conspirators! Oh, this makes too much sense... Expect to see more volatility in Au as buying opportunities are created and seized by our careful masters-to-be...

Just perfect!

Christopher Story might have been a Christian Zealot (only bad if you are not one yourself) but he had the plot line down.

Al Huxley's picture

Exactly.  I wish I could give you more than 1 up arrow.

Cadavre's picture

Is that with or without tungsten?

Now that derivative bets are FDIC insured (anybody wondering why that happened - take a guess - it's lipstick on the pig `n a poke QE ponzi thats worked well for so few and so catastrophically for everybody else. It's a FED to FDIC middleman-ed bail for the white shoe-ed boyz running the 3 Card Monte shtick out of them ivory towers on the street, visa vi the "Shadow".

Where's Gandalf when ya need `en?

Dr Paul did say: Something Big is Happening back in 2008..

Making sure to understand all this shit: 40 is the New 20. Tungsten is the new gold. At least it `splains anti-incandescent push bunches - obviously the Ben needs the tungsten to print the "new" gold!

Membering back when the Chinese took delivery of US gold from a Hong Kong vault and low and behold if that sh*t was cut with tungsten like low end ghetto smack (leaving 3% active ingredient to give the scraggly cardboard box junkie man pissing his pants and scratching his matted hair the illusion he be banging salvation as soon as he cook the the cut!

Nothing said since.

Question : Would a sovereign depository that took delivery on repatriated gold get all noisy and make a scene if-en they found tungsten where gold was supposed to be?

Obvious conclusion is "NOT". That kind of news would shake the pillars of heaven and the Berskank be damned lucky to get off, at a very minimum, as well as his flopbook bathhouse political accomplices having ancestral tomb stones nationalized as pilgrimage urinals (ad infinitum). Our chill`n be a pissing on tombstones (and more than just `Skanks kin) to high heaven and low hell, and beyond, instead of igniting  sparklers and cherries on de 4th of July and that be for sure, by golly!

German PMs asked the Bungleberg for a report of their audit of gold in US custody. The Bungleberg staff that ran the audit said "the looked to make sure the bars where in the proper bin - they said they saw 1em - honest. It's not like the Bungle's staff actually audited the gold beyond the video feed of the NYC vault or actually touch count weigh or assure the stash of German gold they saw on video monitor. They didn't have time. They bussed for brunch to the `Skank's favorite bathhouse and barely had time to make their flight back to deliver the "audit" report because they took in the sights and sounds of K-Street's Kiddie Brothels afterwards,

The Bungleberg said not to worry:
"The scope of the checks that the Bundesrechnungshof wants does not correspond to the usual practices among central banks," the Bundesbank said in a statement quoted by the Frankfurter Allgemeine Zeitung newspaper. "There are no doubts about the integrity and the reputation of these foreign depositories." (.... riiiiiight ... if-en you believe that, then by all means, let's get together and talk about an exciting ground floor opportunity as an "Instant Water (just add water!)" franchisee.

Now Germany wants it's gold back home. Chavez still wants) or wanted Venezuela's gold back from the FED. Switzerland does too. Is that why the FED's FMOC minutes always seem to be peppered with a quip or two `bout shorting UST's and "the" precious?

One gold player suggests, and the ticks on my pet gerbil's back got z`nuff commonsense to realize: The FED has been rehypothocating physical to finance it's market interventions.

why don't they just call a spade a spade and call it what it be: "market rigging". What the hey, we call genocide "war" and death "glory" all the time!

We all saw (as clear as could be) the endgame in the homelands heroic genocide of Libyan tribesmen was all about and only about looting the 144 tons of gold stashed in Libyan valults, covering Goldman's tracks in Libya and preventing Gaddafi from receiving a UN Humanitarian award (PDF).

For sure everybody asking for their gold back, now that the "Shadow" , or GCB (global central bank), is running the ponzi, may well be risking being labeled as Oceania's next Hitler daily rage metaphor - and there be a remote possibility one of them could be a real German (a novel idea for a rerun).

Greeks should tell the bondholders, the CDS writers and the bankers to stick it where the sun don't shine - that gold will worth a lot more than any paper. In fact, the paper will start loosing book value when the swap is settled. GREECE take Gross's advice - do what Iceland did and ttell the fractional reservest to stick it - besides, it was Goldman's fraudulent credit trickery that got you in this mess. F*ck `em! F*Ck `em all!

StormShadow's picture

Wealth preservation is a tradition, is it not?  And it's usually done w/ gold and other hard assets.  Hence, holding gold IS a tradition.

ZerOhead's picture

Exchanging precious paper for a barbarous relic. Yup that's desperation alright!

(They don't call them Barbarians for nothing you know... or was that Bavarians...)

newworldorder's picture

You are wrong on both names - They should be called Bernakians.

magpie's picture

Those trading card games really should have a "Barbarian relic" card: "Cast spell against Central Banker".

And in all seriousness, i just like walking into those cash-for-gold places and ask if they sell some too...

disabledvet's picture

WHOSE Barbarous Relic? Taint English, Swedish, American or Chinese yes, yes?

THX 1178's picture

The Germans know the jig is up too. The question now is how the peripheral PIIGS will react when Germany tries to "take over" a third time. This time in a much sneakier way...

hamurobby's picture

They rolled in the banks instead of tanks.

Freegolder's picture

What other good collateral is there?

The time of freegold draws closer by the day.

NotApplicable's picture


You didn't read the article very closely, did you? Like the part that there will be no gold backing the Euro, as it's being transferred AWAY from the EU countries that use it as backing.

Funny, I was waiting for the freegolders to slam Tyler for that statement.

Think for yourself's picture

I see two reasons for taking gold away - to prevent the PIIGS from backing their own new currency after exiting the euro, and/or because germany understands that gold will soon be worth much more than whatever they're paying in euros to get it.

Hasn't this been the 4th reich's plan all along?

hamurobby's picture

This Angela Merkel, (aka the Humungus) is a reasonable woman,

You heard what she said, it sounds reasonable!

All we have to do is walk away,

Just exchange the gold for our (way of) lives!

She promised us safe passage, she gave us her word!

reader2010's picture

Histroy repeats itself again. The only difference is that last time it happend in the concentration camps without "for cash" part. 

Sam Clemons's picture

Yes.  The Germans seem hell-bent on controlling a lot of these other nations meanwhile they have quite a list of obligations as well.  I guess if you act like your house is made of stone, people won't as easily notice it is also made of glass.

boogerbently's picture

Nothing for Nothing!!

Where's Ireland, on the list. Leprechauns got all their gold ??

Quintus's picture

I think even I have more gold than Ireland.


I've lost more gold in a boating accident that Ireland will ever know. 

NotApplicable's picture

I'm thinking it's time I bought a boat.

Vuke's picture

Got a nice sail boat for you.  Used but serviceable, 25 footer, Folkboat.  Cost? 3 oz. .9999

Think for yourself's picture

3 oz 4-nines? I'll take it! Do you accept Ag?

Vuke's picture

Sure, equivalent Ag will take it away.

Vuke's picture

Sure, equivalent Ag will take it away.

Stoploss's picture

Yeah, but they're trading the gold for electronic 1's and 0's ;)

Beyond fucked for the piigs.

Bay of Pigs's picture

Follow the Yellow Brick Road all the way to Berlin.

boogerbently's picture

Can't wait to hear if this get's any "popular" support, in Germany.

Plus, if that becomes the deal, we'll see who REALLY needs the help, nd who was just in line for a free handout !

Rynak's picture

Your premises are, that current govs do care at all for the benefit of their populations.

Sanity, fairness and reason - NEVER assume any of those three, when trying to predict nowadays politics and major dealers.

MsCreant's picture

Sad how true this is, nice to see you around posting.

the 300000000th percent's picture

Good idea but you wont get mine

Cognitive Dissonance's picture

Before you know it they will be pulling Gold teeth.

Sorry. Was that my out loud voice?

My bad.

gmrpeabody's picture

All your teeth are belong to us!

NotApplicable's picture

In today's news, the FDA has outlawed gold for dental usage stating "That it's simply too dangerous to have something that dense inside your mouth."

In order to alleviate the problem, they are requiring all dentists to go through their records and recall all patients who've have this risky element in their mouths. They will then undergo a federally-funded procedure to replace the relic with Hopium (which has proven mass-less).