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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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Tue, 05/29/2012 - 15:22 | 2473019 Segestan
Segestan's picture

Makes you wonder why anyone would want to hold a 6 thousand year old relic as money instead of a freshly printed fiasco note?.  What are these Germans thinking????

Tue, 05/29/2012 - 15:28 | 2473037 Kastorsky
Kastorsky's picture

civilized people don't invest in gold, they invest in facebook. 

Tue, 05/29/2012 - 15:30 | 2473046 ziggy59
ziggy59's picture

Germany= Pawn brokers
SEC = Porn brokers

Tue, 05/29/2012 - 15:32 | 2473057 FranSix
FranSix's picture

I think they should take away some of the furniture and the toilet paper as well.

Tue, 05/29/2012 - 15:35 | 2473072 ParkAveFlasher
ParkAveFlasher's picture

I'm thanking every Hindu I meet on the street for reliably en masse purchase of barbaric relic on a seasonal basis. 

Tue, 05/29/2012 - 15:36 | 2473075 Mesquite
Mesquite's picture

Reality strikes again...

Who let that genie out of the bottle (again)..?

ps. Sure appreciate all the apropo sarcastic humor upthread..

 

 

Tue, 05/29/2012 - 15:36 | 2473080 Bastiat009
Bastiat009's picture

I am not sure Greeks care one bit about gold, the only thing which is losing value faster than the euro.

Tue, 05/29/2012 - 15:48 | 2473132 Bastiat009
Bastiat009's picture

So Greeks don't care about debt, about wealth production .. they have been voting for stupid leftist governments for years and now they care about gold? It's like saying Americans believe that debt is bad. It's time to get back to earth and live in the real world.

Tue, 05/29/2012 - 15:48 | 2473133 jomama
jomama's picture

fail troll is fail

Tue, 05/29/2012 - 16:06 | 2473218 DosZap
DosZap's picture

I love the Indian Reserve number...................LOL

One Bank bought what??,200 - 400 tons 3ys ago?,from the IMF at $1,050.00 oz.

And China wanted the balance at a discount LOL.

The Indian population holds an estimated 18,000 tons.......private hands.

As much as the rest of the entire world ADMITS to.

Tue, 05/29/2012 - 20:02 | 2473778 prole
prole's picture

Can anyone do the math what that comes out in ounces per Indian citizen? Considering they have 1.2 billion sheople?

Tue, 05/29/2012 - 16:33 | 2473311 jimmyjames
jimmyjames's picture

I am not sure Greeks care one bit about gold, the only thing which is losing value faster than the euro.

************

I'm still waiting for you to explain your ridiculous eur/gold theory-but of course you can't-because no such correlation exists-

http://www.acting-man.com/blog/media/2012/05/Gold-in-euro.png

Tue, 05/29/2012 - 16:58 | 2473374 Bastiat009
Bastiat009's picture

I have just noticed that the price of gold followed the price of the euro against the US$. It is not a theory, it may not last forever. It is just an observation. I do not make prediction, because I am not smart enough to know what will happen in the future. But i can observed what happened in the past. I just care about facts, not possible future fantasies.

Tue, 05/29/2012 - 17:23 | 2473464 jimmyjames
jimmyjames's picture

I have just noticed that the price of gold followed the price of the euro against the US$.

*********

Have a peek-if you're interested in facts-unlike the ones you have yet to produce-

http://bit.ly/xdModk

Tue, 05/29/2012 - 20:38 | 2473868 nmewn
nmewn's picture

"I have just noticed that the price of gold followed the price of the euro against the US$."

Tell me why is it, that countries that use print from thin air debt based fiat, are in a constant state of monetary crisis mode these days?

I'll make a prediction for you...when a debt based currency implodes and a bag of rice can't be exchanged for any amount of that particular currency you'll understand the concept very well.

Tue, 05/29/2012 - 15:43 | 2473113 benbushiii
benbushiii's picture

The reason Germany is seeking Gold as collateral is that it is very easy to liquidate.  Imagine attempting to seize or tie up real estate or some other public asset.  The dollar reserves would be harder to pledge since the world uses the reserve currency to settle trade.  Hence Gold should now see a similar fate to real estate when foreclosures hit over leveraged borrowers. 

Tue, 05/29/2012 - 15:51 | 2473149 Widowmaker
Widowmaker's picture

Gold pounded today.  See ya at $780, suckers.

Tue, 05/29/2012 - 15:56 | 2473168 FreeSlave
FreeSlave's picture

24K Gold for you CASH

Tue, 05/29/2012 - 15:59 | 2473184 mick_richfield
mick_richfield's picture

OT -- sort of --

Ah, that felt good.

I just sent emails to each of the CFTC commissioners ( and the Chariman and Director ) and told them to resign.

Here is the text:

Resign.

You have failed the public trust in your position with the CFTC, because of your incompetent or complicit oversight of an obvious and ongoing criminal manipulation of the silver market.

Please resign your commission immediately.

And I sent it to these beings:

bchilton@cftc.gov     Commissioner Chilton

jsommers@cftc.gov  Commissioner Sommers

Somalia@cftc.gov     Commissioner O’Malia

mwetjen@cftc.gov    Commissioner Wetjen

dmeister@cftc.gov    Director Meister

 

I know that they are all owned by the criminals who have stolen the world.  But as long as we all pretend that there is still democracy in America, that fiction -- it might still have some power.  I think it might.

And at some point you have to speak truth to bestial power. 

Tue, 05/29/2012 - 16:01 | 2473193 mick_richfield
mick_richfield's picture

oops.  definitely don't leave out this guy:

  ggensler@cftc.gov      Chairman Gensler.


Tue, 05/29/2012 - 20:19 | 2473833 WillyGroper
WillyGroper's picture

Good luck. The reply I received had a subject matter of WARNING, with a threat to publish my name & email address.  

The can all pound ground glass up their ass!

Tue, 05/29/2012 - 16:01 | 2473196 Jim in MN
Jim in MN's picture

It's only fair, considering that in the Treaty of Versailles, German war reparations had to be paid in gold, or if in real goods (trains, coal, grain etc.), valued in terms of gold by a special commission.

Getting down to the bare facts at last. 

Tue, 05/29/2012 - 16:02 | 2473202 Jean
Jean's picture

Is this just a poison pill clause in the deal.  Germany knows that allowing gold confiscation would be political suicide for any European politician, so is this a marker to be relinquished at the table so the local pols don't have to go home empty handed.

Tue, 05/29/2012 - 16:05 | 2473216 Shameful
Shameful's picture

Can someone explain to me how Germany plans on getting the Gold out of NYC and London?  "Hey can we have our gold back?"  "No"  "Ok, thanks!"  Pretty sure that holding the physical even on the national level will beat holding a paper claim to it.  I mean I suppose the US/UK could be honorable and hand it over...

Tue, 05/29/2012 - 16:11 | 2473233 Jean
Jean's picture

Or not

Tue, 05/29/2012 - 16:07 | 2473222 youngman
youngman's picture

The way these countries are lying already...to believe they have this quoted gold is a ig question....and it will never make its final destination....the Politicans will all be grabbing a bar or two...so will the bankers as they leave their jobs...lol...its probably gone already...

Tue, 05/29/2012 - 16:09 | 2473225 PR Guy
PR Guy's picture

 

 

This is always what happens in downturns. Creditors and banks etc. hoover up assets cheaply and the rich get richer.

Tue, 05/29/2012 - 16:10 | 2473229 web bot
web bot's picture

but... but... why would they do that? The ChairSatan and The Jewish Taylor (Chuckie Munger) said that gold had no value...

Tue, 05/29/2012 - 16:11 | 2473231 Olympia
Olympia's picture

Germans plunge Europe into a new Medieval Era.

Are they ready to take that risk ?

It was Germany that took huge loans from the American FED. It was Germany that put the markets up to buying ownership shares of the European Central Bank, which has burdened the States with sins. It was this State that lured the rest of the Europeans into a dissolute life so that it can pass the burden of its debts, hence its own sin to them. The current epidemic of debt crisis has begun from Germany, it is just that it kept its disease a secret and at the expense of everybody else, and now that it is in a better shape, it has gone hunting in order to take advantage of the disease it itself had created. The first State to have sickened has gone hunting for the one who was most weak in dealing with the disease, and that was Greece. If Germany had not been over-indebted, the European states would have never been vulnerable to the markets’ attacks.  If Germany had not been over-indebted the European states would have never been forced to mortgage their existence so that Germany’s bosses can get their money.

________________

The Eastern gates of Europe at risk: How Northern Europe shoots itself in the leg

http://eamb-ydrohoos.blogspot.com/2012/05/greece-among-salem-witches.html

Authored by Panagiotis Traianou

Tue, 05/29/2012 - 17:39 | 2473501 Rynak
Rynak's picture

Uh, i'm sorry, but it takes two to tango.... especially in a parasitary relationship. And especially-especially so in a "mutual parasitary relationship" (what the heck does that mean? Well, it works a bit like this: I make everything go down the toilet for you, but it will look nice for you. And you in turn make everything go down the toilet for me, but make it look nice for me). LIKE i.e. in a pusher-junkie environment, the pusher can proll with fake exportbased-profits financed by debt, while the junkie can proll with fake importbased-wealth bought on credit - yet, the pusher will impoverish his nation by firesale prices and debt, and the junkie will impoverish his nation by total destruction of production abilities and debt.

And while both battle over which of both suckers is the master and the slave, in a political sadomaso game..... the creditsharks pillage, laughing maniacally "What stoopid fools... heck, we didnt even ever invest anythng. ROFLMAO".

Tue, 05/29/2012 - 16:23 | 2473269 Unbezahlbar
Unbezahlbar's picture

Ich bin ein Barbarbian!

Tue, 05/29/2012 - 18:23 | 2473606 Iwanttoknow
Iwanttoknow's picture

I'm a barbarian jelly donut?

Tue, 05/29/2012 - 16:25 | 2473273 Likstane
Likstane's picture

I'd like to have one of those gold bars.  I'd carry it around with me everywhere.  I would take a bath with it.  I would  name it.  I would shine it up real nice and put it in an expensive briefcase so I would always know where it is.  I would take it fishing. 

Tue, 05/29/2012 - 16:26 | 2473280 rockraider3
rockraider3's picture

Yes!  I will host Germany's cash for gold party at my house.  There should be quite some "host gift" consider the amount of gold to be traded in....

Tue, 05/29/2012 - 16:47 | 2473346 lemonobrien
lemonobrien's picture

this whole motherfucker is about golds.

Tue, 05/29/2012 - 17:15 | 2473435 sudzee
sudzee's picture

It would be a good deal for Greece. Take the money, default on payment, and hand over the gold certificates housed in a box at the finance dept. all gov'ts sold the physical to public to keep the price down.

Tue, 05/29/2012 - 17:44 | 2473515 Bagbalm
Bagbalm's picture

We HOLDS the collateral?

Tue, 05/29/2012 - 23:24 | 2474119 BuckShotJones
BuckShotJones's picture

The German's know the Golden Rule: "He who has the GOLD makes the RULES."

Tue, 05/29/2012 - 18:33 | 2473633 robertocarlos
robertocarlos's picture

What's the name of the guy in Toronto who has all of Canada's gold? I've seen him on late night TV but the name escapes me.

Tue, 05/29/2012 - 18:56 | 2473667 americanspirit
americanspirit's picture

First it will be - ve are taking all ze gold in all ze banks.

Then it will be a "turn in your gold choolery if you vant a ration ticket for soup and bread". Und don't zink you can hide it - we haf our ways. 

Then, let's say that someone in your family needs urgent medical treatment. Open ze mouth - hmmm, zoze are some fine looking fillings you haf, untermenschen.

Tue, 05/29/2012 - 20:13 | 2473810 prole
prole's picture

Just for the record herr kommissar who actually ended/ends up with all the gold?

Tue, 05/29/2012 - 19:06 | 2473691 supermaxedout
supermaxedout's picture

Here is it what the Germans have in mind, the original thread dated from November 9, 2011.  its in English)

http://www.sachverstaendigenrat-wirtschaft.de/a-european-redemption-pact...

It came to my mind that there might be a connection with this publication at that time and the dive gold took (or better stabiilzed and did not further rise). Look at the chart:

http://markets.ft.com/Research/Markets/Tearsheets/Summary?s=1045492

The Central banks are loading up on gold now!!! The most elegant way to get rid of a huge part of the nations debt is to let the gold price rise significantly in order to exterminate the debts at least for a huge part.  Italy has a lot of debt but also a lot of gold. The same accounts for Germany and France.

 

 

Tue, 05/29/2012 - 19:44 | 2473746 Madrid2020
Madrid2020's picture

Hell why not just come and take the gold off our Great Catherdals! Spain to Germany:FUCK OFF!

Tue, 05/29/2012 - 19:56 | 2473761 Reptil
Reptil's picture

I agree.. it's essentially about who gets the price (gold?!)

I can't help but comment:

1. Ppl. need to be more nuanced. There's a BIG difference between "the germans" and a german banking elite.

2. The elite in those PIGGS countries DID live it up, still does, and is not held accountable for the mistakes or (assumed in-) appropriation that they did with these loans. At least the Spanish elite didn't waste it ALL on huge yachts.

3. There's a growing rift between the elite (group that was rich and now even richer) and the rest of the european population, who are (germans included) about to become a whole lot poorer.

4. Gold, if held by a democratically elected government (!is there still such a thing??) can be used to create a stable currency post euro. Cash for Gold makes NO sense. But if the PIGGS don't acknowledge this, and start a "plan B", what's their counterclaim? They DID loan those euros, and they DID spend them. Portugal told the EU "no" last year. Is that now possible in case of Greece?

Man, they (the Greek) are really FUBAR. And still not a unified front. Hopeless..

Tue, 05/29/2012 - 20:24 | 2473850 dolph9
dolph9's picture

Check out this British chick on Max Keiser:

http://www.youtube.com/watch?v=GwFi3mbcScI

I think I'm in love!

Wed, 05/30/2012 - 00:45 | 2474235 Rastamon
Rastamon's picture

things that make you go hmmmmmmmmmmm ...

 

3,500 tonnes? wow....isn't that the SAME AMOUNT that's supposed to be held in the NY FED?

 

i think Germany has figured out that Geithner has rehypothecated their gold away.... and that they've been threatened with revealing it to the world.

 

so... their solution? steal an equivalent amount from other countries and give them worthless paper in "trade."

Wed, 05/30/2012 - 03:37 | 2474411 silverdragon
silverdragon's picture

So the Germans are gunna steal all the Portugese, Italian, Greek and Spanish Gold and then keep it stored in the USA. Nice one USA you get the Germans to steal 3000 tonnes of PIGS Gold and then the Grermans leave it on your dirt.

Talk about the great Gold heist, bloody brilliant. Its about 60 million per tonne x 3000 tonnes. So 180 billion at todays prices, nice work if you can get it.

Wait a minute, does this explain why the price of gold has been manipulated downwards?  Imagine if the price of Gold went up in the future, imagine what the actual value of this heist would be?

Uncle Sam definitely still has a couple of nice tricks left in his bag.

Wed, 05/30/2012 - 08:08 | 2474779 Morrotzo
Morrotzo's picture

These guys are candy asses. Why does everybody forget to steal the silver and manipulate the price of that as well? Other than JPM, that is.

 

 

Wed, 05/30/2012 - 19:14 | 2477675 fiddy pence haf...
fiddy pence haff pound's picture

gold gets taken in the rape and pillage insanity of war.

If that's what's going on, then

c'est la guerre.

Athens is about 3 months away from its commemoration and

re-enactment of the  Nazi occupation.

Piles of bodies in the streets and no vehicles to take them away,

so they'll use wheelbarrows.

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