The New York Fed On The "Phenomenal Asset" That Is Gold

Tyler Durden's picture


The New York Fed has a few words to say about gold:


For centuries, gold had a profound impact on history, as a symbol and a storehouse of wealth accepted universally around the world. Gold functions as a medium of exchange, particularly in areas where currencies are distrusted. Yet gold has not been without controversy. The influential economist, John Maynard Keynes, referred to gold as a “barbarous relic.” Later in the 20th century, former Chairman of the Federal Reserve’s Board of Governors, William McChesney Martin, praised gold as "a beautiful and noble metal. What is barbarous," Martin said, "is man’s enslavement to gold for monetary purposes." Clearly, this precious metal has aroused great passion. It undoubtedly will continue to do so long into the future.

Yup. The New York Fed. Which, incidentally, explains why the Fed holds it. All of it. Including Europe's. Here's the reason:

The weight of the gold—just over 27 pounds per bar— makes it difficult to lift or carry and obviates the need to search vault employees and visitors before they leave the vault. Nor do they have to be checked for specks of gold. Gold is relatively soft, but not so soft that particles will stick to clothing or shoes, or can be scraped from the bars. The Bank’s security arrangements are so trusted by depositors that few have ever asked to  examine their gold.

See: it's safe, not rehypothecated infinitely courtesy of the Libor-equivalent manipulated system, GOFO. Which is why nobody wants theirs back. Simple.

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Mon, 07/23/2012 - 10:06 | 2642325 SheepRevolution
SheepRevolution's picture

Long Tungsten

Mon, 07/23/2012 - 10:09 | 2642343 SGS
SGS's picture

Long SPiderman towels.  Zippy zappy chappy

Mon, 07/23/2012 - 10:18 | 2642383 HoofHearted
HoofHearted's picture

This article just convinced me to send all of my gold to the NYFed. It appears they are the most trustworthy people ont he planet. I'm so glad that William Dudley took over Timmay's place. At least we have some of the people who do God's work in place there. So, all of ZH, put your gold into envelopes and send it straight to the Fed. Everybody trusts them, and nobody even wants to have assurance that their gold is still there. Only Commie bastards like Hugo Chavez wouldn't trust the Fed.

Wait. What did those little bears jst say about the William Dudley? Oh crap. Now I'm conflicted. Everyone trusts animated bears, and everyone trusts the Fed. I think my brain will explode.

Mon, 07/23/2012 - 10:27 | 2642432 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The Bank’s security arrangements are so trusted by depositors that few have ever asked to  examine their gold.

Trusting, another word for:  complacent.

Mon, 07/23/2012 - 10:32 | 2642453 Temporalist
Temporalist's picture
CFTC's Chilton expects silver investigation to finish by October

"I am hopeful and expect the silver investigation to conclude in the not-too-distant future, hopefully in September or October," Chilton, a 52-year-old Democrat, said in an e-mail. "It has already taken way too long."

WASHINGTON -- A four-year probe of potential price manipulation in the silver market may be completed as early as September, according to Bart Chilton, a member of the U.S. Commodity Futures Trading Commission.


found on

Mon, 07/23/2012 - 10:36 | 2642475 Bay of Pigs
Bay of Pigs's picture

Headline: CFTC Finds No Evidence of Silver Manipulation

Mon, 07/23/2012 - 10:40 | 2642485 silvertrain
silvertrain's picture

They will be found quilty, served up a fine to pay and promise to not do it again..Move along, nothing to see here..
Silver will fix its self when there isnt any to make new tablets and Iphones, solar panels etc.thats when the shit gets real, not until..

Mon, 07/23/2012 - 11:33 | 2642736 NewThor
NewThor's picture

"There has never been a drop in housing prices."

"Gold is not money."

"Baphomet will be good to me when I die."

- Ben Bernanke

Mon, 07/23/2012 - 12:14 | 2642895 engineertheeconomy
engineertheeconomy's picture

Oh I get it now...

Gold is used to ENSLAVE...

Fiat paper enables FREEDOM & LIBERTY...

Those assholes...

They know they're on their way out


Mon, 07/23/2012 - 11:49 | 2642762 strannick
strannick's picture

Bart ''Uncle Tom" Chilton is the yapping mouthpiece of the CFTC's enabling of silver manipulation. He's the good cop, offering you one of his smokes, while JIll Sommers and Jeff Christian chuckle in the other room.

Mon, 07/23/2012 - 10:44 | 2642502 ParkAveFlasher
ParkAveFlasher's picture

In May it was July, in July it is September.  September it'll become November.  November will become February, which, in turn, will become May again.  You see, Chilton's self-assessment is more important than anything else, and you must also realize that there is a lot of polo to watch, many gimlets to drink, many sailboats to sail, and many blue blazers to sport.  Now you understand?  The world is complex.  Have no fear.  What matters is not the result, it's the pursuit!


Mon, 07/23/2012 - 10:46 | 2642508 Quinvarius
Quinvarius's picture

Longest white wash in the history of mankind.  They must have had to paint a whole lot of ass until it was completely covered.

Mon, 07/23/2012 - 11:00 | 2642582 Overfed
Overfed's picture

These are not the 'droids you're looking for.....

Mon, 07/23/2012 - 12:10 | 2642874 viahj
viahj's picture

damn...again?! WTF are they?

Mon, 07/23/2012 - 11:45 | 2642784 alfred b.
alfred b.'s picture


    Yeah,,,,and the results of the investigation will probably be released on JPM stationery...(sic)



Mon, 07/23/2012 - 12:47 | 2643025 JLee2027
JLee2027's picture

Bart Chilton is always buying time, saying everything is just a few months away. Last year it was position limits, which never happened. Last I heard they were still defining the word swap.  It's tiresome, and obviously a stall tactic.

Mon, 07/23/2012 - 10:33 | 2642464 CuriousPasserby
CuriousPasserby's picture

Trusting, another word for: FOOLS!

Mon, 07/23/2012 - 10:58 | 2642568 Cyrano de Bivouac
Cyrano de Bivouac's picture

Trusting, another word for clueless


Mon, 07/23/2012 - 12:23 | 2642925 engineertheeconomy
engineertheeconomy's picture

Trusting, another word for " there isn't any, we stole it all" 


Mon, 07/23/2012 - 11:41 | 2642766 Treason Season
Treason Season's picture

From one of Bob Stone's novels;

"Trust is good. Not to trust is better."

Mon, 07/23/2012 - 10:30 | 2642450 eclectic syncretist
eclectic syncretist's picture

"Gold is relatively soft, but not so soft that particles will stick to clothing or shoes, or can be scraped from the bars"

This is an outright lie.  Any half-assed chemist knows that pure gold is very soft.  So soft in fact, that it is the most malleable metal known.  These bars could easily be cut or scraped for shavings with a common butterknife (that is, if they are truly pure gold anyway)

This lie gives away the fact that what they want is for you to feel like your gold is safe there.  Trust me, it isn't.  If there is a problem it will be your problem and you will never see your gold.  It has happened many times throughout history.

Mon, 07/23/2012 - 10:50 | 2642530 TrainWreck1
TrainWreck1's picture

If some country did ask for their gold back from the Fed (has ths ever happened and did the Fed deliver?)

Would cause a stir to see armed guard hauling heavy stuff out the front door. Bet they have a tunnel or something...


Other interesting gold and other valuables storage links:

Mon, 07/23/2012 - 12:11 | 2642882 Papasmurf
Papasmurf's picture

Not a problem, just a beer truck riding low on the suspension.

Mon, 07/23/2012 - 10:28 | 2642396 Precious
Precious's picture

Real men prefer lead bullets and a good scotch.   Both quite adequate investments as they are irreplaceable in dire times.

Anyone who thinks their necessities in an emergency can be transacted using gold is a complete 19th century fool. This commodity simply isn't going to practically work in today's electronic world.

Nevertheless, I have a deal today for you on assay kits, at only $299 complete, shipping included.  

Call 1 800 DUMB ASS

Mon, 07/23/2012 - 10:46 | 2642510 Oldballplayer
Oldballplayer's picture

Cipro, Cigarettes, and Coffee.....They will make you the ruler of the post apocalytkc world.  Add in some anti-depressants, and you will be in "barter" heaven.

Tue, 07/24/2012 - 01:31 | 2644701 Lord Koos
Lord Koos's picture

Yep it's going to be bad news for addicts of alchohol, tobacco and caffiene when TSHTF but I'm not among the crowd, I'll stick with food and water, thank you.

Mon, 07/23/2012 - 10:50 | 2642528 ParkAveFlasher
ParkAveFlasher's picture

Can I ride shotgun in your apocalyptic dune buggy?  I have my own hockey mask and leather thong.  -thx

Mon, 07/23/2012 - 11:15 | 2642629 Precious
Precious's picture

We have a cage for you at the rear of the caravan labeled "pig slop".  You're wife however, may borrow your thong and ride shotgun (so to speak) up front.

Mon, 07/23/2012 - 11:25 | 2642698 ParkAveFlasher
ParkAveFlasher's picture

rubber, glue, etc.

Mon, 07/23/2012 - 11:42 | 2642772 Master_Blaster
Master_Blaster's picture

Two men enter, one man leaves.....


Mon, 07/23/2012 - 10:52 | 2642536 Ignatius
Ignatius's picture

Real men also prefer accuracy.

Keynes said that "the gold standard is a barbarous relic", not gold itself.  To miss this distinction is to miss the important point that gold is a wealth reserve asset (i.e., savings).

Mon, 07/23/2012 - 10:59 | 2642578 Benjamin Glutton
Benjamin Glutton's picture

no no are supposed to hate and misquote Keynes whenever possible.

Mon, 07/23/2012 - 11:13 | 2642622 Fred Hayek
Fred Hayek's picture

Well, misquoting him's not fair. Hating him, on the other hand? Well . . . I mean, standing as the symbol of a two step policy guideline which pretentious economists and politicians profess to support yet none of them EVER follow the first of the two steps . . . That's inventing something almost perniciously useless for which you don't exactly deserve affection. Has there ever been a politician or economist who supported the increase of government spending in the bad times half of it who had actually demanded that the government run a surplus in the good times? Everybody wants to eat their dessert but no one wants to eat the broccoli first. And, in the end, Keynes has become the king of dessert.

Mon, 07/23/2012 - 11:09 | 2642617 Precious
Precious's picture

We all know what kind of "real man" Keynes was by his own diary admissions.


Mon, 07/23/2012 - 13:40 | 2643188 Bansters-in-my-...
Bansters-in-my- feces's picture

@ Precious.

Fuck Off faggot

Tue, 07/24/2012 - 13:10 | 2645889 Precious
Precious's picture

try and stay away from the meth, psycho

Mon, 07/23/2012 - 10:22 | 2642405 Doña K
Doña K's picture

Gold for monetary purposes?

Let's give them this argument but. Don't take away our argument: GOLD AS WEALTH PRESERVATION.

Give us whatever fiat you want for medium of exchange. But...let us convert any savings to gold. 

Mon, 07/23/2012 - 12:08 | 2642867 margaris
margaris's picture

Give them nothing!

Take everything from them!

Mon, 07/23/2012 - 11:03 | 2642590 Long-John-Silver
Long-John-Silver's picture

Tungsten price now tracks Gold price.

Mon, 07/23/2012 - 11:17 | 2642650 Precious
Precious's picture

That's even better.  All my neighbors have expressed an interest in Tungsten.

Mon, 07/23/2012 - 10:07 | 2642327 DoChenRollingBearing
DoChenRollingBearing's picture

Even though it's down today, gold is outperforming everything except the 10-Year bond.

Mon, 07/23/2012 - 10:14 | 2642365 bigdumbnugly
bigdumbnugly's picture

that's because everyone knows the ten year is the true safe haven.



Mon, 07/23/2012 - 10:49 | 2642521 Zero Debt
Zero Debt's picture

Once the 10-year T note hits 0% we are past the inflection point where a Minsky moment of safe haven flows may move from bonds to gold.

Laundry list:

1) Sell equities, buy pheripheral bonds

2) Sell pheripheral bonds, buy high yield dividend stocks

3) Sell high yield stocks, buy core bonds

4) Sell core bonds, buy gold

Dexters pyramid bishes...

Mon, 07/23/2012 - 10:16 | 2642374 I am a Man I am...
I am a Man I am Forty's picture

And municipal bonds.  Paging Meredith Whitney (eyes roll out of head and onto floor)

Mon, 07/23/2012 - 10:29 | 2642442 DCFusor
DCFusor's picture

Obviously, your definition of "everything" does not include almost my entire portfolio at the moment - VXX, SPXU, FAZ,AGNC - all up much more than bonds today.  Gold's not even down enough to buy, it's well above support, though its near the bottom of the most recent trading range.

Mon, 07/23/2012 - 11:00 | 2642581 Cyrano de Bivouac
Cyrano de Bivouac's picture

As of today gold down about 10$ for the year and for 5 years up about 900$ an oz.

Mon, 07/23/2012 - 10:06 | 2642328 Ray1968
Ray1968's picture

Until you print paper gold and sell it on the stock market and COMEX

Mon, 07/23/2012 - 10:20 | 2642400 GeezerGeek
GeezerGeek's picture

If ever there were a place for banning short sales, the PM market is it. Especially naked shorts. We need to import some Italians to do this, I suppose.

Mon, 07/23/2012 - 10:08 | 2642339 PaperBear
PaperBear's picture

"Martin said, "is man’s enslavement to gold for monetary purposes."" ?

Government's are enslaved is more accurate, enslaved from stealing wealth from the populace through currency debasement.

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