ECB GOLD PLANS: Germany audits its gold reserves, looks to bring them home.

As news breaks that Mario Draghi’s ECB is giving serious consideration to gold-backed eurobonds and a ban on gold ownership in the eurozone, respected English-language German site DW reports that Berlin is to ship 150 tons of gold from New York to Germany.

In the light of this revelation, the German Bundesbank stresses that it does not doubt ‘the integrity, reputation and safety’ of the foreign storage sites. But Folker Hellmeyer, the chief economist at Bremer Landesbank, observed that “…the shortcomings in monitoring our gold reserves have to be viewed quite critically. It makes sense that this issue has been taken up by the National Audit Office.”

It makes sense alright Folker, but why now? As DW correctly observes, ‘as the financial crisis has engulfed the European single currency zone, [gold] has shifted into the focus of politicians’. Indeed it has.

Germany has the second largest gold reserves in the world. While the US allegedly has 8,133 tons, Germany has nearly 4000 tons. Gold reserves are an important part of the reserves of national banks in the eurozone: according to the World Gold Council (WGC), the eurozone countries together hold over 10,787 tons of gold.

The European Central Bank holds only 502 tons of that – less than 5% of the total. Is Berlin quietly preparing to give support to the ECB’s Last Redoubt plan for the euro? What will the public reaction there be if and when this scheme gains wider awareness in Germany?

This is a developing story. Stay tuned.

 

53 thoughts on “ECB GOLD PLANS: Germany audits its gold reserves, looks to bring them home.

  1. Doubtless Viking Jack will be able to keep us up to date with how this story is gently spun for the public at home. But spinning ‘we’re bringing our gold home in order to support those nice Greek, Spanish and Italian folk’ does sound to me like a bridge too far.

    • @Jon
      I am getting old: please remind me which fairy-tale it was where a young lady span her golden locks into gold itself…

      Was it:
      Rip Van Merkel; or
      The Sleeping Proletariat; or
      Goldilocks and the Three Troikas; or
      The Gold Is Goosed; or
      The Pied Piper of Berlin; or
      Merkelstillskint; or
      Three Little PIIGS; or
      The Blunderbussed Gizard of Oz(terity)?

      Hieronimusb – over to you!

      • I thought it was The Troika Billy Goats Gruff, or 101 Damn(we’re all ruined)Nations,
        or maybe, from Tales of Ancient Greece;
        Prospering and the King of the Underworld
        Mervyn King with the Golden Touch
        The Watchman with a Hundred Eyes (on the money)
        The Boastful Draghi Spinner – of lies

        or perhaps Sinbad the *anker……and the strange little Island (he has his eye on to buy cheap!)

    • @ Jon

      There has been a fair bit about this over the past couple of days on various blogs/papers. The basic question being asked is why the greater part of the German gold reserves (allegedly worth some 133 billion at the moment) are being stored in New York, London and Paris.

      The basic justification used to be that, in the event of the Warsaw Pact troops deciding to go for a paddle on the Channel coast (which they were expected to perhaps reach in about 7 – 10 days), it might not be a good idea to store it in Frankfurt – which is only around 2 hours or so down the road from the Fulda Gap. Just a thought – the Russkies just might have been in Paris a couple of days later! As for the gold in London – the Russkies just might have done a Goldfinger on it.

      A great justification during the Cold War, but that (allegedly) finished around 20 or so years ago – and the gold is still in New York, London and Paris (allegedly)!

      Now, the gold that they had left after the war was sequestrated – and it can’t have been very much. But in the intervening years they have earned themselves quite a bit more from essentially peaceful activities. Is this gold also subject to sequestration?

      There was a long article today on Kopp Verlag about it all:

      http://info.kopp-verlag.de/hintergruende/deutschland/gerhard-wisnewski/deutsche-gold-inventur-londoner-finanzfreunden-flattern-die-nerven.html

      The headline and a few choice sentences – the article itself is rather lang and finance-technical:

      “German Gold Inventory: the nerves of our financial friends in London are trembling.

      Gerhard Wisnewski

      The Bundesbank wants to count its gold and maybe even bring it back home? This is bringing fear amongst the financial friends in London. The inventory is “paranoid,” the bullion “irrelevant” or even “economic poison”. Boy oh boy – their nerves are on edge. So, better bring it here …

      The Spiegel author Wolfgang Münchau is a true Briton. Or rather better said, a Londoner. (Then follows a resumè of his journalistic career)
      (…)
      Any more questions? Not really: he is a real London finance U-Boat*. The same man who is now hounding the Federal Audit Office, who have come up with the long overdue idea to see what the German government gold in foreign – amongst others, London – vaults is actually doing.”

      * in this sense, not a submarine, as used here it appropriates to “fifth columnist”.

      The article then continues with how the Spiegel is (once again) trying to rewrite history – and a general deconstruction of what Munchau has written. The last couple of sentences:

      “Well I’ll be – are the people in London already so nervous, Mr. Münchau? If so, then we would prefer to bring our gold home. Assuming it is still there.”

      I’ll see if I can find anything else.

      • Maybe the Germans have figured out that the 9/11 truther video’s that talk about the fact that the vaults storing large amounts of gold below the WTC Towers were found doors open and empty. I think there was also mention of a truck found loaded up with gold trying to leave from there that got stopped by falling building pieces. Just a thought.

  2. Merkel does a Brown and gives up Germany’s gold for the greater good of the Eurozone.

    Will the Germans take to the street? Will synagogues burn? Nah, by the time the Germans work out what’s happened, Goldman Sachs, JP Morgan et al, will own those synagogues and streets and the little people might actually start to ask themselves is allowing themselves to be Screwed by their Government is actually a genetic trait?

    • That was my thought, kfc1404.

      If the solids are about to hit the fan it would be far better to have one’s gold tucked safely away at home, rather than in the care of kindly Uncle Sam (who is looking glumly at the empty cobwebbed vaults in Fort Knox) or perfidious Albion. The temptation for amoral bankers and slippery politicians to set to with a file and a set of new metal stamps would be overwhelming …

      • Trouble is with this scenario is that they are bringing “home” only 50t per year over the next 3-years, whereas the bond markets are likely to go pop over the next 3-months.
        Time-scales seem wrong?

  3. Maybe they`re thinking to return the gold they stole from Greece during WW2, as a gesture of solidarity :-)
    Was also wondering if private investors would be forced to relinquish their stock to the state….presumably bullion dealers keep records? You would then have to smuggle what you managed to hide outside the EU in order to sell at its real price?
    And would silver/platinum then become more investable?
    A regular can of worms!

    • @zeusgoose…
      “…if private investors would be forced to relinquish their stock to the state…”

      I was thinking about the same thing. If one did receive a demand to hand over privately owned gold, couldn’t you just tell whoever it is that you have privately sold the stuff to another person and that you have conveniently forgotten his/her/their name(s)?

      How could they prove otherwise?

      • I think by the time we get to this stage telling little fibs like that will get you arrested and the truth will be discovered via a little persuasion.

      • Lost all mine in a boating accident, so sad. :-(

        —————————–(_____)——————————————————-
        . o .

        o
        ____________________________oooo_____________________________

  4. Pingback: EUROZONE GOLD EXCLUSIVE: Draghi mulls gold sales ban…. | A diary of deception and distortion

    • @Matt
      Thank you: a very long but very interesting article which confirms that which we already know: Max Keiser and John Ward are correct in their observations of everything to do with global finance…

      • This is one time I hope John is incorrect, not because that in itself would please me in any way, but because the idea of Draghi proposing gold backed bonds just seems too peculiarly strange to make much sense to me. Doesn’t it sound rather incredible?

  5. Surely any such sequestration move would be a massive flashing danger signal which would trigger many more problems than any such plan could ever solve?

  6. Er, it was reported that Deutschland (über alles, of course) had called back the shiny stuff BEFORE Super Mario’s “emission”…

    So which came first one wonders?

    • Yes, that’s exactly what they’ve got in mind. That, and to make sure that their returned gold bars are nice and soft all the way through, and not as hard as, say, tungsten….

    • @Joanna
      Thanks for enlarging my knowledge of Fairy Tales!

      The answer to your question above is: yes, of course it will. A la yesterday: the FM is dead: long live the DM!

  7. If the krauts had any sense or cojones they wold get ALL their gold out of NY when Jim Rickards is going around saying the US will nationalise every nations gold in NY fo0r USG paper when the crisis hits and the US decides to go on some form of gold standard. Now JR is a bit of a blowhard but he is well connected into the defence and intellligence communities not to mentionthe Treasury.

  8. Probably a good job gormless gordon sold all ours then- even at low premium- otherwise Dotty Dave would be trying to gove it to Mario….

  9. Pingback: John Ward – ECB GOld Plans : Germany Audits Its Gold Reserves, Looks To Bring Them Home – 26 October 2012 | Lucas 2012 Infos

  10. I thought I saw somewhere here at the slog that China has quietly been mopping up physical gold for some time now, or am I mistaken ?

  11. Pingback: EUROZONE GOLD EXCLUSIVE: Draghi mulls gold sales ban…. - NT Markets

  12. As news breaks that Mario Draghi’s ECB is giving serious consideration to gold-backed eurobonds and a ban on gold ownership in the eurozone, respected English-language German site DW reports that Berlin is to ship 150 tons of gold from New York to Germany.

    and a ban on gold ownership in the eurozone?

    Does this mean we will be given a paper iou for any gold we might own?
    I was told that this would never happen? Plus what would the valuation be?

    • You will be given paper in exchange but my guess is it will only apply to bullion bars and not to numismatic coins. What is a numismatic coin? you, the owner must decide that!

      That is what happened in the US and the UK and I presume Europe when you see all those old gold coins still selling more or less for their bullion value.

      • You will be given paper in exchange but my guess is it will only apply to bullion bars and not to numismatic coins. What is a numismatic coin? you, the owner must decide that!

        That is what happened in the US and the UK and I presume Europe when you see all those old gold coins still selling more or less for their bullion value

  13. Speaking of gold, for anyone remotely interested in facts, being of a scientific persuasion I have plotted the log(gold price) against time and amazingly found it to be linear since 2003. Salient observations are:
    Since 2003 gold has yielded a yearly return of 20% (tax free if you hold british coins) – no wonder they want you to put your money in the bank.
    Year end (January 2013) predicted gold price should be $1900.
    If things carry on like this, we should see $2290 year end 2013, $2690 year end 2014 and $3240 year end 2015.
    Of course events may change this. One wonders if it’s gold that has been manipulated since 2003 or in fact real inflation has been running at 20% per annum? Amazing what you can do with a little inflation statistics and currency manipulation.
    So even though gold may not (or indeed may) jump to $10000/oz, a 20% return is quite decent as an investment.
    Alas, you can’t eat it.

  14. Pingback: THE SATURDAY ESSAY: For as long as it’s legal, gold is to have and to hold. | A diary of deception and distortion

  15. Pingback: John Ward – The Saturday Essay : For As Long As It’s Legal, Gold Is To Have And To Hold – 27 October 2012 | Lucas 2012 Infos

  16. Just as all the bbc peeps knew the score on ‘hey now there guys n gals’, all the bankers know that all the real gold has been lent or leased out over 100 fold so even if it is actually in the vaults, who it belongs to is ‘all of the above’. When this comes to light as it is starting to thats when see the comex and lbma clients default on promises to deliver and gold go to johns £4000-12000 per oz

  17. Legally Germany is still on the hook for hundreds of billions worth of “gold backed” bearer bonds that they have been promising to pay over and over again since 1953 to Americans. The U.S. Government should lock that gold down until they pay up.

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