Tuesday, January 20, 2015

Germany’s Bundesbank Repatriates 120 Tons of Gold

Apparently pressured by the public Germany’s central bank the Bundesbank announced the transfer of gold held overseas (Paris and New York) to Frankfurt

From Yahoo news:
The German central bank or Bundesbank said Monday that it stepped up the repatriation of its gold reserves from overseas storage last year.

"The Bundesbank successfully continued and further stepped up its transfers of gold," the central bank said in a statement.

"In 2014, 120 tonnes of gold were transferred to Frankfurt from storage locations abroad: 35 tonnes from Paris and 85 tonnes from New York."

Germany's gold reserves are the second-biggest in the world after those of the United States and totalled 3,384.2 tonnes this month, according to the latest data compiled by the World Gold Council.
Stated reasons:
But surging mistrust of the euro during Europe's debt crisis fed a campaign to bring home Germany's gold reserve from New York and London, with some political parties fuelling fears the gold might have been tampered with.

Under the Bundesbank's new gold storage plan in 2013, it decided to bring back 674 tonnes from abroad by 2020 and store half of its gold in its own vaults.
Ironically in today’s world of modern technology as seen through the coming of driverless cars and hypersonic planes, the Bundesbank’s plan to bring back 674 tonnes from abroad by 2020 has been a sign of how wishy washy German’s central bank has been. Or has been that German's Bundesbank knows something about real inventories of gold stored at the US Federal Reserve which they have failed to disclose?

Perhaps as I blogged last January 2013 they would ship gold via ancient triremes.

And 674 tons represents just 19% of German’s declared gold holdings of 3,384 tons. How long to ship the entire bulk?

More questions

Why does it take such lengthy period of time to ship gold to Bundesbank?

Has there really been physical gold stored at the New York Fed? Or will it take several market operations to bring back into physical form gold that may have possibly been leased out into the markets?

If the reason for the repatriation has been “surging mistrust of the euro”, what happens if the Draghi’s QE fail and or if the fallout from the SNB’s termination of  the franc-euro cap spreads to deepen the mistrust? Will the public’s demand surge enough to pressure the Bundesbank to accelerate repatriation? How will the central banks like the NY Fed respond?

In 2014, the government of Netherlands stealthily brought back 122 tons of gold reserves from New York as part of the overall plans to ship 612 tons intended to spread its gold stocks in a “more balanced way” (WSJ).  Will there be more demand from various central banks to bring back gold held mostly by the US Federal Reserve? On the other hand, will there be enough stocks to fulfill such demand?

What the German –Netherland gold repatriation events has been indicative of has been that demand for gold seem as getting to be more about physical, rather than just paper speculative gold.

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