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.

Contra Media, US Government Gold Reserve Holdings Unscathed by Gold Plunge

Mainstream media attempts to downplay the “conspiracy” theory that the current plunge in gold prices may have been engineered.

So they allude to losses incurred by central banks in the wake of the selloffs 

From a Bloomberg article 

Central banks are among the biggest losers because they own 31,694.8 metric tons, or 19 percent of all the gold mined, according to the World Gold Council in London. After rallying for 12 straight years, the metal has tumbled 28 percent from its September 2011 record of $1,923.70 an ounce.

Central bank-got-hit meme looks like a press release.

Reuters has a chart suggesting the same

I don’t know about other central banks, but for the US government via the US FEDERAL RESERVE and the US Treasury, the recent slump has hardly impacted the dollar value of gold reserves because they are “valued” at 42.2222 per troy ounce.

This straight from the US Federal Reserve’s footnote on US Reserve Assets as of September 2012

Gold held "under earmark" at Federal Reserve Banks for foreign and international accounts is not included in the gold stock of the United States; see table 3.13, line 3. Gold stock is valued at $42.22 per fine troy ounce.    

And this from the US Treasury

The Status Report of U.S. Treasury-Owned Gold (Gold Report):

• Reflects gold bullion and gold coins owned by the federal government
• Summarizes the fine troy ounces and the book value of gold held by various facilities
• Identifies the value of gold coins and bullion on display at Federal Reserve banks; coins and bullion in reserve at the Federal Reserve Bank of New York; and gold held by U.S. Mint facilities

The book value of gold is currently $42.2222 per troy ounce. The information used to compile this reporting is received from the U.S. Mint, Federal Reserve banks, and FMS.

In effect, based on the US government's accounting treatment of gold reserves, media’s reporting can be seen as deceptive or misleading.

And that's even to assume yet that the official holdings of gold are intact, which is questionable. It would reportedly take SEVEN years for the FED to return the gold reserves of the Bundesbank. Why?

I am inclined to think that this quasi-crash may have provided the window for the Fed to load up gold to return to the Bundesbank. Talk about conspiracy.

Bundesbank’s Gold Repatriation will Take Seven Years!

This is just a follow up on my earlier post about how Germany’s Bundesbank repatriation of their gold held by the NY FED (and the Banque de France) could trigger a scramble for the premier precious metal.

Apparently, in today’s deepening digital economy and the space age, it would strangely take 7 years for this process, which only accounts for half of Bundesbank’s claims, to get fulfilled.

Here is the Bloomberg:

The Bundesbank will repatriate 674 metric tons of gold from vaults in Paris and New York by 2020 to restore public confidence in the safety of Germany’s reserves.

The phased relocation of the gold, currently worth about 27 billion euros ($36 billion), will begin this year and result in half of Germany’s reserves being stored in Frankfurt by the end of the decade, the Bundesbank said in a statement today. It will bring home all 374 tons of its gold held at the Banque de France and a further 300 tons from the New York Federal Reserve, it said. Holdings at the Bank of England will remain unchanged.

My guess is that these governments will apply manual labor or of physically dragging gold from source central banks to their destination: the Bundesbank. 

Gold from the NY FED may be shipped by ancient maritime ships known as Triremes.

Portrait of modern day replicas of ancient Triremes from the Wikipedia.org

Of course, they might build these ships manually too. 

On the other hand, from the ranks of the unemployed, political appointees will physically carry bullions from the Banque de France to the Bundesbank. But they would to do these via obstacle courses designated by the authorities.

Pun aside, the above developments, seem as dilatory tactics aimed at implicitly squelching the current demand by the German public for a central bank gold audit. Eventually these central banks hope that the public's interest on these will fade.

Yet instead of "restoring confidence", such will likely raise more questions about the gold reserves held by central banks for the Bundesbank and for the FED itself, as well as, postulations of gold manipulation schemes, employed by central banks and by welfare-warfare governments.

A Coming Scramble for Gold? Bundesbank Initiates Repatriation of NY Fed held Gold

Oh this should be interesting. 

If governments have indeed been manipulating gold prices, then Germany’s Bundesbank’s reported commencing of the process of repatriation of their gold bullions held by the NY Fed may have just opened the gauntlet for a potential scramble for physical gold.

Writes the Zero Hedge, (bold, underline and italics original)

In what could be a watershed moment for the price, provenance, and future of physical gold, not to mention the "stability" of the entire monetary regime based on rock solid, undisputed "faith and credit" in paper money, German Handelsblatt reports in an exclusive that the long suffering German gold, all official 3,396 tons of it, is about to be moved. Specifically, it is about to be partially moved out of the New York Fed, where the majority, or 45% of it is currently stored, as well as the entirety of the 11% of German gold held with the Banque de France, and repatriated back home to Buba in Frankfurt, where just 31% of it is held as of this moment. And while it is one thing for a "crazy, lunatic" dictator such as Hugo Chavez to pull his gold out of the Bank of England, it is something entirely different, and far less dismissible, when the bank with the second most official gold reserves in the world proceeds to formally pull some of its gold from the bank with the most. In brief: this is a momentous development, one which may signify that the regime of mutual assured and very much telegraphed - because if the central banks don't have faith in one another, why should anyone else? - trust in central banks by other central banks is ending.

Much more importantly, it is being telegraphed as such, with Buba fully aware of just what the consequences of this (first partial, and then full; and certainly full vis-a-vis the nouveau socialist regime of Francois Hollande which will soon hold zero German gold) repatriation will be in a global monetary arena, which is already scraping by on the last traces of faith in a monetary system that is slowly but surely dying but first diluting itself to oblivion. And in simple game theory terms, the first party to defect from the prisoner's dilemma of all the bulk of global gold being held by the Fed, defects best. Then the second. Then the third. Until, in this particular case, the last central bank to pull its gold from the NY Fed and the other 2 primary depositories of developed world gold, London and Paris, just happens to discover their gold was never there to begin with, and instead served as collateral to paper gold subsequently rehypothecated several hundred times, and whose ultimate ownership deed is long gone.

Two things:

First, if true then this should be reflected on gold prices soon.

Next if the Bundesbank action will impel for a "domino effect" or where other central banks may likely do the same, then this may translate to some volatility in the asset markets, as bullion banks and the banking system, who may be physically short gold, envisage risks of financial strains to cover their positions.

Germany’s Bundesbank Consolidates Gold Holdings

Possibly in response to German’s federal authorities call for the audit the gold holdings of their central bank, the Bundesbank—which has the second largest after the US of nearly 3,400 tonnes (valued at 133 billion euros $174 billion) held at foreign central banks, particularly at the vaults at Federal Reserve Bank of New York, the Banque France and the England—has begun to redeem them, despite their disagreements with the Feds.

Writes Telegraph’s Ambrose Evans Pritchard 

Roughly 66pc is held at the New York Federal Reserve, 21pc at the Bank of England, and 8pc at the Bank of France. The German Court of Auditors told legislators in a redacted report that the gold had "never been verified physically" and ordered the Bundesbank to secure access to the storage sites.

It called for repatriation of 150 tons over the next three years to test the quality and weight of the gold bars. It said Frankfurt has no register of numbered gold bars.

The report also claimed that the Bundesbank had slashed its holdings in London from 1,440 tons to 500 tons in 2000 and 2001, allegedly because storage costs were too high. The metal was flown to Frankfurt by air freight.

Has German’s federal government smelled something fishy? Or have they been influenced by the concerns of US Texas Congressman Ron Paul whom has urged, through a bill, for the audit of the US Federal Reserve’s gold?

What if central bank vaults have indeed over-declared their holdings through accounting wizardry? What if central bankers have used of gold for loans, swaps and repurchase agreement partly to control or manipulate or suppress gold prices?

If the suspicions of gold bugs are exposed as true, will the German “audit” prompt for a wider international or domino effect of gold audits that would force central banks, who could have been naked short on gold, to cover or buy them back which should drive gold prices significantly higher?

Or will this be just another white wash? Thus, perhaps the recent price pressures on gold?

Or by securing their gold holdings, have German federal authorities been dabbling with the prospects of an eventual departure from the euro?

More questions than answers from such interesting turn of events.