‘CATACLYSMIC’: GERMANY TRYING TO GET ITS GOLD BACK FROM THE FEDERAL RESERVE

Clip at the Blaze

Where is the German Gold?

By Turd Ferguson | Wednesday, January 8, 2014 at 1:48 pm
Almost a year ago, the German government put in a formal request to reclaim (repatriate) a portion of their gold reserves held outside of Germany. Reports on the progress of this initiative have raised quite a few questions.

Here's the first report, from ZeroHedge and released on Christmas Eve: http://www.zerohedge.com/news/2013-12-24/year-later-bundesbank-has-repatriated-only-37-tons-gold-700-total

At the time the plan was announced, many in the gold community made note that it would take over 8 years for Germany to reclaim this portion of its foreign reserves. Seven hundred metric tonnes...though a lot of gold...should simply be sitting in New York, London and Paris vaults, collecting dust. Why not just brush it off, certify that the bars numbers match up and then ship that shiny stuff back to Germany. No big deal and certainly not something that should take eight years to accomplish.

Now news comes that, in the first year of the plan, Germany only received back 37.5 metric tonnes of their gold. This is only 5% of the total repatriation amount. At this rate, it will take twenty years, not eight, to reclaim the gold.

Further muddying the waters are reports that this gold came exclusively from the vaults of the Federal Reserve Bank of New York (FRBNY). If that was the case, then the gold returned should have been a simple transfer. The Germans deposited the gold there decades ago. It is being shipped back to them now. Problem is, it wasn't a simple transfer!

Apparently, The Bundesbank took the unusual step of having "its" bars assayed, melted and recast into London Good Delivery form before taking delivery. Now, why would they do that? And why would they do this in the U.S. and not in Frankfurt? These bars should simply be the same bars that were deposited decades ago. Do they not trust the FRBNY? Are these not the same bars?

Perhaps, instead, there's another explanation. This idea was first spelled out on the GATA site earlier this week and I urge you to read through this post now: http://www.gata.org/node/13458

In summary, it goes like this:

The original German gold held in the U.S. is gone. Leased, sold and rehypothecated many times over.
Germany now wants its gold back. The U.S. balks and promises to only return roughly 40 mts/year for eight years. (By the way, why didn't France return any gold in 2013? Germany's looking for 374 metric tonnes from them and, in 2013, it got zilch, zero and nada.)
Pressed to come up with gold to ship back to Germany, the U.S. scours it's vaults.
The U.S. takes some of it's 1930s-confiscated "coin melt" gold, assayed at 90% purity, and recasts it into 99.5% purity London bars and ships them off to Frankfurt.
The Bundesbank books in these new bars, apparently date-stamped "2013", as a "return of German gold" and now awaits the other 95% of their "order".
Hmmm. OK, then. First year done. Whew! Now, from which vault will the U.S. find gold for Germany in 2014? And how about the reserves allegedly held in Paris? When will those be returned? You'd think they could just drive that over in a convoy of guarded trucks. From Paris to Frankfurt is only about a 500km drive. You could do that in under a day. What's the big deal?

(Could it be that there is no German gold in Paris? Coincidentally, it's almost the exact same distance from Paris to Basel, Switzerland. Hmmmm. Maybe the Germans should look for their gold there, instead??)

Anyway, this entire farce just keeps getting sillier by the day. Today, there are reports from Germany that indicate the Bundesbank is quickly backtracking and attempting to retract the "U.S. remelting of bars" story. (http://www.gata.org/node/13472) OK, right. Whatever you say. And don't forget about this fun chart, created for us last year by our pal, Ned Naylor-Leyland:

RUSSIA NOW WORLD’S BIGGEST GOLD BUYER (ADDED 570 METRIC TONS IN 10 YEARS!)

PUTIN ON THE RITZ

n September 2012, TheBlaze reported that Russian President Vladimir Putin had been grabbing up gold “as fast as he can get his hands on it.”

And since that initial report, he has only doubled his efforts.

“Not only has Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer,” Bloomberg notes.

“His central bank has added 570 metric tons of the metal in the past decade, a quarter more than runner-up China,” the report adds. “The added gold is also almost triple the weight of the Statue of Liberty.”

For reference, here’s a chart illustrating the rapid growth in runner-up China’s gold holdings:

Courtesy Zero Hedge

“The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency,” said Evgeny Fedorov, a member of for Putin’s United Russia party, in a telephone interview with Bloomberg.

It’s definitely worth noting that the value of gold has jumped by nearly 400 percent since Putin began his gold-acquiring efforts.

Also, it’s widely believed that Putin – along with China, the Netherlands, and Germany – is merely reacting to global money-printing trends. That is, he is simply looking for a safer investment than the devaluing currencies of the EU and U.S.


“In 1998, the year Russia defaulted on $40 billion of domestic debt, it took as many as 28 barrels of crude to buy an ounce of gold,” Bloomberg notes.
“That ratio tumbled to 11.5 by the time Putin first came to power a year later and in 2005, after it touched 6.5 — less than half what it is now — the president told the central bank to buy,” the report adds.
Indeed, Putin has been actively and aggressively encouraging banks to invest in the precious metal. In fact, during a recent tour of the Magadan region in the Far East, the Russian president told Bank Rossii not to “shy away” from investing in gold.
“After all, they’re called gold and currency reserves for a reason,” Putin said, according to a Kremlin transcript.
Putin’s spokesman declined to comment of his boss’ interest in gold.
“While Putin is leading the gold rush in emerging markets, developed nations are liquidating,” according to the report.
“Switzerland unloaded the most in the past decade, 877 tons, an amount now worth about $48 billion, according to International Monetary Fund data through November. France was second with 589 tons, while Spain, the Netherlands and Portugal each sold more than 200 tons,” the report adds.
Still, when all is said and done, at approximately 958 tons, Russia’s gold holdings is only the eighth largest in the world, according to the World Gold Council.
“The U.S. is No. 1 with about 8,134 tons, followed by Germany with 3,391 tons and the Washington-based IMF with 2,814 tons,” the report notes. “Italy, France, China and Switzerland are fourth through seventh.
But at the rate that the Russian’s are snatching up gold, it’s not entirely unlikely that we’ll see a change in these standings soon.

Fed Has Bought More U.S. Gov’t Debt This Year Than Treasury Has Issued

If the Fed continues to purchase $45 billion in additional federal debt each month in 2013 it will buy up another $540 billion in federal debt this year alone


The CBO currently estimates that the federal deficit for fiscal 2013 will be $845 billion. If the Fed were to buy debt at a pace of $540 billion a year, and the Treasury were to issue it at $845 billion per year, the Fed would be buying the equivalent of about 64 percent of all debt the government issued.

As recently as calendar year 2007, the total debt of the United States increased by only about $549 billion, or roughly equal to the amount of debt the Fed plans to buy this year.

Currency Wars Return, 1930s Style: Who Will Lose Out?

The U.K. was the first to leave the gold standard on September 19, 1931 due to painfully high unemployment. Sterling depreciated, setting off a volatile chain of events with the U.S., Norway, Sweden, France and Germany all following suit.

Remember, one country's weak currency is another country's strong one: it's a zero sum game. In the past, currency wars have led to protectionism and capital controls, as well as tariffs as countries seek to protect their industries. Look what happened in the 1930s and 1970s when the U.S. finally abandoned the gold standard and devalued the dollar.

Why Currency Wars Might Be Coming

The rush to cheapen the yen and the dollar, which has left the euro appreciating, is creating headaches for policymakers all over the world. The Brazilians are furious at the Americans, since it has increased the cost of exporting goods for them. They already have a weak form of capital controls.

Other policymakers have had to cut interest rates to weaken their currencies.

The worry: This could become a serious issue and undermine the global recovery.

Federal Reserve Bank admits they lost 9 Trillion Dollars!

Fed's Inspector General Elizabeth Coleman Missing Trillions of Taxpayers' Dollars in a Senate Hearing

Fed's Inspector General Elizabeth Coleman Missing Trillions of Taxpayers' Dollars

The Inspector General of the Federal Reserve in the video above acknowledges that trillions of dollars cannot be accounted for. The astonishing five-minute clip is taken from a Congressional hearing where Federal Reserve Inspector General Elizabeth Coleman is questioned by Congressman Alan Grayson of Florida on May 6th about huge amounts of money for which the Federal Reserve is responsible.

The Inspector General avoids answering almost every question asked by the Congressman. In fact, she appears in this video clip to know less about the finances of the Federal Reserve than Congressman Grayson.

Among the many important questions raised, Grayson requests information on the Bloomberg report that many trillion of dollars in credit have been extended by the Federal Reserve. When the Inspector General avoids answering, Grayson states, "If you're not responsible for investigating that, who is?" Once again, she avoids the question stating, "We've not gotten to a specific level of detail to really be in a position to respond to your question."

At another point, Coleman answers a further question with, "We are not in a position to say whether there are losses." Yet if the Inspector General of the Federal Reserve cannot account for trillions of dollars extended, who can? Grayson holds his composure very well throughout the questioning. He concludes, "I have to tell you honestly, I am shocked to find out that nobody at the Federal Reserve, including the Inspector General, is keeping track of [the unaccounted for trillions]."

U.S. Taxpayers Risk $9.7 Trillion on Bailout Programs 

The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.

“We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?”

FLASH BACK 

9/10/2001: Rumsfeld says $2.3 TRILLION Missing from Pentagon