Gold price bounces off $1720 as Germany wants its gold back because it doesn’t trust the NY Fed
Back in mid September when the gold price was trying to break above $1777 and hold there, something that it attempted several times but eventually failed, we cited the $1720 level as a place where any significant pull-back should be supported:
Should $1770 not hold decent support can be found at the $1720 level.
And that is exactly what has happened. On Friday, and as usual just after the jobs report in the States, we got another smash in gold taking the price all the way down to $1720.
This morning there was initial selling but the gold price has turned around and is now holding around the $1727 area.
As you can see on the chart above that $1720 area is also right at the 50 day moving average.
Today we also got some very interesting news out of the German central bank that relates to a story we first talked about back in August last year in a piece titled Babaloynian Queen Nitetis’ message to the Germans:
So Germany has 3,400 tons of gold, but does it really have that amount? First question is where is all that gold held? Max Keiser has done a pretty good job at getting to the ‘bottom’ of this (pun intended) in a short documentary he made called ‘Brown’s Bottom’, referring of course to the then Chancellor Gordon Brown’s sale of over half the UK’a gold right at the bottom of the market at $254 per ounce….
…So just how much of that 3,400 tons do the Germans keep in Germany? According to this only about 5%, or 170 tons. To put that in perspective that’s just over half the size of the UK’s meagre gold holdings. And a whopping 66% of all of Germany’s gold is at the NY Federal reserve.
So if it doesn’t have it in its own vaults, can it be said that the Germans own very much gold at all?
So when Germany asks for its gold back and goes down to the vaults for the NY Fed and swings the door of the safe open and instead of seeing pallets of gold there will be a simple note:
“Of course we stole your gold – we’re central bankers, it’s in our nature”
Well we’re about to find out if that prediction is correct because today, according to the German newspaper Die Spiegel, the Germans are about to ask for their gold back and for it to be audited (via google translate so it’s not brilliantly worded but you get the gist):
Germany has the second largest gold reserves in the world, nearly 3400 tons. Supposedly, anyway. Because stocks have never been checked for authenticity and weight. Now, the Federal Court has asked the Bundesbank to examine the gold reserves abroad regularly.
Note how even the German newspaper agrees with our assessment last year questioning that 3400 ton number.
Berlin – The German central bank gold is safely stored in vaults in Frankfurt, New York, Paris and London. Checked really but apparently no one.
It also admits that the gold held abroad isn’t checked by anyone.
The Federal Court has the Bundesbank now anyway required regular inspection and inventory of the vast gold reserves abroad.
It seems that the German Federal Court is now concerned enough about whether the gold is really there to order regular inspections because…
…The samples stored at other German banks stocks were also never by the Bundesbank itself or by other independent auditors “added physically and for authenticity and weight” checked. Actually talk on the subject numerous conspiracy theories – so should the U.S. gold reserves at Fort Knox have long been looted .
The Bundesbank has on the USA’s second largest gold reserves in the world. End of 2011 there were 3396 tons, worth 133 billion euros. After the soaring price of gold is likely to reach about 142 billion euros currently even. Secures the gold bars by the Bundesbank in own vaults in Frankfurt as well as at three bearing points abroad: The U.S. Federal Reserve Bank in New York, Bank of France in Paris and the Bank of England in London.
Looks like the Bank of England is also on the list for these German inspections to take place.
The Court had determined the order of the Bundestag that the Federal Bank reviews its overseas gold reserves stored exactly. It is disputed whether the Bundesbank experienced for years practice sufficient to rely only on a written confirmation to the gold bars by the foreign central banks.
So basically in the past other central banks that hold the German gold have just written a note saying “yeah, we’ve got your gold” and this had been sufficient. Not anymore it would seem.
The Court recommends that the Bundesbank to negotiate with the three foreign central banks the right to physical verification of stocks. With the implementation of this recommendation, the Bundesbank has begun according to the report. They also decided to bring in the next three years to 50 tons each of the past at the Fed in New York gold to Germany to get it here to undergo a thorough examination. In the report, several points are blackened. In effect, the paper is not clear exactly how much gold is in which foreign central bank.
Basically this move should be read only one way. The German court simply does not trust the central banks of the UK, France and USA. Which raises a very interesting point, if they don’t trust these supposed venerable institutions should you?
But the real issue has not really been whether the gold is in these foreign vaults but rather who has been assigned ownership. Put simply the gold is probably there, but it has probably been lent and/or sold to other parties many times over. So the fact that the Germans are planning on shipping back 50 tons per year is significant.
It means that the NY Fed will have to actually ship out some gold that it does have to the germans. But if it has sold or lent that gold to other parties it means that those other parties will left goldless.
First it was Chavez, now it’s Germany. It probably won’t be long until other people around the world who house their gold with the NY Fed or the BoE get nervous and ask the same questions because you don’t want to be the last in the que to get your gold back because there is a good chance, according to Germany at least, that it won’t be there.
- Germany’s economy is only king in the blind valley of the Eurozone
- Gold price dips to $1630 (again) and then bounces back towards $1650 (again)
- Götterdämmerung – Germany is finished.
- Weekly Wrap: Gold bounces back
- $1800 gold price shows solid support as gold bounces to $1850
Link to this article: : http://www.goldmadesimplenews.com/gold/gold-price-bounces-off-1720-as-germany-wants-its-gold-back-because-it-doesnt-trust-the-ny-fed-8432/