Gold price moves higher as the Bundesbank admits to repatriating gold held at BoE in 2000-1 – the real reason that Brown sold all that gold?
Yesterday we thought the gold price would be drawn towards $1700:
So the big question is do we get there? As long as there isn’t a rather big drop in stocks causing some liquidation of ‘good’ positions to cover them then this correction will probably bottom out around the $1700 level.
And that is exactly what has happened. Gold briefly touched $1700 yesterday and then quickly turned around and moved higher, there has been some decent follow through this morning with gold getting back to around $1715.
Gold $ (hourly):
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Gold $:
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Today will probably be the day when we’ll find out whether gold is going to stay above $1700 or test that 200 day moving average. If gold can grind higher to around $1725 this should start to draw some buyers in to the market.
Gold €:
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Gold £:
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After we noted this week that the Bundesbank have essentially admitted that they don’t trust foreign central banks to hold their gold comes a very interesting piece in the Telegraph today:
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.
So during 2000 and 2001 the Bundesbank directed the BoE to ship back some 940 tons (or 2/3 of their total holdings stored in the UK) of gold. This is the first time this information has come to light.
Obviously the ‘storage cost were too high’ excuse is complete bunk so the Telegraph offer up a reason why they might have done it:
Peter Hambro, chair of the UK-listed gold miner Petropavlovsk, said the Bundesbank may have withdrawn its bullion in self-protection since it did not, apparently, have its own specifically allocated bars in London. “They may have decided that the Bank of England had lent out too much gold, and decided it was safer to bring theirs home. This is about the identification. Can you identify your own allocated gold, or are you just a general creditor with a metal account?”
This is a very telling paragraph. Firstly it seems that it is now totally accepted that central bank have (and still do) lend out the gold that they have in the vault that they are only meant to be just storing for third parties.
This is something that only a matter of a couple of years ago would be met with utter derision whenever the tireless GATA tried to let people know that this practice goes on.
Why is this important? Because it goes to the very heart of how any gold suppression scheme might work. It essentially creates a false sense of more physical supply than there really is – which artificially keeps a lid on the price.
Let’s say you store the only 10 ounces of gold in the world with the BoE. The BoE then lends out those 10 ounces to your friend. You think you own 10 ounces of gold, but now so does your friend – which makes 20 ounces.
However, there was and can only ever be 10 ounces of actual gold in existence, but the BoE have made the supply look like there is now 20 physical ounces of gold.
But what happens if/when you want to take physical delivery of that gold but your friend has spent/lost his (your ) gold? You don’t get your gold. This is why taking physical ownership of your gold is so important – and if you do store it, make sure it is placed somewhere that doesn’t loan out your gold behind your back. The Bundesbank action this week is telling you that loud and clear.
It is also important because it should be a very loud ‘heads-up’ to anyone that invests in gold through ETFs. Basically when you invest in gold through an ETF you aren’t getting any physical gold itself, you merely become ‘a general creditor’ (watch this for more on this subject).
Look again at the timing that the Bundesbank asked for its gold back, 2000 to 2001. What else was happening around this time with gold in the UK? Gordon Brown was busy selling some 60% (390 tons) of the UK’s gold between 1999-2002.
Which raises two interesting theories. Did the Bundesbank upon hearing that the UK was selling gold get worried that the BoE would be selling ‘their’ gold and countered this by asking for their gold back?
Or did the Bundesbank ask for their gold back and the BoE, because it had leant, re-leant and then re-leant some more, didn’t have enough gold to cover all the 940 tons requested by Germany. So Gordon Brown, under the spurious guise of ‘rebalancing the UK’s foreign currency portfolio’, was forced to sell the peoples’ gold so the Central Bank could cover their obligation to the Germans?
Is this in fact the real reason why Brown sold 2/3 of the UK’s gold smack-bang at the bottom of the market?
We just don’t know, but the timing of these two events sure is very ‘coincidental’.
Oh, and how do we know for sure that the Bundesbank has lost all trust in other central banks? The official denial:
The Bundesbank said it had full trust in the “integrity and independence” of its custodians, and is given detailed accounts each year. Yet it hinted at further steps to secure its reserves. “This could also involve relocating part of the holdings,” it said.
Related posts:
- Gold price moves higher at the start of April
- As the Bank of England finally admits it is trying to achieve higher than 2% inflation – it is simply now time for Mervyn King to be sacked and stripped of his Knighthood
- As gold moves higher again: Comparing the sell off in gold between dollars and sterling
- Brown Gold Fiasco
- GFMS forecasts the gold price to break $2000 before the end of the year
Link to this article: : http://www.goldmadesimplenews.com/gold/gold-price-moves-higher-as-the-bundesbank-admits-to-repatriating-gold-held-at-boe-in-2000-1-the-real-reason-that-brown-sold-all-that-gold-8480/
Posted by Thomas Paterson on Oct 25 2012. Filed under Gold News.
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