Germans nervous about their gold

[Master Shake]

BERLIN (AP) — Germany's central bank has failed to properly oversee the country's massive gold reserves, which have been stored abroad since the Cold War in case of a Soviet invasion, independent auditors say.

The central bank must renegotiate its contracts to gain the right to inspect its gold bars, which are worth tens of billions of dollars and are stored in the United States, Britain and France, the Federal Auditors' Office said in a report to lawmakers obtained by The Associated Press on Monday.

The report says the gold bars "have never been physically checked by the Bundesbank itself or other independent auditors regarding their authenticity or weight." Instead, it relies on a "written confirmations by the storage sites."

[snip]

The debate on most of the gold reserves being held by foreign authorities has caused some inevitable conspiracy theories questioning their very existence, but several German politicians have also voiced unease.

Philipp Missfelder, a leading lawmaker from Chancellor Angela Merkel's center-right party, has asked the Bundesbank for the right to view the gold bars in Paris and London, but the central bank has denied the request, citing the lack of visitor rooms in those facilities, German daily Bild reported.


http://finance.yahoo.com/news/unease...--finance.html

[don]

Re: Germans nervous about their gold

If the German Federal Auditors are headed off at the pass (the vault doors) what happens?

[thriftyandboringinohio]

Re: Germans nervous about their gold

If the German Federal Auditors are headed off at the pass (the vault doors) what happens?

Then Germany and the world would conclude that the gold was not being stored; it was being stolen.
Payment by currency rather than return of bullion might be accepted, might not.
All other gold owners would demand their bullion from that vault-keeper.

All bad.

[Master Shake]

Re: Germans nervous about their gold

If the German Federal Auditors are headed off at the pass (the vault doors) what happens?

It sounds to me like there's some form of "gentlemen's agreement" among the federal bankers not to look too closely at actual gold holdings.

[FrankL]

Re: Germans nervous about their gold

It sounds to me like there's some form of "gentlemen's agreement" among the federal bankers not to look too closely at actual gold holdings.

Absolutely. I'm sure there are quite a few more gentlemen's agreements regarding gold within the Western block. It'd be interesting if some of these can be unveiled (for example like this German auditor demanding access and getting a very odd response from the Bundesbank).

Another interesting thing to watch:
- if demands will be made to separate physical gold holdings from swaps on central bank balance sheets (they're always lumped together, without breakdown)

[don]

Re: Germans nervous about their gold

Then Germany and the world would conclude that the gold was not being stored; it was being stolen.
Payment by currency rather than return of bullion might be accepted, might not.
All other gold owners would demand their bullion from that vault-keeper.

All bad.

It was stolen. I assume they would never admit it. It would remain a supposition, for what that's worth.

Currency payment would not be accepted - no way this will happen in a fiat currency world in crisis.

Gold owners would demand their bullion. Those who really have it most likely know it. The rest would get the German treatment.

Leaving us shorn of a golden illusion and little else . . .

[don]

Re: Germans nervous about their gold

Jesse on the Currency War, which is prompting the German inquiry into their gold . . .

Currency Wars Part II

"All war is based on deception. Of all those close to the commander, none is more intimate than the secret agent; of all rewards none more liberal than those given to secret agents; of all matters none is more confidential than those relating to secret operations."

Sun Tzu


"Let Hercules himself do what he may,
The cat will mew, and dog will have his day."

William Shakespeare, Hamlet

There is a currency war underway.

The international trade clearing mechanisms are tottering. Countries are using their economic power, their banks and currencies, as a part of overall foreign as well as domestic policy.

This is a huge source of the tensions and problems which are are seeing both economically and militarily in the world today.

The current trade system based on the US dollar reserve currency is not sustainable. It has had a good long run, but like the euro it has reached the end of its rope. The US cannot continue to print enough money and increase its debt balance through trade any further. See Triffin Dilemma. Yes I am familiar with Eichengreen's counter argument.

And I am also aware of the already written and vetted proposals for a 'single world currency' with independent local governments, an arrangement which is even more fallacious and ill founded than the euro. Yes I know that there could be a series of agreements that could kick this down the road five or ten years. But something has got to give. The charade is getting a bit thin but the deception must go on.

I still think the only tenable solution, if one still wishes to cling to the notion of 'free trade' internationally, is an SDR based on a wider basket of currencies with a gold and silver component. And I am of the opinion as you know that much of these international theatrics and sword hammering is just the 'negotiations' phase with regard to the composition of the new SDR, and the ownership of its maintenance.

There are some who would treat the dollar as an arm of the military strategy, but that becomes a bit dramatic, in the Dr. Strangelove sense, but is nevertheless a good source of Defense Department consulting fees for those who promote the idea.

And I would hope that it goes without saying that the currency war is intimately tied in with the oil/energy situation, via the petrodollar. If you are going to send your country into multiple preemptive wars, one might take the time to understand the reasons why they are doing it. It is about the oil, and the positioning for it.

The problem is that there is no mechanism in place to bring the disputing parties together for an expedient resolution, given their conflicting interests. And those interests run deep, particularly for the Anglo-American banking cartel in NY and London. The dollar is the basis of their power.

And so we are locked in a 'currency war,' a resolution of differences in interest by other, less destructive, means than war itself. After all, nine-tenths of diplomacy is economic, if money is power.

If this notion is alien to you, then one can sympathize, because it is like watching an opera in a foreign tongue without a libretto to help you to understand the action on the stage. To have such knowledge of the basic plotline might not only help your understanding, it could be good for your investment portfolio. For in this currency war, your accounts and your savings are cannon fodder.

If you wish to read one pivotal post on the subject read the first part of this: Currency Wars.

If you click on the label 'currency wars' at the bottom of this post, it will bring up all the other posts here that touch on that subject, some admittedly only tangentially.

I think the currency war will intensify quite a bit before it resolves. I have been tracking this since 1999. It is the reason I first became interested in gold. I went looking for something like it, and only gold really fit, and to a lesser extent silver.

Gold and silver are intimately involved in the unfolding currency war, because they take no sides, and have no counterparty risk. No one can print them. And this is why I think GATA is right, not because of the evidence they have, which is more substantial than one might suspect given obsessive secrecy and the disinformation campaigns, but because it is exactly what one would do if there was to be a currency war, and such things as gold and silver existed. It is basic strategy of war: seek to control the high ground. And along with oil, gold and silver are strategic high ground in a currency war. And the first victim in a war is the truth.

If one does not understand these things, and the scope of what is happening with the dollar and the euro, then the significance of the important things that are happening will be missed and dismissed. People will connect the dots that they see and draw their pictures accordingly and they will be wrong. And what is particularly Machiavellian is that some of that is being done by intent.

And even with all sorts of technical trading knowledge, one will be in the dark, literally be fighting 'the last war,' in their understanding of what is happening in the world as it is today.

[Master Shake]

Re: Germans nervous about their gold

I still think the only tenable solution, if one still wishes to cling to the notion of 'free trade' internationally, is an SDR based on a wider basket of currencies with a gold and silver component. And I am of the opinion as you know that much of these international theatrics and sword hammering is just the 'negotiations' phase with regard to the composition of the new SDR, and the ownership of its maintenance.

I believe EJ has noted previously that as silver is not held by Central Banks, it is unlikely to be part of any new SDR.

[thriftyandboringinohio]

Re: Germans nervous about their gold

...Currency payment would not be accepted - no way this will happen in a fiat currency world in crisis...

The original post is not about what might unfold in the future during a hypothetical global currency collapse.
It's about here and now, Germany auditing it's gold now, or soon.

Of course, the distinction might not really exist. Should Germany audit their gold and find a big problem, it might trigger a global currency collapse.

[don]

Re: Germans nervous about their gold

I still think the only tenable solution, if one still wishes to cling to the notion of 'free trade' internationally, is an SDR based on a wider basket of currencies with a gold and silver component. And I am of the opinion as you know that much of these international theatrics and sword hammering is just the 'negotiations' phase with regard to the composition of the new SDR, and the ownership of its maintenance.

I believe EJ has noted previously that as silver is not held by Central Banks, it is unlikely to be part of any new SDR.

If PM is any part of a currency basket does anyone believe a trade imbalance will be redeemable in PM?

[shiny!]

Re: Germans nervous about their gold

If PM is any part of a currency basket does anyone believe a trade imbalance will be redeemable in PM?

Isn't Iran using gold to get around dollar trade sanctions?

[don]

Re: Germans nervous about their gold

Isn't Iran using gold to get around dollar trade sanctions?

If they are, it's the exception that proves the rule. Tremendous pressure being brought to bear and not only fiscal.

[aaron]

Re: Germans nervous about their gold

If PM is any part of a currency basket does anyone believe a trade imbalance will be redeemable in PM?

Like this?
U.S. Exporting Record Amounts of Gold Overseas

http://www.financialsense.com/contributors/steve-angelo/u-s-exporting-record-amounts-of-gold-overseas

[don]

Re: Germans nervous about their gold

Like this?
U.S. Exporting Record Amounts of Gold Overseas

http://www.financialsense.com/contri...-gold-overseas

As was stated in the headline of this article, the United States is exporting a record amount of gold and the majority of it is being sent to Switzerland, London and Hong Kong. I would imagine these large U.S. gold exports are being used to try and fill the insatiable demand by the Eastern buyers (mostly Asian)... claimed by Jim Willie (goldenjackass.com) in many of his recent interviews.

How is this addressing trade imbalances? Obviously it isn't nor is it an integral working part of the fiat currency regime. These are sales to private gold buyers, looking for a fiat money hedge. Gold shines, yes. Blinding some of its proponents - another yes.

[aaron]

Re: Germans nervous about their gold

One ton of gold is worth about $50 million dollars. 400 tons * $50m = $20 billion dollars...

$20 billion dollars can be magically be used to loan out 10 times that amount. Those that get the loans can buy treasuries on margin. Treasuries are also considered to be money and can be used as collateral.

So, if the U.S. exports $20 billion in high(est)-powered money, which in turn is used to buy 10-100 times that in treasuries, etc.... Basically, the "real" value of gold is not just the value in U.S. dollars, but the amount it can be used to create money to buy other stuff as well.

Or, I imagine:

400 tons leave the U.S. On net, the new gold owners are then able to buy $200 billion to $1 trillion in (mostly) U.S. treasuries.