Germany to repatriate gold

Phiber,


"And you obviously know it all and better than everyone!"


In this case, yes, better than BS.


OC
 
A short anecdote,

In 1940, with invasion probable, England packed up ALL of her gold and silver and other valuable/strategic metals, together with anything of value (not sure about the Crown Jewels), and shipped the lot to Canada. Even I believe, the Magna Carta!

And much of the munitions/food convoys to Russia were partially paid for by back loading valuable minerals in the same ships as ballast.


OC
 
bron suchecki said:
Yes Phiber, maybe I do know it all about VAULTS given I work in a mint. The issue is more to do with the vault than the logisitics. Unless you will watch the NY Fed video I can't have a conversation about it. FYI vaults are specifically designed to make it hard to get metal out to prevent and slow down crooks. When you have space constrained area where you will have problems even getting a forklift in, a vault door less than 1.5m wide, tens of thousands of bar loose stacked that each need to be checked off etc etc throwing men and machines at it doesn't make a difference. I give up moving ammo tins in the army is the same as gold in a vault.
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Sorry Bron but that isn't much different from most military ammunition vaults. For all the same reasons that you don't want undesirables getting in. Once they're delivered by the manufacturers to theatre/corp first distribution centre and it's taken delivery of by any formation less than a brigade it's mostly manually handled. 5.56/7.62 loose and link ammo boxes are not much bigger than 2 bars of gold either.
 
JB3 said:
The London Market moves more gold in a morning than they did last year.[1]

It's not logistics.

What's interesting to me is the apparent nonchalance shown by the Bundesbank. Maybe they want the gold but don't want the whole house of cards to come down by showing the world it isn't there?



[1] http://www.lbma.org.uk/pages/index.cfm?page_id=50&title=clearing_-_statistical_table

In November last year, for example, 24.2 million ounces were transferred through the LBMA. I calculate that averages about 15 tons per working day. I accept not all this metal actually moves relative to the earth, mind.
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The very existence reason for Comex and other market vaults/stocks is to avoid transports.
Reducing a gold trade to an digital-electronical relabeling in a computer-networked world, very much the same as we posting here on this forum.
I have no idea, but I consider it likely that 99 or more % of the LBMA ownership transfers, do not involve any gold transports.
Very likely the only actual transports involve gold for precious metal dealers delivering to stackers, and if you look at the annual Mint productions, it's just a small fraction of the electronical trading volume. And actually, more generally, trading volume means little to nothing regarding amount gold involved, because a transfer forth and a transfer back totals to 2 transfers, while still the same objects. This is a typical scam going 'round.
 
AS,

As I am sure you know, logistics is all about getting "the right stuff, to the right place, at the right time". Armies live and die from it. I was a Service Corps driver in my National Service (Pucka and CMF) 1958 to 1960.

As I tried to illustrate to some that cannot see, and cannot imagine, a 5.5" shell is rather large and heavy and even slightly dangerous. It required special attention, not unlike a 400oz (12.5kg) bar of gold. It requires men and material to do what they are told to do, and do it properly.

Some would reply to the Boss's order, "sorry, but it can't be done", others just say YES SIR!


OC
 
Let's have a reality check.
If the U.S. wanted to move that amount of gold it wouldn't be a huge deal. 1 ton a day and it would be finished before the year is out.
There is a reason why they're not doing it and it's likely the same reason why the Germans aren't allowed to see the gold in the vault.
 
Logistical challenges mean further delays

"The Bundesbank no longer feels bound to the [concrete repatriation commitment time table] as they now admit for the first time [towards the HB]."

=> Interesting because this is in fact the first time that the BuBa is partially revoking their promise, made to the German Bundestag (parliament) in 2012, for a full inventory inspection and a repatriation of "150 tons from New York by 2015. After the 5 tons retrieved from NY in 2013 and the 30-50 tons announced for 2014, the BuBa seems to already KNOW today that not even 100 tons (= 6.7 % of the portfolio) will be forthcoming from NY in 2015! Honi soit qui mal y pense. ("Shame on him who thinks evil of it!")

=> Indeed, in January 2013 BuBa has come up with a new (less specific) repatriation concept that would retrieve 300 tons from NY & Paris by the end of 2020. However, the concrete repatriation time table from the Bundestag hearings of 2012 had thus far not been withdrawn which is why the above quoted admission of the unfeasibility of repatriation by 2015 is quite remarkable! And which naturally feeds our mistrust of the Fed's ability and willingness to deliver the gold.

Handelsblatt: "Due to 'logistical challenges,' the BuBa no longer feels bound to its promise to the Bundestag."
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InGoldWeTrust
 
Bottom line has always been, if the Central Banks in the US are actually holding another nation's gold (with a contract that states the depositor/claimant can withdraw all at any time) and any of these US CBs don't want to part with this gold in the timetable that the claimant expects, what is the claimant going to do about it? Attack the CB and take the gold by force? Yeah, right.

I suspect that the statement by the BuBa is merely stating the obvious. Were the US not a million times militarily stronger than any other country, this could be a tense situation...but it's not.

Now please don't confuse me stating the obvious with my approval of such behavior by the CBs....I think it's incredibly haughty and unethical behavior.



.
 
That depends I guess on whether the country whose gold is being held has more, or less, than the gold value in reserves held in US Treasury paper.

Germany could, assuming its dollar reserves are valued at more than the gold, just fail to roll over the Treasury bills. That would hurt the US (because it would provide an inflationary pressure and upward pressure on interest rates) and allow Germany, if it chose, to buy back the gold with the dollars released.

The buy-back would - in a way - help the US by devaluing the dollar but any money market interest rate hike would be devastating.

But I don't know if Germany has the kind of reserves that would do that, or whether they can - or have the will to - forgo the gold.
 
"Germany could, assuming its dollar reserves are valued at more than the gold, just fail to roll over the Treasury bills. That would hurt the US (because it would provide an inflationary pressure and upward pressure on interest rates) and allow Germany, if it chose, to buy back the gold with the dollars released."


At maturity, the US will do what it has always done, pay them out with new printed $100 ($1,000,000?) bills.

Germany will NOT see their gold this side of 2100.


OC
 
Old Codger said:
At maturity, the US will do what it has always done, pay them out with new printed $100 ($1,000,000?) bills.

OC
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Sure, of course it will. But that has two deleterious effects on the US economy:

It 'imports' inflation as those dollars, spent, will return to the US and it puts upward pressure on interest rates as there is now one fewer major purchaser of US government debt. They wouldn't even need to take the dollars though: just shorting their 10 year bonds to 30-day T-bills would have the same effect.



Is Germany big enough to make this an issue? Probably not, I don't know. But as far as I understand (I'm an armchair economist) it doesn't really cost the Germans anything to do this - they can just hold another currency in reserve. If they choose one pegged the the US dollar (or at least held in a tight exchange-rate band with it - perhaps the yuan) then they don't even assume an exchange rate risk.
 
JB3 said:
If they choose one pegged the the US dollar (or at least held in a tight exchange-rate band with it - perhaps the yuan) then they don't even assume an exchange rate risk.
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Its not the issue of exchange rate, rather the counterparty risk / failure. Physical gold has no counterparty its payment in full, unlike fiat.
 
But it does, in bailment. That's what they are finding out now, the hard way!

My comment about the exchange rate risk is in the switching to an alternate reserve currency. If you switch to a currency that devalues against the dollar - which most assets are still priced in - then you lose purchasing power. Fixed to the dollar and that doesn't happen. The yuan has had a narrow exchange-rate band for many years now, sometimes to China's detriment I might add.

I agree gold as a reserve is safer than another's fiat, although holding cash makes sense in any trade imbalance (although gold used to work for this as well, when banks held it).

But having your gold in a vault in New York doesn't seem a safe bet right now, either!
 
Yes, German gold stored in US on their behalf does have counterparty risk. I was talking about gold stored within sovereign's borders; lack of clarification - my mistake.
Bringing some of the gold back from the states would reduce exposure, it seems as if Bundesbank is on Risk Mitigation Path.

Banks still have gold, Central Banks that is; therefore if they do have gold they claim they do, repricing it would automatically fix many CB's Balance Sheet issues. Yes I'm talking about US now, as keeping the gold at 41$ an oz is pure BS. EU gold is priced on mark-to-market basis since a while anyway.

Having gold in a vault in New York is not a safe bet I agree, but providing goods and services in exchange for FIAT + settling trade imbalances with FIAT or even SDR's (60's style) is not a smart or safe move either. You are on a whim of either other Sovereign or International self serving organisation "IMF".

I believe in one gold rule: The one that has Gold, rules. And it does seem that major players around the world follow it, otherwise Bundesbank would get their gold in no time.
 
Australia is in much the same boat with a large tonnage of gold in the UK. It would be interesting to see the outcome if either Germany or Oz chose to sell their holding to the highest bidder, and that bidder demanded delivery.

Of course that would never happen because the USA, EU and Oz represent the West, and in this clash of civilisations, we must stand united.
 
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