-- Posted Wednesday, 9 November 2011 | Source: GoldSeek.com
Dear Friend of GATA and Gold:
The long clamor about the German gold reserves by GATA and particularly by our friends, the German journalist Lars Schall and the German market analyst Dimitri Speck, this week caught the attention of the German edition of the Financial Times, which published a story headlined "Speculation and Rumors: The Hunt for the Treasure of the Bundesbank."
The Financial Times Deutschland confirms, as GATA has reported, that most of the German gold is stored outside the country, partly for international security reasons but more so now for ease of trading and general subservience to the United States. The FTD story is notable mainly for extracting from the German central bank, the Bundesbank, a statement that no German gold is being leased at the moment.
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| "Hey, das ist Gold von uns in der US-Notenbank gefälschten - es ist Wolfram!" |
http://www.gata.org/node/9363
And the FTD's story errs completely in asserting: "In the 1960s former Bundesbank president Karl Blessing allegedly sent a letter to the American high commissioner in Germany in which he guaranteed that gold would not be converted into dollars. The letter is unpublished to this day; that's why it cannot be excluded that the commitments went even further."
In fact the supposedly mysterious Blessing letter was sent, in 1967, not to the American high commissioner in Germany but to the chairman of the U.S. Federal Reserve, William McChesney Martin Jr.; it did not guarantee that Germany would not trade gold for dollars but quite the opposite, that Germany would not trade dollars for gold; and GATA published it in January this year, thanks to the efforts of Speck and University of Texas economics professor James K. Galbraith, who obtained a copy of the letter from the Lyndon B. Johnson presidential library at the university: http://www.gata.org/node/9547
But the FTD story is a good start by a major news organization in getting interested in the details of gold price suppression. The FTD and other news organizations would perform even better service by pressing the Bundesbank, the Bank of England, and the Federal Reserve about gold swaps, the Fed in 2009 having admitted undertaking them --
http://www.gata.org/node/8192
-- and the Bank of England having refused last month to distinguish its gold loans and swaps from its general reporting of its claimed gold reserves:
http://www.gata.org/node/10635
The Financial Times Deutschland story is appended -- first an English translation provided by Schall and then the original in German.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Speculation and Rumors:
The Hunt for the Treasure of the Bundesbank
Germany is in possession of 3,400 tons of gold, the second-largest gold reserves in the world. But where is the billion-dollar treasure stored? There has been wild speculation about this for years. Financial Times Deutschland went in search of clues.
By Peter Vollmer
Financial Times Deutschland
Monday, November 7, 2011
http://www.ftd.de/finanzen/maerkte/rohstoffe/:spekulation-und-geruechte-...
Anyone who wants to lay his hands on the gold reserves of the Bundesbank -- which are currently approximately 3,401 tons with a current market value of $196 billion -- faces a problem: Where is the gold of the Bundesbank anyway?
This simple question has been the subject of wild speculation. Critical minds claim that the precious metal was largely in the United States, where it was deposited on the one hand during the Cold War as far away as possile from the "Iron Curtain," and on the other hand also as an ideological pledge of loyalty to the alliance of Germany to the United States.
Supercritical spirits even doubt that the Bundesbank has the gold at all.
Let's take one thing at a time.
The big gold reserves of the Federal Republic -- according to recent data from the the mining lobby World Gold Council the second largest in the world after the U.S., which holds with 8,133 tons, more than twice as much -- date from the 1950s. With the economic miracle, West German exports boomed and many nations paid in gold.
In 1968, Germany held 4,000 tons -- the culmination of the German gold holdings. A large portion of these reserves was, however, never transported, which is both logistically and actuarially difficult. The gold simply changed hands at the great trading centers in New York, London, or Paris without ever changing the local storage locations there.
During the Cold War, it seemed too uncertain to deposit the gold at the headquarters of the Bundesbank in the financial metropolis Frankfurt -- just 100 kilometers away from what in the Cold War was called the "Fulda Gap" -- a spot at the inner German border, which would have been ideal for an invasion by Warsaw Pact troops in wartime because of its topography.
Over the years Germany's gold reserves decreased slightly, especially since the gold price dropped between 1980 and 2000, interrupted only by occasional convulsions. With the gold price increasing beginning in 2001 from below $300 per troy ounce to $700 in 2006 and finally above $1,000 in 2008, the perception of gold in the public mind changed, and more and more critical minds were interested in the whereabouts of the gold.
But the Bundesbank was tight-lipped: Its former chief executive, Hans-Helmut Kotz, told the magazine Stern in 2004: "The biggest part of our gold reserves is held at the U.S. Federal Reserve, the Bank of England, and the Banque de France, in that order." Never again has any representative of the Bundesbank expressed himself in such detail.
Via a written request to the Federal Government, Member of Parliament Peter Gauweiler received in November 2010 no further details of the storage locations but learned that the Bundesbank maintains its gold holdings in physical form -- not in the form of dodgy, windy delivery promises of banks that may be cash-strapped in time of crisis -- and that lending would be made in the current low-percentage range.
... Gold Lender Bundesbank
So anyone who does the treasure hunt has to patch up a map first: for example, from rumors -- 2.300 of the 3.400 tons are allegedly in the vaults of the Federal Reserve Bank in Manhattan. That would be more than two-thirds of the total gold reserves. The testimony of former Bundesbanker Kotz would not be contradicted by that. And because the Bundesbank is so tight-lipped, a lot of yarn is spun.
This also implies that the central bank would have lent the gold to collect interest on the loan -- and to give unspecified market forces such as banks the opportunity to suppress the gold price by selling the borrowed gold at the market. That would be a classic short sale, for which specualators are blamed in the stock and bond markets, and there would have been a lot of winners except for gold owners and producers. The central bank would receive interest for lending the gold that would otherwise uselessly lounge around.
Speculators could suppress the price with the sale of the borrowed gold and buy the gold back later more cheaply and pocket the difference as profit, more so as one pushes the gold price down. And both banks and central banks have an indirect interest in a low gold price, even if their gold reserves are worth less. The price of gold is ultimately a crisis indicator of system stability and future inflation rates; the higher the gold price, the higher the stress in the system, which neither banks nor central banks want.
But either the Bundesbank is lying or the conspiracy theory of "gold price suppression" via short selling with borrowed gold is wrong, because at the request of the Financial Times Germany, the Bundesbank announced that "at present no gold is lent."... finish reading at GoldSeek
