Dezember 12th, 2012
By Lars Schall
This time was different right from the beginning, as this request was the result of an interview that I did recently with Ambrose Evans-Pritchard. I’ve talked with him about the German gold reserve held abroad. The rest is pretty self-explanatory – as you will see.
The follow-up
On December 5, I wrote to the Bundesbank press department under the heading “Media Request” an email of the following content:
Dear Ladies and Gentlemen,
my name is Lars Schall, I am a freelance journalist for finance from the Ruhr area. On behalf of Matterhorn Asset Management / GoldSwitzerland in Zurich, Switzerland , I have conducted an interview with Mr. Ambrose Evans-Pritchard (in the CC), the international business editor of the British newspaper The Daily Telegraph. This interview will be published today.
During the course of the interview, I’ve asked Mr. Evans-Pritchard about his thoughts with regards to the German gold reserves stored abroad. He raised then some questions related to it, about which he said that the Bundesbank owes some answers to them. Therefore, I would like to forward these questions to you herewith.
To give you the context, here’s the relevant excerpt taken from the interview. The five extracted questions will follow afterwards. (Please note that I will add also three questions that I have myself related to the topic.)
From the interview:
L.S.: What are your thoughts on the controversial topic of the German gold reserves that are held in New York City, London and Paris?
A.E.P.: Well, I think that it is quite extraordinary that the Bundesbank pulled out two thirds of its gold from London in early 2001, I believe it was. (4) This seems an odd thing to do, I mean, they had a very large share of the gold reserves sitting in London, and why did they do this?
It happened to be a time when Gordon Brown had ordered the Bank of England to sell over half of Britain’s gold. We were doing so at the bottom of the market, I might add. We managed to create the bottom of the market, these auctions were the lowest points reached – I think 252 dollars an ounce and Britain sold off some of its gold, a lot of it under 300 dollars; fantastically stupid thing to do in retrospect, but then Gordon Brown thought it was a “barbarous relic” and thought it had no place in modern finance. He entirely bought into the modern fiat triumphalism.
So the word going around in London is that the Bundesbank had reason to fear that those holdings were not secure anymore and that maybe the Bank of England had sold short some of its gold, leasing it out; or maybe got over extended. Clearly that didn’t prove to be the case as far as we know, but maybe they were concerned about that at the time. Apparently these gold bars in London were not numbered, so the Bundesbank was keeping un-numbered bars there. All they had was a metal account in the Bank of England. They didn’t have specific allocated bars under their name which is, I find, a completely extraordinary situation as they should have done that. I would think the Bundesbank might want to answer to its German citizens about why it was doing that.
L.S.: Well, maybe I will do it. – Another question related to this topic: have you seen any convincing reasoning why Germany should keep a large amount of its gold reserve at the New York Fed? After all, these are 45 percent of the total amount of roughly 3.400 tons... More>
