So wrong, so very, very wrong - And to this we would respond: Don't be like the Bundesbank! There is a dearth of evidence that the US Fed warrants no greater trust than the irascible Soviet Union. Afterall, hasn't the warmongering American Empire, become the world's 21st century Satan? American political leaders and their banker handlers are never to be trusted as the American people are learning all too late. Your "gold" or "silver" is no more safe in an ETF than Bundesbank "gold" is with the NY Fed! A cash settlement in depreciating paper dollars is a dishonest substitute for physical gold that has been promised you.
The window of opportunity to rescue your physical wealth is closing and will slam shut leaving you, and your family, as just being another klan of "Have Nots".
News that the German Bundesbank is shuffling its gold holdings over
the next seven years means very little for the market. Even if the fuss
did contribute to gold’s best Friday finish in five weeks for U.S.
investors, the metal barely budged priced in the euro.
Now, plenty of stories on the internet will tell you that Germany is “taking home its gold”. (They’ll tell you that in German too, if you wish). But as you can see, it isn’t. Fifty per cent will stay overseas. So you might want to look askance at anyone who runs such headlines.
You might then consider what the news does in truth signal…
#1. Hold gold for the long run
Based on the figures in the Bundesbank’s announcement, it’s clear that the German central bank has no intention of selling gold anytime soon. Its huge gold reserves, the second-largest after the United States‘, underpinned the deutsche mark’s famous stability during the Great Inflation of the 1970s. Germany then refused to sell any of its gold reserves when prices were low a decade ago, unlike every other European state except Italy.
Besides very small quantities for commemorative coins, it has steadfastly refused to sell into this rising market either. Short of “the need arising”, the Bundesbank has every intention of keeping hold of its gold through 2020, too.
#2. Keep it ready for sale
Despite all the fuss about “taking home its gold”, Germany is keeping 50% split between London and New York. It’s pulling out of Paris entirely, citing the need for foreign currency in a crisis, which France can’t now offer. But the fact is that Paris doesn’t offer a deep, liquid market for wholesale bullion. Whereas London, like New York and Zurich, remains a world centre for physical gold bullion. Indeed, London is the heart of global dealing, with wholesale prices worldwide always quoted as the price for London delivery plus a premium for shipping elsewhere.
The Bundesbank makes plain that, if some unspeakable crisis demanded it, being able to sell its gold fast is a prime concern. Hence the 37% staying at the New York Fed, and the 13% staying in London.
#3. Let geography spread your risk
Holding some gold overseas isn’t a problem, then. Indeed, it’s benefit of gold’s deeply liquid international market. Because when asked, central bankers will repeatedly cite the diversifying power of gold as a major reason to own it. (See this French central banker speaking in 2000, for instance.) Unlike other metals and commodities, gold is not tied to the economic cycle, nor the stock market. It is a natural “hedge” against the US Dollar too. And if you are spreading your investment risk with gold, why not also spread your geographical risk by owning some gold overseas as well?
Historically, the reason that Germany holds gold in the UK, France and US was fear of Soviet invasion. Even with that fear gone, however, geopolitical diversification clearly still makes sense to Frankfurt, starting with a full 37% of its gold being on a separate continent.
For private individuals, holding investment-grade gold in secure, professional vaults can cost you just a fraction of a per cent each year. It need cost no more overseas, and that will give you an escape fund if things get really ugly at home.
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The window of opportunity to rescue your physical wealth is closing and will slam shut leaving you, and your family, as just being another klan of "Have Nots".
Be Like The Bundesbank, Own Some Gold
Gold bars
That’s not to say the news doesn’t send
clear signals to investors already holding – or considering – physical,
derivative or cash-price bullion proxies such as the big SPDR Gold Trust
(NYSE: GLD). First up, the facts:
Now, plenty of stories on the internet will tell you that Germany is “taking home its gold”. (They’ll tell you that in German too, if you wish). But as you can see, it isn’t. Fifty per cent will stay overseas. So you might want to look askance at anyone who runs such headlines.
#1. Hold gold for the long run
Based on the figures in the Bundesbank’s announcement, it’s clear that the German central bank has no intention of selling gold anytime soon. Its huge gold reserves, the second-largest after the United States‘, underpinned the deutsche mark’s famous stability during the Great Inflation of the 1970s. Germany then refused to sell any of its gold reserves when prices were low a decade ago, unlike every other European state except Italy.
Besides very small quantities for commemorative coins, it has steadfastly refused to sell into this rising market either. Short of “the need arising”, the Bundesbank has every intention of keeping hold of its gold through 2020, too.
#2. Keep it ready for sale
Despite all the fuss about “taking home its gold”, Germany is keeping 50% split between London and New York. It’s pulling out of Paris entirely, citing the need for foreign currency in a crisis, which France can’t now offer. But the fact is that Paris doesn’t offer a deep, liquid market for wholesale bullion. Whereas London, like New York and Zurich, remains a world centre for physical gold bullion. Indeed, London is the heart of global dealing, with wholesale prices worldwide always quoted as the price for London delivery plus a premium for shipping elsewhere.
The Bundesbank makes plain that, if some unspeakable crisis demanded it, being able to sell its gold fast is a prime concern. Hence the 37% staying at the New York Fed, and the 13% staying in London.
#3. Let geography spread your risk
Holding some gold overseas isn’t a problem, then. Indeed, it’s benefit of gold’s deeply liquid international market. Because when asked, central bankers will repeatedly cite the diversifying power of gold as a major reason to own it. (See this French central banker speaking in 2000, for instance.) Unlike other metals and commodities, gold is not tied to the economic cycle, nor the stock market. It is a natural “hedge” against the US Dollar too. And if you are spreading your investment risk with gold, why not also spread your geographical risk by owning some gold overseas as well?
Historically, the reason that Germany holds gold in the UK, France and US was fear of Soviet invasion. Even with that fear gone, however, geopolitical diversification clearly still makes sense to Frankfurt, starting with a full 37% of its gold being on a separate continent.
For private individuals, holding investment-grade gold in secure, professional vaults can cost you just a fraction of a per cent each year. It need cost no more overseas, and that will give you an escape fund if things get really ugly at home.
Best and Worst Gold Investing Ideas For 2012
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