An ethical person - like a politician, banker or lawyer - may know right from wrong, but unlike many of them, a moral person lives it. An Americanist first already knows that.
Bankers and their government agents will always act in their own best interests. Any residual benefit flowing down to the citizens by happenstance will just be litter.
What do Switzerland, England, Austria, Netherlands, France, Belgium, Mexico, Poland, Italy. Australia, Ecuador, Romania and the tiny country of Azerbaijan have in common? They all want to know where their gold is, and they all have burgeoning gold repatriation movements in various stages of progress. Peter Boehringer, the father of the gold repatriation movement in Germany, and founder of the website Goldseiten.de joins us to discuss the great global awakening as nations begin asking, where is our PHYSICAL gold? We want it back!
Dec 4, 2014 ... Who's who in Ukraine's new neo-Nazi, fascist government ... Was The Price Of
Ukraine's "Liberation" The Handover Of Its Gold To The Fed?
Aug 11, 2014 ... The Ukraine's gold reserves weigh in at 42.3 tonnes, and are worth 1.3 billion
Euros. A leading figure of the former ministry of finance has ...
As Ukraine's socio-economic situation goes from wost to worst-er, today's announcement by President Poroshenko that the government will take actions to stabilize the currency (which as we previously noted, appears to be heading for hyperinflation) has Ukrainians rushing for the exits into precious metals... with only one goal in mind - wealth preservation.
Furthermore, according to RIA, on Tuesday, Ukrainian television channel Ukraina announced that with the new exchange rate, the minimum wage in Ukraine stands at around $42.90 per month, which according to the channel, is lower than in Ghana or Zambia.
There are currently no plans to raise the minimum wage until December.
Behold hyperinflation:
"Food prices among producers rose 57.1 percent, with the price for grains and vegetables rising 91 percent from January 2014 to January 2015, while the official inflation rate over the period totaled 28.5 percent.
Meanwhile, Ukrainian consumers responded to economic difficulties by cutting their spending in hryvnias by 22.6 percent, which amounts to an almost 40 percent decrease in real consumption."
Nothing to fear though: we are sure all that hard-earned US taxpayer-lent money will be safe and sound.
Submitted by Tyler Durden on 02/23/2015 22:17 -0500
No matter how many times the big banks are caught red-handed manipulating precious metals, some failed former Deutsche Bank prop-trader (you know who you are) will take a vociferous stand based on ad hominem attacks and zero facts that no, what you see in front of you is not precious metal rigging at all but a one-off event that has nothing to do with a criminal banking syndicate hell bent on taking advantage of anyone who is naive and dumb enough to still believe in fair and efficient markets.
The last time this happened was in November when we learned that "UBS Settles Over Gold Rigging, Many More Banks To Follow", and sure enough many more banks did follow, because in Europe, where the stench of gold market manipulation stretches far beyond merely commercial banks, and rises through the central banks, namely the BOE and ECB, culminating with the Head of Foreign Exchange & Gold at the BIS itself, all such allegations have to be promptly settled or else the discovery that the manipulation cartel in Europe involves absolutely everybody will shock and stun the world, which heretofore was led to believe that such things as gold market (not to be confused with Libor or FX) manipulation only exist in the paranoid delusions of a few tinfoil fringe-blogging lunatics.
However, as usually happens, someone always fails to read the memo that when it comes to gold-market manipulation one must i) find nothing at all incriminating if one is a paid spokesman for the entities doing the manipulation such as former CFTC-sellout Bart Chilton or ii) if one can't cover it, then one must settle immediately or else the chain of revelations will implication everyone.
This time, that someone is the US Department of Justice, which as the WSJ just reported, is investigating at least 10 major banks for possible rigging of precious-metals markets. The DOJ is shockingly doing so "even though European regulators dropped a similar probe after finding no evidence of wrongdoing, according to people close to the inquiries." Of course, the reason why said probe was dropped in Europe is because it would have implicated virtually the entire trading desk at the biggest and most important European bank: Deustche Bank, as well as the biggest bank in Switzerland, UBS and UK's own Barclays, reveal a manipulation cartel rivaling even that of Libor. And once traders at the commercial banks turned sides and squealed for the prosection, well then it would be the central banks' turn next. Which is why it was imperative to bring this investigation to a quiet end.
But not in the US.
According to the WSJ, "prosecutors in the Justice Department’s antitrust division are scrutinizing the price-setting process for gold, silver, platinum and palladium in London, while the Commodity Futures Trading Commission has opened a civil investigation, these people said. The agencies have made initial requests for information, including a subpoena from the CFTC to HSBC Holdings PLC related to precious-metals trading, the bank said in its annual report Monday.
HSBC also said the Justice Department sought documents related to the antitrust investigation in November. The two probes “are at an early stage,” the bank added, saying it is cooperating with U.S. regulators.
Robert Hockett, a law professor at Cornell University, said it is “not particularly surprising” that the Justice Department is plowing ahead despite the decision by European regulators.
Recent scrutiny of big banks’ operations in the physical commodities markets and criticism of the Justice Department’s financial-crisis track record make it “quite understandable” that the agency would investigate allegations of precious metals price-rigging.
Last year, the FCA fined Barclays £26 million ($40.2 million) for lax controls after one of its traders allegedly manipulated the gold fix at the expense of a client.
Swiss regulator Finma settled last year allegations of foreign-currency manipulation with UBS. The regulator said it found “serious misconduct” among precious-metals traders at UBS, including “front running,” or trading ahead of, the silver-fix orders of one client. A spokeswoman for UBS, which said at the time that it “instituted significant cultural and compliance changes,” declined further comment.
You mean to say that the banks that were for decades rigging Libor... and FX... and bonds... and stocks... oh, and gold, were let go with a slap on the wrist and a promise to "change their ways" and not to do it again? Yup, that's exactly right.
So what happens next? Well, we finally will find just how much of a banker-controlled muppet the so-called US attorney general truly is. Recall that a week ago he gave his subordinates 90 days to being cases against individuals for their role in the financial crisis.
Well here is the perfect opportunity. Should Holder let this latest mass criminal ring go without any incarceration, one can officially stick a fork in the US justice system, which is meant for everyone, but the rule-flouting bankers who can clearly get away with absolutely anything.
As for the rigging in the gold market, rigging which begins with the lowliest prop-traders at Deutsche Bank and involves every single central bank and High Frequency trading outfit and is now a proven fact, we have explained over the years and thousands of times just how to end it all, so instead of wasting readers' time on this topic yet again, here are just two very simple solutions how to fix this one particular market:
So simple, even the most corrupt US Attorney General caveman can do it.
What if you could carry and exchange gold in the exact same manner as you do with the dollar bills in your wallet?
Last year, we introduced the precious metals community to a company called Valaurum, which has developed a technology that’s making this possible.
Here’s the write-up from last year:
Democratizing Gold
In short, a fractional gram’s worth of gold is affixed to layers of polyester, creating a note – called an “Aurum” – similar in dimension and thickness to a U.S. dollar bill. This gold (usually 1/10th or 1/20th of a gram) is commercially recoverable. So an Aurum offers similar potential as a coin or bar, in terms of providing a vehicle for storing and exchanging known, dependable increments of precious metals – just in much smaller (and more affordable) amounts than commercially available to date.
The big idea here? In a world where a 1oz coin of gold costs over $1,200, an Aurum will let you hold a few dollars’ worth of gold in a single note. If you’ve got pocket change, you can be a precious metals owner.
And you don’t have to change your behavior. You can store and transport an Aurum in your billfold along with your dollars.
Understanding the Aurum
As the saying goes, a picture’s worth a thousand words. Here’s a picture of an Aurum designed for Peak Prosperity that the Valaurum team produced for us:
You’ll see that with even just 1/20th of a gram of gold involved, it’s enough to make the Aurum appear to be “made of” gold.
The characteristic luster, color, and shine of the 24-karat gold used is immediately apparent.
The Aurum is designed to be handled in the same manner as we do with our “paper” money. And, despite having a more ‘plastic’ feel to it (resulting from the polyester backing), it’s as flexible, lightweight, and familiar-feeling as paper currency.
The big difference, of course, is that instead of being a claim on something else, it simply is what it is: a fractional gram of gold. It can be stored, traded, or melted down – just like a coin or bar.
Here’s a brief video that gives an overview of the production process:
Implications
Being able to hold gold in this form is significant for several reasons.
First, it makes gold ownership available to all budgets. Many of the world’s households have been priced out of gold to date. This changes that completely.
Second, it enables the potential for everyday transactions should we ever return to a precious metal-backed monetary standard. It answers the challenge: How will you pay for your groceries with gold? With an Aurum, it’s now easy.
Whether Valaurum’s product emerges as the winning horse or not, the world definitely needs this type of solution (i.e., convenient fractional physical metal) to go mainstream.
I’m very excited by this new innovation in the bullion industry, and I explore the matter in depth in this podcast [14]. If you’re similarly intrigued, it’s worth the listen.
The response to last year’s podcast was tremendous. It quickly became one of the most popular in Peak Prosperity’s history. If the description above interests you, and you haven’t listened to it already, you can do so by clicking here [14].
Big News
So, what’s happened with the aurum over the past year? Has the concept caught on with precious metals investors?
We’ve invited Adam Trexler back to the program to find out. In this week’s podcast, he shares with us a number of positive updates about adoption of the aurum, demand by the bullion dealer community, and product enhancement to the gold note itself.
But most exciting is this: a (small) sovereign central bank is deep in negotiations with Valaurum to replace its existing national currency with aurum notes, creating a true precious-metals backed monetary system. As best we know, this would make it the only one in existence in the world today.
If this indeed occurs, it could be a game-changer. Changes in trust and perception always begin with a non-conformist having the courage to depart from the herd’s consensus. Even a small country rejecting fiat money in favor of a gold standard will catch the attention of others. And as the current currency wars exacerbate, as they inevitably will, more countries will increasingly look to adopt monetary regimes that work better.
Perhaps that will be a return to gold, in this new form.
More Big News
The Peak Prosperity aurum notes we printed up last year quickly sold out. Demand was much higher than we had expected.
For those who did not have the chance to purchase any — or for those who did, and are interested in collecting each new series that gets produced — we have good news: the new 2015 Peak Prosperity aurum (1/10th gram) is now available for purchase [15]. Those interested in doing so can learn more by clicking here [15].
And for those interested in the latest on Valaurum, click the play button below to listen to my latest interview with Adam Trexler (31m:20s)
D. Strauss-Kahn and US Treasury Secretary Timothy Geithner
Pssst!Did you know?In hardly any other area of life so many conspiracy theories circulating in the economy.SPIEGEL ONLINE presents the key.This time: How President Nixon verscherbelte the U.S. gold reserves from Fort Knox.
The gold oil ratio corresponds to the price of the
ounce of gold in dollars (31.103 grams) divided by the oil price in
dollars (159 liters). For my calculations, I use the gold price,
London listing, and oil, WTI Cushing Oklahoma, in a given month since
1986.
For example, in December 2014, the price of the ounce of gold was
1202.29 US dollars and the oil barrel price was 59.29 US dollars thus
the gold oil ratio was 1,202.29 / 59.29 = 20.27.
This ratio exhibits a decreasing trend as shown by the two red lines (high and low bounds) on the graph below.
In 1986, you needed 15 to 30 barrels of oil to buy one ounce of gold whereas in 2009, 7 to 25 are sufficient.
Interestingly when this ratio is near the top red
lines (high bound), it is usually the signal for the end of the oil
price fall.
1 July 1986, ratio 30, low point in oil prices in June 1986 to 13.4 dollars per barrel.
2 October 1988, ratio 29.5, low point in oil prices in August 1988 to 15.5 dollars per barrel.
3 December 1993, ratio 27, low point in oil prices in November 1993 to 16.6 dollars per barrel.
4December 1998, ratio 26, low point in oil prices in November 1998 to 13 dollars per barrel.
5 December 2001, ratio 14.4, lowest point in oil prices in November 2001 to 19.6 dollars per barrel (not a high peak).
6 January 2007, ratio 11.8, lowest point in oil prices in January 2007 to 54.5 dollars per barrel (not a high peak).
7 February 2009, ratio 24.13, lowest in oil prices in January 2009 to 39 dollars per barrel.
8 January 2015, ratio 26.3, this is the first time in 29 years that the
ratio is out of bounds. It corresponds to the ratio observed in the
80s and 90s.
The cycles of the XOI index
and the gold oil ratio indicate that oil price is in a low area. We
know that on the long term oil price is expected to increase (peak production, increase in the marginal cost and growth of the world population).
We also know that we are in a depression, we will go up, the question is when? Today, in one month, 12 months, 24 months?
Difficult to answer, it will depend on the speed at which the offer is destroyed.
Currently, large companies reduce exploration expenditures, the deep
offshore is in the closet, risky drillings are cancelled, rigs in
operation decrease in the USA, juniors can no longer finance themselves
... One only needs bankruptcies and takeovers for the panorama to be
completed.
Dr Thomas Chaize
Note : In the recent years, the oil production of
the largest companies has decreased, while investments increased
considerably. Today they are decreasing their investment...
The
“perfect-storm” of geopolitical instability, diplomatic isolation,
severe currency depreciation, and economic decline now confronting
Russia has profoundly damaged Moscow's international standing, and
possibly for the long-term. Yet, it is precisely such conditions that
may push the country’s leadership into taking the radical step that will
secure its world-player status once and for all: the adoption of a
gold-exchange standard.
Though a far-fetched idea at first glance,
many factors suggest that remonetization in gold may be a logical next
step for Moscow.
First, for years Moscow has been expressing its
unwillingness to remain at the monetary mercy of the US and its NATO
allies and this view has been most vehemently expressed
by President Putin’s long-time economic advisor, Sergei Glazyev. Russia
is prepared to play strategic hardball with the West on the issue: the
governor of Russia’s central bank took the unusual step last November of
presenting
to the international media details of the bank’s zealous gold-buying
spree. The announcement, in sharp contrast to that institution’s more
taciturn traditions, underscores Moscow’s outspoken dismay with dollar
hegemony; its timing suggests coordination with the top rungs of
government to present gold as a possible currency-war weapon.
Second,
despite international pressure, Russia has been very wary of the
sell-off policies that led the UK, France, Spain, and Italy to unload
gold over the past decade during unsuccessful attempts to prop up their
respective ailing economies — in particular, of then-Prime Minister
Gordon Brown’s sell-off of 400 metric tons of the country's reserves at stunningly low prices. Moscow’s surprise decision upon the onset of the ruble’s swift decline in early December 2014 to not tap into the country’s gold reserves, now the world's sixth largest,
highlights the ambitiousness of Russia’s stance on the gold issue. By
the end of December, Russia added another 20.73 tons, according to the
IMF in late January, capping a nine-month buying spree.
Third,
while the Russian economy is structurally weak, enough of the country's
monetary fundamentals are sound, such that the timing of a move to gold,
geopolitically and domestically, may be ideal. Russia is not a debtor
nation. At this writing in January, Russia’s debt to GDP ratio is low and most of its external debt is private. Physical gold accounts for 10 percent
of Russia’s foreign currency reserves. The budget deficit, as of a
November 2014 projection, is likely to be around $10 billion, much less
than 1 percent of GDP. The poverty rate fell
from 35 percent in 2001 to 10 percent in 2010, while the middle class
was projected in 2013 to reach 86 percent of the population by 2020.
Collapsing
oil prices serve only to intensify the monetary attractiveness of gold.
Given that oil exports, along with the rest of the energy sector,
account for 45 percent of GDP, the depreciation of the ruble will continue; newly unstable fiscal conditions have devastated banks, and higher inflation looms,
expected to reach 10 percent by the end of 2015. As Russia remains (for
the foreseeable future) mainly a resource-based economy, only a move to
gold, arguably, can make the currency stronger, even if it does limit
Russia’s available currency.
In buying as much gold as it has, the
country is, in part, ensuring that it will have enough money in
circulation in the event of such fundamental transformation. In terms of
re-establishing post-oil shock international prestige, a move to gold
will allow the country to be seen as a more reliable and trustworthy
trading partner.
The repercussions of Russia on a gold-exchange
standard would be immense. Above all, it would mean the first major
schism in the world's monetary order. China would quite likely follow
suit. It could mean the threat of a severe inflation in the United
States should rafts of unwanted dollars make their way back across the
Atlantic — the Fed's ultimate nightmare. Above all, the country will
avoid the extreme debt leverages which would not have happened had
Western capitals remained on gold.
“A gold standard would be
politically appealing, transforming the ruble to a formidable currency
and reducing outflows significantly,” writes Dr. Enrico Colombatto, economics professor at the University of Turin, Italy.
He
notes that the only major drawback would be that the imposed discipline
of a gold standard would deprive authorities of discretionary political
power. The other threat would be that of a new generation of Russian
central bankers becoming too heavily influenced by the monetary mindset
of the European Central Bank (ECB) and the Fed.
As Alisdair MacLeod, a two-decade veteran of off-shore banking consulting based in the UK, recently wrote,
Russia (and China) will “hold all the aces” by moving away from any
possible currency wars of the future into the physical gold market. In
his article, he adds that there is currently a low appetite for physical
gold in Western capital markets and longer-term foreign holders of
rubles would be unlikely to exchange them for gold, preferring to sell
them for other fiat currencies.
Mr. Macleod cites John Butler, CIO at Atom Capital in London, who sees great potential
in a gold-exchange standard for Russia. With the establishment of a
sound gold-exchange rate, he argues, the Central Bank of Russia would no
longer be confined to buying and selling gold to maintain the rate of
exchange. The bank could freely manage the liquidity of the ruble and be
able to issue coupon-bearing bonds to the Russian public, allowing it a
yield linked to gold rates. As the ruble stabilizes, the rate of the
cost of living would drop; savings would grow, spurred on by long term
stability and lower taxes.
Foreign exchange also would be
favorable, Mr. Butler maintains. Owing to the Ukraine crises and
commodities crises, rubles have been dumped for dollar/euro currencies.
Upon the announcement of a gold-exchange, demand for the ruble would
increase. London and New York markets would in turn be countered by
provisions restricting gold-to-ruble exchanges of imports and exports.
The
geopolitics of gold also figure into Russia’s increasingly close
relations with China, a country that also has made clear its preference
for gold over the dollar. (Russia recently edged out China as the world's top buyer of the metal.) In the aftermath of the $400 billion, 30-year deal
signed between Russian gas giant Gazprom and the China National
Petroleum Company in November 2014, China turned its focus to the
internationalization of its own gold market. On January 15, 2015, the
Shanghai Gold Exchange, the largest physical gold exchange worldwide,
and the World Gold Council, concluded a strategic cooperation deal to
expand the Chinese gold market through the new Shanghai Free Trade Zone.
This
is not the first time the gold standard has been seen as the ultimate
cure for Russia’s economic problems. In September 1998, the noted
economist Jude Wanninski predicted in a far-sighted essay for TheWall Street Journal
that only a gold ruble would get the the country out of its then-debt
crises. It was upon taking office about two years later, in May 2000,
that President Putin embarked upon the country’s massive gold-buying
campaign. At the time, it took twenty-eight barrels of crude just to buy
an ounce of gold. The gold-backed ruble policy of those years was
adopted to successfully pay down the country's external debt.
As a
pro-gold stance is, essentially, anti-dollar, speculation about how the
US would react raises the question of whether an all-out currency war
would follow. The West would have to keep Russia regionally and
militarily marginalized, not to mention kept within the confines of the
Fed, the ECB, and the Bank of England (BOE).
Nor is that prospect too far-fetched. As Dutch author Willem Middelkoop has written in his 2014 book The Big Reset: War on Gold and the Financial Endgame,
A
system reset is imminent. Even before 2020 the world's financial system
will need to find a different anchor. ... In a desperate attempt to
maintain this dollar system, the United States waged a secret war on
gold since the 1960s. China and Russia have pierced through the American
smokescreen around gold and the dollar and are no longer willing to
continue lending to the United States. Both countries have been
accumulating enormous amounts of gold, positioning themselves for the
next phase of the global financial system.
Das Gold ist alles vorbei sie Dang Fool! Aber, wissen Sie, dass. Sie sind einfach nur als wüßte es ist sicher mit der NY Fed. Sie liegen für das deutsche Volk. It's gone, Zugsystem lahm gelegt. Die Rothschild Banken haben es und sie werden nie wieder von ihr in unserer Lebenszeit. Mit ihr Leben. Sie hat dich reingelegt vom gleichen Fürsten, die über Jahrhunderte hinweg haben sie die Kriege führen, umfassendes selbst während sie fliehen mit ihrem Gold die ihm zugrunde liegende, schulden. Weiter.
~~~~~~~~~~~~~~~~~~~~~~~~~~
Where Is Mein Gold?
Almost half of Germany’s gold is stored in vaults under the streets of Manhattan. Or is it?
Peter Boehringer hates the word “conspiracy.” It implies something
crazy, and if you spend even a little time with the 45-year-old German,
it becomes clear he’s driven by a desire for order. On a recent morning
in Munich, he’s dressed in a cobalt blue shirt that matches his blue tie
and blue eyes. His black hair is cropped close above his receded
hairline. In his gray Volkswagen minivan, the cup holder contains two
identical water bottles, each filled to the same level. At the end of a
daylong interview, for which Boehringer has arranged an hour-by-hour
itinerary, he sends a follow-up e-mail with a numbered summation of
points he’s made. No. 2 says that the crusade he’s been waging for the
last three years is simply about transparency. “Questions,” he writes,
“by definition cannot be ‘conspiracy theories.’ ”
Boehringer is a gold bug, a member of the impassioned tribe of
investors and academics who distrust central banks and paper money,
unless the governments that print it will exchange the cash for gold or
silver from their vaults. He has an asset management firm that invests
his own money and that of clients in gold, silver, and mining stocks,
and he’s a founder of the nonprofit German Precious Metal Society, which
educates the public about “the craziness of unbacked monetary systems,”
he says. In short, Boehringer is worried that the global economy is
built on a fiction of currencies that aren’t backed by precious metals.
Which is why he set out to make sure the gold that Germany and other
nations say they have actually exists.
Almost half of Germany’s gold resides at 33 Liberty St., the
headquarters of the Federal Reserve Bank of New York, 80 feet below
street level in a vault that sits on Manhattan’s bedrock. In 2012,
Boehringer started a campaign on his blog to bring it home. He argued
the gold should be shipped to the German central bank in Frankfurt. The
hoard, amassed during Germany’s postwar boom, had never been subject to a
published bar-by-bar physical review by its owners.
That lack of accounting had become an insatiable itch for Boehringer.
As the volunteer chairman of a private storage company for silver and
gold investors based in Gerstetten, Germany, Boehringer personally
counts the holdings each year by lugging metal valued at some €140
million ($161 million) from one end of the vault to the other, just to
make sure it’s all there. His blog became a hub for precious-metal fans.
As gold prices peaked in 2011, the Taxpayers Association of Europe
asked him to draft a letter to the Deutsche Bundesbank seeking to know
precisely where the central bank’s gold was. He eagerly agreed to help
the group, which advocates for lower taxes and serves as an umbrella for
29 national associations across the continent. After receiving a
response that wasn’t detailed enough to satisfy him, Boehringer pressed
on, starting the “Repatriate Our Gold” campaign in February 2012. He
conceded it had low odds of success. Gold bugs largely inhabit the
fringes of finance, and some of their apocalyptic arguments for
investing had begun to show cracks as gold prices slid. Opponents
including bankers and journalists branded Boehringer a conspiracy
theorist for even suggesting something was amiss at the core of global
finance. Then the seemingly impossible happened: He started to win.
Photographer: Ulricht Baumgarten/Getty Images
Because it doesn’t react with air or water, gold always glitters,
even in shipwrecks lost for centuries. It’s so dense—19.3 times heavier
than water—that when you lift an ingot, the disconnect between what
your eyes see and your hands feel produces an odd sensation, as if
you’re on a planet with a stronger gravitational pull. A standard
central bank gold bar is a bit smaller than two soda cans stuck together
end-to-end but weighs about 27 pounds, the combined heft of four
newborn babies.
Less than 175,000 metric tons (386 million pounds) of gold have been
mined in all human history, according to the World Gold Council. Melt it
all down—King Tutankhamun’s death mask, the bars in Fort Knox, your
wedding ring—and it would form a cube 21 meters on each side, reaching
just one eighth the height of the Washington Monument. A 1-kilogram gold
bar is the size of a flip phone and could buy a BMW.
Gold also has a deeper appeal. When stocks and bonds are plummeting
on paper, gold is reassuringly physical. Speaking in October at the
Council on Foreign Relations, former Federal Reserve Chairman Alan
Greenspan said gold is so universally treated like money itself, it’s as
if it’s “inbred into human beings.” The fact that gold can be touched
means, of course, that it can also disappear.
Boehringer cites an anecdote from almost a century ago to argue that
Germany has failed to zealously protect its gold holdings. In the 1920s
the president of the German central bank, Hjalmar Schacht, paid a visit
to the New York Fed and its founding president, Benjamin Strong. In an
episode recounted in his 1955 autobiography, Schacht wrote, “Strong was
proud to be able to show us the vaults which were situated in the
deepest cellar of the building and remarked: ‘Now, Herr Schacht, you
shall see where the Reichsbank gold is kept.’ ”
The two bankers waited as New York Fed staff sought the German stash.
“At length we were told: ‘Mr. Strong, we can’t find the Reichsbank
gold.’ ” Schacht comforted the flabbergasted Fed banker: “Never mind; I
believe you when you say the gold is there. Even if it weren’t you are
good for its replacement.” The men left without the German seeing his
bars, instead accepting their existence as a matter of trust.
Assuming the German gold actually was somewhere at 33 Liberty St. at
the time, it’s probably now long gone. The period between the World Wars
was plagued by runaway inflation in which Germans legendarily shopped
with wheelbarrows of cash and burned bundles of reichsmarks for warmth.
(Among the inflation causes, Germany had stopped backing its currency
with gold during World War I.) Adolf Hitler exploited the economic
meltdown to seize power and then drained Germany’s gold holdings,
including assets he stole from Jews, to pay for World War II.
After the war, global trade revolved around the U.S. dollar, which
was backed by gold. Under the arrangement, any nation could cash in its
greenbacks for ingots at any time. As West Germany’s economy took off,
the nation ran a trade surplus during the 1950s and ’60s. German
companies exchanged their dollars for deutsche marks, filling the new
Deutsche Bundesbank with U.S. currency. The central bank, in turn,
switched the dollars for gold at the New York Fed, swelling its stores
under Liberty Street. That ended in 1971 when President Richard Nixon
suspended gold conversions, making the dollar a “fiat currency,” backed
by nothing but the public’s confidence in the U.S. During the Cold War,
it made sense to keep the gold in Manhattan rather than Frankfurt, 75
miles from the Iron Curtain, just in case the Soviets invaded. Yet even
after the Berlin Wall fell in 1989, the gold remained in New York. Or so
the Germans have been told.
Boehringer in Munich.
Photographer: Ramon Haindl for
Bloomberg Businessweek
The bursting of the dot-com bubble in the early 2000s left
Boehringer, who’d done tech investing, without a job and with time on
his hands. After a life ticking the boxes of conventional
success—growing up middle class near Stuttgart, earning dual degrees in
information technology and business, working as a management consultant
for Booz & Co. and a private equity group—he got to thinking for the
first time about how the global economy works.
“Some things didn’t add up,” he says, especially the trust-based
monetary system. “I saw how destructive paper money could become.”
Concluding that precious metals were a reliable store of wealth, he
became a gold evangelist, blogging and starting his money-management
business in 2003. Three years later he founded the German Precious Metal
Society, which organizes conferences and speeches on topics such as
gold price manipulation and trends in gold demand in Asia. It was
through his activism that the Taxpayers Association of Europe found
Boehringer, and they started their campaign.
The first breakthrough occurred in September 2012, when Germany’s
Audit Court followed Boehringer with its own, similar demands. The
court, which is a branch of the federal government that examines federal
financial management, asked the Bundesbank to say how much gold it had
and where it was located and to physically inspect the bars, saying
their existence had never been verified.
The Bundesbank responded a month later, revealing that at the end of
2011 it had 271,265 bars weighing 3,396 tons—today worth about $140
billion. They were stored in Frankfurt and at the New York Fed, the Bank
of England in London, and the Bank of France in Paris. “Every year,
these central banks provide the Bundesbank with confirmation of its
holdings of gold,” the German bank said. “The integrity, reputation, and
security of these foreign depositories are beyond reproach.
… There is
no possibility of confusion or commingling with the holdings of other
parties.” The single biggest slice of the German reserves, at 45
percent, was in Lower Manhattan: 122,597 bars weighing about 1,536 tons,
dwarfing the 1,036 tons held in Germany itself.
But the Bundesbank said the physical inventory requested by the audit
court didn’t conform to common practice among central banks—that is,
one does not just show up at the New York Fed and start counting gold
bars.
The Bundesbank told the German parliament it was in talks to gain
access and that the New York Fed was receptive, as long as its own
security and logistical constraints were taken into account. Bundesbank
executive board member Carl-Ludwig Thiele, who testified to the
parliament’s budget committee, added, “We’re in negotiations with our
partner central banks to develop auditing rights.”
Boehringer, the disclosure that it would take negotiations to
access the gold felt like proof he was on the right track. The limited
transparency he’d won had made plain that Germany didn’t necessarily
have the right to thoroughly examine the single largest stash of its own
gold. “Central banks live from their trust,” he says. “Our campaign has
the ability to put that trust in question.”
In October 2012, as part of a compromise with the audit court, the
Bundesbank said it would start bringing home some of the reserves. At
first, the bank said it would move 150 tons of gold, valued at about
$8.4 billion at the time, from New York to its own vaults, dividing the
shipments evenly over three years. “It was a huge success for us,”
Boehringer says. “I would never have believed that.” The German central
bank later expanded its repatriation plan to 300 tons from New York to
Frankfurt by 2020.
Boehringer had to wait until Christmas Eve 2013 to see if the
Bundesbank was making good on the pledge. That day, the central bank
announced the first-year tally in the tabloid Bild under a
front-page headline, “Today Only Good News.” “At last! The Bundesbank
gets its gold treasure back,” the story said. The amounts, however, were
underwhelming. Although 32 tons came from the Bank of France, just 5
tons came from New York—a tenth of the original plan of 50 tons a year
from the New York Fed.
“Why so little material?” Boehringer recalls wondering. “Something
smelled fishy.”
The article quoted Bundesbank President Jens Weidmann
saying the repatriation had been “a huge logistical challenge.” Yet one
ton of gold, formed into a cube, is just larger than a plastic milk
crate. Five tons of gold bars can fit into the back of a pickup truck,
assuming the truck’s suspension can handle the weight.
“The organisational preparations were very time-consuming since the
required agreements and contracts are voluminous and detailed,” the
Bundesbank’s Thiele said in a statement four weeks later. Additionally,
some bars in New York had to be melted and recast. To Boehringer, the
recasting was the ultimate red flag. It meant any trace of original
serial numbers had been wiped out. “Their untouched existence since the
1960s is no longer provable,” Boehringer says.
The Bundesbank explained that it recast the bars because they hadn’t
met the “London good delivery” standard. Such gold is at least 99.5
percent pure and comes in bars of roughly 400 troy ounces, or 12.44
kilograms. They must bear certain marks, such as year of manufacture,
and have sides that measure within specified dimensions. The gold in
American vaults is a mix of London good delivery and lower-quality bars.
Boehringer figured maybe the German bars had oddball weights and
purities and needed to be recast.
He did some quick math on the Bundesbank’s own numbers, dividing the
total weight it had disclosed for New York holdings by the number of
bars it listed. It came out to about 12.5 kilograms per bar—same as
London good delivery. If the central bank’s published numbers were
right, Boehringer says, “There would not be a reason to melt them, but
they did.”
Asked about the calculations, a Bundesbank spokesperson says meeting
the London good delivery standard “cannot be reduced entirely to the
weight of a gold bar but needs to take various other features into
account, one criterion being the outer appearance.” The spokesperson
also noted that “parts of the gold reserves, which were relocated from
New York to Frankfurt,” were recast to meet that standard.
Boehringer still doesn’t buy it. “Why, of all the possible
bars—120,000—it chose to repatriate, did it choose bars that were
nonconforming?” He also questions why the Bundesbank doesn’t publish
lists of bar numbers, which would allow other depositors to see if
there’s any double counting of the same gold under multiple owners. The
Bundesbank says it has such lists for all the gold it keeps in custody
at the New York Fed but that “security reasons” prevent it from making
those lists public.
“Why is a bar list a security risk?” Boehringer says. It reminds him
of the 1920s visit the Reichsbank president paid to the New York vault.
“That’s the culture of ‘I don’t want to know,’ ” he says.
Boehringer speculates that individual bars may have several owners,
perhaps as the result of bars being leased, sold, or subject to
complicated financial arrangements. “I can’t prove it,” he adds, saying
the onus of proof should be on the central bankers, not him. He isn’t
alone in raising doubts. John Hathaway, co-manager of the $1.3 billion
Tocqueville Gold Fund, says Germany might need the slow, seven-year
repatriation window to unwind complex financial arrangements by which
the gold was loaned out, perhaps several times. Their questions about
multiple owners aren’t completely out of left field, as there is a loan
market in which gold bars are put up as collateral and then sold to
third parties for the duration of the deals.
Piling gold bars at the Bundesbank headquarters in Frankfurt.
Photographer: Frank Rumpenhorst/EPA via Corbis
The German central bank says that’s not the case with its New York
gold and that its repatriation plans will be completed on schedule. “The
Deutsche Bundesbank has never loaned gold bars held in custody at the
New York Fed into the market or to other central banks,” the bank said.
The New York Fed says it isn’t party to any transactions that the
gold in its custody may be involved in. It says all gold bars on deposit
are present at the 33 Liberty St. vault and that the bank doesn’t
recognize any third-party rights or interests other than those of the
account holder. In response to questions for this story, the bank also
says foreign depositors are able to conduct inventories and that it
provides those depositors with lists of bar numbers for all holdings.
The gold may be in order. The gold may not be in order.
But either way, gold bugs around the world are winning unprecedented
concessions from their governments, and gold is streaming out of 33
Liberty St. and across the Atlantic.
In May 2014, the Bank of Italy, which has the third-biggest gold
reserves after the U.S. and Germany, ended years of secrecy by
disclosing the locations of its holdings. Citing the German
repatriations, the central bank said about half its gold is in Rome and
most of the rest is beneath the New York Fed. Then in November, the
Dutch central bank announced that it had secretly moved 122.5 tons of
gold from New York to Amsterdam. In apparently just months, the Dutch
had shipped almost 25 times the gold that Germany moved in all of 2013.
“Beyond realising a more balanced distribution of the gold stock across
the different locations, this may also have a positive effect on public
confidence,” the Dutch bank said in its announcement. Soon after, the
leader of France’s anti-euro, anti-immigration National Front party,
Marine Le Pen, asked the Bank of France for an independent audit of its
gold and to reveal any lending or financial commitments related to the
reserves.
At the end of November, a referendum in Switzerland to repatriate
some holdings failed but led the country’s central bank to disclose
locations and amounts of its gold for the first time. Swiss politicians
are pushing for more. “I want a clear inspection where you have a list
of all the gold bars, where it’s written that it’s fine gold and only
belongs to Switzerland,” says Lukas Reimann, a member of the Swiss
parliament who led the referendum.
On Jan. 19, the Bundesbank delivered its own surprise, publishing a
tally of its 2014 gold repatriations. During the year, the German
central bank had shipped 85 tons from New York to Frankfurt, blowing
away the mere 5 tons from 2013 and setting a pace at which the
Bundesbank would easily meet its target of 300 tons returned by 2020.
Even if the world’s biggest central banks did explain away his gold
bug speculations, Boehringer had triumphed. But for him, and his sense
of order, the itch is never scratched. There were still 1,447 tons of
German gold under Manhattan at year’s end, and he wants all of it back
in Frankfurt. At the current rate it would take more than 30 years for
all German gold stored abroad to return, he says.
And there’s this detail from the German announcement: “The Bundesbank
took advantage of the transfer from New York to have roughly 50 tonnes
of gold melted down and recast according to the London Good Delivery
standard.” Bar lists were cross-checked with bar markings, the statement
said. Spot checks found no irregularities. Yet any identifying trace of
the original gold had been wiped out, the bars “now destroyed,” a
freshly fired-up Boehringer says. Melted bars might not prove
something’s rotten under Liberty Street, but the mere disclosure shows
Boehringer is making a difference.
On one of these ECB monetary leaps of fiat faith the ECB will not have a bungee cord for its sovereign members. Maybe this time off the cliff is that monetary jump. Watch out below. Take a selfie for posterity. This will raise the curtain for the next planned "rescue"Act; entrance stage left: NAU and the Amero. Insurance policies with no"free look" period.
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ECB to launch €1.1 trillion of quantitative easing
By buying eurozone governments’ bonds using
electronically created money – so-called quantitative easing– the ECB
hopes to shore up confidence, boost inflation, and drive down the value
of the euro on foreign exchanges, helping to boost exports and kickstart
growth.
European Central Bank President and ex-Goldman Sachs Managing Director Mario Draghi.
Mario Draghi, president of the European Central Bank, has announced that he will pump €1.1tn at a rate of €60bn a month into financial markets until September 2016, in an attempt to prevent the fragile eurozone economy from grinding to a halt. In a keenly anticipated announcement at the ECB’s headquarters in
Frankfurt, Draghi said the operation would continue, “until we see a
sustained adjustment in the path of inflation”.
By buying eurozone governments’ bonds using electronically created money – so-called quantitative easing–
the ECB hopes to shore up confidence, boost inflation, and drive down
the value of the euro on foreign exchanges, helping to boost exports and
kickstart growth.
The €60bn a month figure includes the purchases of private sector
assets that the ECB had already begun to try to unlock credit markets.
Draghi said the decision on the ECB’s governing council was made with “so large a majority that no vote was necessary”.
The launch of QE is likely to infuriate Berlin, which views it as akin to a bailout for free-spending governments such as Greece.
However, with average prices already falling across the eurozone, the
ECB wants to avoid the threat of a deflationary spiral, in which
consumers and businesses slash spending while they wait for prices to
fall further, dragging the economy into a slump.
“While the sharp fall in oil prices over recent months remains the
dominant factor driving current headline inflation, the potential for
second-round effects on wage and price-setting has increased and could
adversely affect medium-term price developments,” Draghi said.
In a concession to the Germans, Draghi promised that national central
banks would bear most of the risk of their governments defaulting, with
just 20% of the new bond-purchases subject to “risk-sharing”. In an
aside that will be heard loud and clear in Athens, Draghi also warned
that, “some additional eligibility criteria will be applied in the case
of countries under an EU/IMF adjustment programme”. That could allow the
ECB to exclude Greek bonds from QE if, for example, a future Syriza
government ditched the austerity programme imposed by its creditors.
Syriza supporters in Athens greeted the exit polls with jubilation
Draghi has promised to do “whatever it takes” to safeguard the single
currency, and has repeatedly signalled in recent months that with
eurozone inflation slipping well below the ECB’s 2% target, he felt more
action was necessary. However, he stressed that QE alone would not
repair the eurozone economy, and reforms by member-country governments
would also be necessary.
“What monetary policy can do is to create the basis for growth, but
for growth to pick up you need investment, for investment you need
confidence, and for confidence you need structural reforms”. He urged
governments urgently implement reforms, saying, “the more they do, the
more effective our monetary policy will be.”
The ECB had already announced, in a statement earlier on Thursday,
that it would leave its main interest rate unchanged at 0.05%.
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