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Some Follow-Up Questions For The Bundesbank, And Its Gold
zerohedge.com ^ | 10-28-2012 | Tyler Durden

Posted on 11/16/2012 8:51:38 AM PST by Renfield

Yesterday we posted the official statement of Bundesbank executive board member Carl-Ludwig Thiele, which in turn was a response to a recent surge in concerns about the safety and sanctity of German sovereign gold, held mostly abroad (if a major part of it held in London had been secretly repatriated), and demands by the general public - i.e., those who actually own the gold - for either an audit, or full repatriation, or both. There are, however, some problems with the official Bundesbank statement: the statistics cited in it, as well as the various explanations, are wrong, incorrect or misleading. Below we present some of the "facts" stated by Herr Thiele, and what the truth is.

The statistics, and facts, Thiele quotes in the interview are either patently wrong or indicate a major lack of understanding about the gold market.

1. Thiele says:

"By 1956, the gold reserves had risen to DM 6.2 billion, or 1,328 tonnes; upon its foundation in 1957, the Bundesbank took over these reserves. No further gold was added until the 1970s"

This is factually incorrect. From a documented source such as Timothy Green's gold reserves report from 1999 (source), we find that German gold reserves were 1,328 tonnes in 1956 and contined to rise every year until 1969 when they hit 4034 tonnes, an increase of 200% since 1956! Offical German gold in 1970 was 3,537 tonnes and declined to 2,963 by 1979. Since then it has increased by just 400 tonnes.

2. Thiele says:

"At the beginning of the last decade, we brought 930 tonnes of gold to Frankfurt from London and subjected it to a painstaking inspection. Part of the gold was melted down in order to create new bars which conform with the “Good Delivery Standard”.

Fact: All gold stored at the Bank of England has to be London Good Delivery Standard. Bars that do not conform are not accepted. That is how the LBMA system works. There is an accepted refiner list. There would be no need to melt down anything from the Bank of England unless the Bundesbank had been duped with coin bars or similar and/or does not have faith in the BOE in the first place.

3. Thiele says:

"We have at our disposal fully documented lists of the bars, and our partner central banks send us every year confirmation not only of the bars’ existence but also of their quality. We receive confirmation of our gold reserves, measured in troy ounces."

Which is it: on a bar basis or on a fine ounce basis? They are two very different things. One is covered by bailor/bailee law, the other is covered by a debtor/creditor relationship.

Fact: The gold reserves built up and stored on behalf of the Bundesbank at the Bank of England were earmarked on a bar basis in the Bundesbank's set-aside account. Set-aside accounts were not accounted for on a fine ounce basis. Thiele does not seem to be aware of this difference between a set-aside bar basis and a fine ounce basis.

A lot of gold in the FRBNY vaults is in the form of US assay office melts. These have a history of losing fine ounces on re-smelting, so with the Fed he is explicitly off base.

All of this, of course, excludes Thiele's emotional appeal to German heartstrings to please trust the New York Fed and the BOE (whose British Pound apparently is still a reserve currency by the Buba's offered logic), while completely leaving out the ECB (that other bank in Frankfurt, whose currency is what Germany currently does use). It also excludes his disturbing statement that "when push comes to shove, we can have it available as a reserve asset as soon as possible." The fact that "gold is not money", at least according to the Chairman, aside, one wonders just what signal is, or rather was, the Bundesbank sending by reclaiming its gold: is the need for gold to be used as a reserve assets once again approaching? (this is, obviously, rhetorical).

Finally, all of this begs the question: was the German writing while under the influence when he posted the official Bundesbank retort, or was he simply truly ignorant about some very simplistic facts about gold, official gold reserves and the gold industry, which anyone could fact-check on their own in 5 minutes or less. Or was he simply being disingenuous in hopes that nobody would actually question his authority and thus, his "facts"?

Because if anything, the Bundesbank response only opens up even more question about the credibility, not to mention the validity, of the official German stance, which logically implies that the fundamental hypothesis: that German offshore gold is in good hands, is also debatable at best and null and void at worst.

We hope that this ongoing dialogue between the German Central bank and its people continues, as it is one that is urgently needed in a world in which the old form of currency - fiat - is rapidly losing its credibility around the entire developed, and developing, world.

h/t Ronan



TOPICS: Crime/Corruption; Germany; Government
KEYWORDS: fed; fraud; germany; gold

1 posted on 11/16/2012 8:51:44 AM PST by Renfield
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To: All

More detailed stuff, exposing a lot of financial monkey-business, is here:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/10/25_James_Turk_-_The_Entire_German_Gold_Hoard_Is_Gone.html


2 posted on 11/16/2012 8:58:23 AM PST by Renfield (Turning apples into venison since 1999!)
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To: Renfield

Got a feeling there is no gold in Ft. Knox and the Bundesbank is short some bars. Wait until the audits are completed - ObamaBars made of tungsten.


3 posted on 11/16/2012 9:05:37 AM PST by gotribe
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To: All

Joseph Farrell comments:

“Just in case you want to know, the Exchange Stabilization Fund was established in 1934 as a result of – you guessed it – FDR’s confiscation of US gold, and thus, as the author correctly deduces, this is a slush fund directly beholden to the American executive and to the financial oligarchy.

In short, you’re looking at part of a financial mechanism that is completely off the books… you’re looking at something that has the potential for massive fraud, and you’re looking at something that could fund a lot of covert activity… and indeed, may have been doing so for a very long time…”


4 posted on 11/16/2012 9:05:55 AM PST by Renfield (Turning apples into venison since 1999!)
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To: Renfield
"In short, you’re looking at part of a financial mechanism that is completely off the books…"

Are you saying that gold is the next financial bubble crisis? Are you saying that there is not enough tangible gold available to back the ownership certificates of all the gold that is bought and sold in the commodities market??

5 posted on 11/16/2012 9:21:41 AM PST by buckalfa (Nabob of Negativity)
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To: buckalfa
Are you saying that there is not enough tangible gold available to back the ownership certificates of all the gold that is bought and sold in the commodities market??

I'm no expert but I would say that is a fair assessment.

6 posted on 11/16/2012 9:26:17 AM PST by Bloody Sam Roberts ('Need' now means wanting someone else's money. 'Greed' means wanting to keep your own...)
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To: buckalfa

“Are you saying that gold is the next financial bubble crisis? Are you saying that there is not enough tangible gold available to back the ownership certificates of all the gold that is bought and sold in the commodities market??”

There is a great deal of evidence to indicate that that is indeed the case.


7 posted on 11/16/2012 9:47:26 AM PST by Renfield (Turning apples into venison since 1999!)
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To: Renfield

It seems to me that a new *form* of gold is in order. That is, bricks, bars, and coin are easy to make, relatively speaking, but there might be a way to form gold that would make it easy to verify for both quality and purity, even from such contaminants as radioactive isotopes.

The way to do this would be to make container “leaf rolls”, taking advantage of gold’s malleability. That is, gold can be machined to be like a roll of aluminum foil. Not only could such gold foil be laser embossed with a complex pattern or image, but a large quantity of gold could be scanned for purity by unrolling and re-rolling the gold foil between scanners. They could examine all the gold at a near molecular level, without damaging it.

For strength the gold might be coated in a light layer of lacquer, invisible to the scans.

Just an idea.


8 posted on 11/16/2012 10:20:47 AM PST by yefragetuwrabrumuy (DIY Bumper Sticker: "THREE TIMES,/ DEMOCRATS/ REJECTED GOD")
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