GoldCore has a pair of
interesting articles on German concerns about its gold reserves. The most
recent article regards gold held outside Germany.
Please consider Germany to Review Bundesbank Gold Reserves in Frankfurt, Paris, London and
Federal Reserve Bank of New York
German lawmakers are
to review Bundesbank controls of and management of
Germany’s gold reserves. Parliament’s Budget Committee will
assess how the central bank manages its inventory of Germany’s gold
bullion bars that are believed to be stored in Frankfurt, Paris, London and
the Federal Reserve Bank of New York, according to German newspaper Bild.
The German Federal Audit Office has criticised the Bundesbank’s lax auditing and inventory controls
regarding Germany’s sizeable gold reserves – 3,396.3 tonnes of gold or some 73.7% of Germany’s national
foreign exchange reserves.
There is increasing nervousness amongst the German public, German politicians
and indeed the Bundesbank itself regarding the
gigantic risk on the balance sheet of Germany's central bank and this is
leading some in Germany to voice concerns about the location and exact amount
of Germany’s gold reserves.
The eurozone's central bank system is massively
imbalanced after the ECB’s balance sheet surged to a record 3.02
trillion euros ($3.96 trillion) last week, 31% bigger than the German
economy, after a second tranche of three-year loans.
The concern is that were the eurozone to collapse, Bundesbank's losses could be half a trillion euros - more
than one-and-a-half times the size of the Germany's annual budget.
In that scenario, Germany’s national patrimony of gold bullion reserves
would be needed to support the currency – whether that be a new euro or a return to the Deutsche mark.
Jim Rickards has outlined possible plans by the
Federal Reserve to commandeer Germany’s and all foreign depositors of
sovereign gold at the New York Federal Reserve in the event of a dollar and
monetary crisis leading to intensified “currency wars” and the
‘nuclear option’ of a drastic upward revision of the price of
gold and a return to a quasi gold standard is
contemplated by embattled central banks to prevent debt deflation.
It is difficult to separate fact from fantasy, and speculation from reality
in such stories, but those wishing to learn more about Jim Rickards' ideas, might be interested in his book, “Currency Wars: The Making of
the Next Global Crisis”
In January, Eric King had an Interview with Jim Rickard on King World News.
James G. Rickards is a writer, lawyer and economist
with over 30 years experience in global capital
markets. He is Senior Managing Director at Omnis, Inc., a consulting firm in
McLean, VA and is the leading practitioner at the intersection of global
capital markets and national security. His advice to clients from 2002 to
2006 included early warning of impending financial collapse, the rise of
sovereign wealth funds, the decline of the dollar and the sharp rise in gold
prices years in advance of these events. He has held senior executive
positions at Citibank, Long-Term Capital Management and Caxton Associates. In
1998, he was the principal negotiator of the rescue of LTCM sponsored by the
Federal Reserve Bank of New York.
German Gold Off Limits, Greek Gold Subject to Confiscation
The other article of note on GoldCore
regarding German gold reserves was back in November when various proposals
for Germany to backstop Greece and the EFSF with its gold surfaced.
Please see Germany to G20: German Gold
“Must Remain Off Limits”; Italian Gold Sale Again Proposed in
Germany for details.
Those proposals were shot down quickly. However, Germany did make Greek gold
subject to confiscation in the latest bailout proposal by the Troika.
Greece is foolish to accept this parasitic offer of "help". Greek
gold reserves may be the only thing that prevents all-out hyperinflation and
complete destruction of currency when Greece returns to the drachma.
Please see Pact With the Devil Over Gold for further
discussion as to sad state of affairs that may befall Greece.