... Just like the gold itself?
* * *
5:42p ET Friday, November 2, 2012
of GATA and Gold:
Our friend the German financial journalist Lars Schall calls attention to remarks
delivered Thursday by a member
of the executive board of
the German Bundesbank, Andreas Dombret,
at a reception held at the Bundesbank's
office in New York in the presence of the president of the Federal
Reserve Bank of New York, William Dudley. Dombret's
remarks, appended here, confirm that, as GATA often has reported, Germany's gold reserves are held in large part
at the New York Fed to facilitate
their presumably secret trading, since, as Dombret notes, "Frankfurt is
not a gold-trading center."
seem meant to pretend that the clamor and controversy over the
foreign vaulting and secrecy around the German gold reserves will end quickly, preserving the trust between
the Bundesbank and the Federal Reserve.
And yet the Bundesbank continues to refuse to answer whether it has any gold swap
arrangements with the Fed or any
other agency of the U.S. government:
If the Bundesbank won't answer about that to the Germany people, why
should they have any trust in their own central bank or any central bank?
The clamor and controversy probably won't be going away
before the Bundesbank and Fed answer
that question truthfully.
And of course if that ever
happens, the clamor and controversy will have only just begun.
The section of Dombret's remarks about the gold
issue, copied from the Bundesbank's Internet site, is appended.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Excerpts from Remarks
by Andreas Dombret
Member of the Executive Board
Reception of the Bundesbank Representative
Office, New York
Thursday, November 1, 2012
... Please let me also comment on
the bizarre public discussion we are currently facing in Germany on
the safety of our gold deposits outside Germany -- a
discussion which is driven by irrational fears.
In this context, I wish to warn against voluntarily adding fuel to the general sense of uncertainty among the German public in
times like these by conducting a "phantom debate" on the safety of our gold reserves.
The arguments raised are not really convincing. And I am glad that this
is common sense for most Germans. Following the statement by the president of
the Federal Court of Auditors
in Germany, the discussion is now
likely to come to an end -- and it
should do so before it causes harm to the excellent relationship
between the Bundesbank and the U.S. Fed.
back to facts and figures: I would
like to remind you that our
gold reserves are part of the German
currency reserves. These were accumulated
over time thanks, in part, to Germany's
economic boom in the 1950s and 1960s. Germany's growing economic strength, especially its strong external position, resulted in rather large trade account surpluses, most of them acquired in U.S. dollars. At that time, the International
Monetary System, known as
the Bretton Woods system,
was dominated by the U.S.
currency. As long as this
system was in force, which
was up until 1971, the
U.S. Fed was obliged to
exchange its currency for
account surplus thus resulted in an increase in Germany's gold reserves. This
gold was stored in U.S. vaults for obvious reasons. This was not only the case for the gold held
by the Bundesbank -- it was,
in fact, common practice.
By the way: It was the only practical thing to do, since running a trade account
deficit meant a decrease in gold stocks.
are now looking back at 60 years not only of fruitful cooperation in many fields and international fora, but also
of storing gold and trading
via the New York Fed. As a matter of fact, it is
sensible for us to do so in New York, as Frankfurt is not a gold-trading venue.
60 years we have never encountered the slightest problem, let alone had any
doubts concerning the credibility of the Fed. And for this,
Bill [Dudley, president of the Federal
Reserve Bank of New York], I would like to thank you personally. I am also grateful
for your uncomplicated cooperation in so many matters. The Bundesbank will remain the Fed's trusted partner in future, and we will continue to take advantage of the Fed's services
by storing some of our currency reserves as gold in New York.
At the same
time, you can be assured that
we are confident that our gold is in safe hands with you. The days in which Hollywood Germans such as Gerd Frobe, better known as Goldfinger, and East German terrorist Simon Gruber masterminded
gold heists in U.S. vaults
are long gone. Nobody can
seriously imagine scenarios like
these, which are reminiscent of a James Bond movie with Goldfinger
playing the role of a
U.S. Fed accounting clerk.
While gold is
important, we have to combat a crisis
of confidence in the euro area. This is the task we need
to concentrate on. And we
will do so.
* * *
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