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The long clamor about the German gold reserves
by GATA and particularly by our friends, the German journalist Lars Schall and the German market analyst Dimitri
Speck, this week caught the attention of the German edition of the Financial
Times, which published a story headlined "Speculation and Rumors: The
Hunt for the Treasure of the Bundesbank."
The Financial Times Deutschland confirms, as
GATA has reported, that most of the German gold is stored outside the
country, partly for international security reasons but more so now for ease
of trading and general subservience to the United States. The FTD story is
notable mainly for extracting from the German central bank, the Bundesbank, a statement that no German gold is being
leased at the moment.
Unfortunately the FTD's question, or at least
the Bundesbank's answer, did not encompass gold swaps,
particularly gold swaps with agencies of the U.S. government, also major
mechanisms of gold price suppression, which were the focus of Schall's telling recent inquiries of the Bundesbank, inquiries the Bundesbank
turned away without answering:
http://www.gata.org/node/9363
And the FTD's story errs completely in
asserting: "In the 1960s former Bundesbank
president Karl Blessing allegedly sent a letter to the American high
commissioner in Germany in which he guaranteed that gold would not be converted
into dollars. The letter is unpublished to this day; that's why it cannot be
excluded that the commitments went even further."
In fact the supposedly
mysterious Blessing letter was sent, in 1967, not to the American high
commissioner in Germany but to the chairman of the U.S. Federal Reserve,
William McChesney Martin Jr.; it did not guarantee
that Germany would not trade gold for dollars but quite the opposite, that
Germany would not trade dollars for gold; and GATA published it in January
this year, thanks to the efforts of Speck and University of Texas economics
professor James K. Galbraith, who obtained a copy of the letter from the
Lyndon B. Johnson presidential library at the university:
http://www.gata.org/node/9547
But the FTD story is a good start by a major
news organization in getting interested in the details of gold price
suppression. The FTD and other news organizations would perform even better
service by pressing the Bundesbank, the Bank of
England, and the Federal Reserve about gold swaps, the Fed in 2009
having admitted undertaking them --
http://www.gata.org/node/8192
-- and the Bank of England having refused last
month to distinguish its gold loans and swaps from its general reporting of
its claimed gold reserves:
http://www.gata.org/node/10635
The Financial Times Deutschland story is
appended -- first an English translation provided by Schall
and then the original in German.
CHRIS
POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Speculation
and Rumors:
The Hunt
for the Treasure of the Bundesbank
Germany is in possession of 3,400 tons of
gold, the second-largest gold reserves in the world. But where is the
billion-dollar treasure stored? There has been wild speculation about this
for years. Financial Times Deutschland went in search of clues.
By Peter Vollmer
Financial Times Deutschland
Monday, November 7, 2011
http://www.ftd.de/finanzen/maerkte/rohstoffe/:spekulation-und-geruechte-...
Anyone who wants to lay his hands on the gold reserves
of the Bundesbank -- which are currently
approximately 3,401 tons with a current market value of $196 billion -- faces
a problem: Where is the gold of the Bundesbank
anyway?
This simple question has been the subject of
wild speculation. Critical minds claim that the precious metal was largely in
the United States, where it was deposited on the one hand during the Cold War
as far away as possile from the "Iron
Curtain," and on the other hand also as an ideological pledge of loyalty
to the alliance of Germany to the United States.
Supercritical spirits even doubt that the Bundesbank has the gold at all.
Let's take one thing at a time.
The big gold reserves of the Federal Republic
-- according to recent data from the the mining
lobby World Gold Council the second largest in the world after the U.S.,
which holds with 8,133 tons, more than twice as much -- date from the 1950s.
With the economic miracle, West German exports boomed and many nations paid
in gold.
In 1968, Germany held 4,000 tons -- the culmination
of the German gold holdings. A large portion of these reserves was, however,
never transported, which is both logistically and actuarially difficult. The
gold simply changed hands at the great trading centers in New York, London,
or Paris without ever changing the local storage locations there.
During the Cold War, it seemed too uncertain
to deposit the gold at the headquarters of the Bundesbank
in the financial metropolis Frankfurt -- just 100 kilometers away from what
in the Cold War was called the "Fulda Gap" -- a spot at the inner
German border, which would have been ideal for an invasion by Warsaw Pact
troops in wartime because of its topography.
Over the years Germany's gold reserves
decreased slightly, especially since the gold price dropped between 1980 and
2000, interrupted only by occasional convulsions. With the gold price
increasing beginning in 2001 from below $300 per troy ounce to $700 in 2006
and finally above $1,000 in 2008, the perception of gold in the public mind
changed, and more and more critical minds were interested in the whereabouts
of the gold.
But the Bundesbank
was tight-lipped: Its former chief executive, Hans-Helmut Kotz,
told the magazine Stern in 2004: "The biggest part of our gold reserves
is held at the U.S. Federal Reserve, the Bank of England, and the Banque de France, in that order." Never again has
any representative of the Bundesbank expressed
himself in such detail.
Via a written request to the Federal
Government, Member of Parliament Peter Gauweiler
received in November 2010 no further details of the storage locations but
learned that the Bundesbank maintains its gold
holdings in physical form -- not in the form of dodgy, windy delivery
promises of banks that may be cash-strapped in time of crisis -- and that lending
would be made in the current low-percentage range.
... Gold Lender Bundesbank
So anyone who does the treasure hunt has to
patch up a map first: for example, from rumors -- 2.300 of the 3.400 tons are
allegedly in the vaults of the Federal Reserve Bank in Manhattan. That would
be more than two-thirds of the total gold reserves. The testimony of former Bundesbanker Kotz would not be
contradicted by that. And because the Bundesbank is
so tight-lipped, a lot of yarn is spun.
This also implies that the central bank would
have lent the gold to collect interest on the loan -- and to give unspecified
market forces such as banks the opportunity to suppress the gold price by
selling the borrowed gold at the market. That would be a classic short sale,
for which specualators are blamed in the stock and
bond markets, and there would have been a lot of winners except for gold
owners and producers. The central bank would receive interest for lending the
gold that would otherwise uselessly lounge around.
Speculators could suppress the price with the
sale of the borrowed gold and buy the gold back later more cheaply and pocket
the difference as profit, more so as one pushes the gold price down. And both
banks and central banks have an indirect interest in a low gold price, even
if their gold reserves are worth less. The price of gold is ultimately a
crisis indicator of system stability and future inflation rates; the higher
the gold price, the higher the stress in the system, which neither banks nor
central banks want.
But either the Bundesbank
is lying or the conspiracy theory of "gold price suppression" via
short selling with borrowed gold is wrong, because at the request of the
Financial Times Germany, the Bundesbank announced
that "at present no gold is lent."
Thorsten Schulte has neither a wooden leg nor
an eye patch -- only his nickname fits the image of the treasure hunt. The
"Silver Boy" is an expert in precious metals. He says: "Of
course it is suspect that the Bundesbank reveals so
little." There are several explanations. One is that the Bundesbank appeals to reasons of security and business
policy.
In various Internet forums it is conjectured
that the reserve was a dead pledge to the United States. But at the Bundesbank they do not want to hear of that: "We are
guided by safety, cost efficiency, and liquidity," said a spokeswoman.
Changes of storage locations were not excluded in general, but a transport to
Germany's own vaults would be associated with high costs. Therefore, much of
the gold is stored abroad.
Most experts consider it likely that Germany
does not want to offend the wooden leg of the U.S.: "I suppose it's also
about diplomatic consideration for the U.S.," says Schulte.
In the 1960s former Bundesbank
president Karl Blessing allegedly sent a letter to the American High
Commissioner in Germany in which he guaranteed that gold would not be
converted into dollars. The letter is unpublished to this day; that's why it
cannot be excluded that the commitments went even further. And even if not:
"To carry the gold away from the U.S. would be a distrust signal
first-class," says Schulte.
The situation is not as dramatic anyway. Parts
of the German gold are simply in New York, Paris, or London because it can be
traded or sold better this way. About 60 central banks store their bullion in
Manhattan, thus saving the cost of transport. "In addition, there are
reputable sources who say that the Bundesbank would
bring small quantities to Germany time after time," says "Silver
Boy" Schulte.
Therefore, the gold reserves that lie under
the Bundesbank branches in Mainz and Frankfurt had
not for long been at more than 4 percent of the total, as gold fans
speculated over and over again. The Bundesbank told
the FTD that "a large part of its gold reserves" are in Germany.
However, more precise statements will not be given for the time being, and
therefore conspiracy theorists will continue in dark nights at the fireplace
spinning yarns about the German gold.
* * *
Spekulation und Geruchte:
Die Jagd auf den Goldschatz der Bundesbank
Von Peter Volmer
Financial Times Deutschland
(Monday, November 7, 2011)
http://www.ftd.de/finanzen/maerkte/rohstoffe/:spekulation-und-geruechte-...
FRANKFURT
-- Deutschland besitzt mit
3400 Tonnen Gold die zweitgrößten
Goldreserven der Welt. Doch
wo lagert der milliardenschwere Schatz überhaupt?
Darüber gibt es seit Jahren
wilde Spekulationen.
FTD.de war auf Spurensuche.
Wer seine Hand an die Goldreserven
der Bundesbank legen will
-- derzeit sind das rund 3401 Tonnen mit einem aktuellen
Marktwert von 196 Mrd.
Dollar --, steht vor einem Problem: Wo ist das Gold der Bundesbank überhaupt? Diese einfache Frage ist seit Jahren
Gegenstand wilder Spekulationen.
Kritische Geister behaupten, das Edelmetall sei größtenteils in
den USA, wo es im Kalten Krieg einerseits möglichst weit weg vom
"Eisernen Vorhang"
und andererseits auch als ideologisches Pfand für die Bündnistreue Deutschlands zur USA deponiert worden sei. Überkritische
Geister ziehen sogar in Zweifel, dass die Bundesbank das Gold überhaupt besitzt.
Der Reihe nach: Die großen Goldreserven der Bundesrepublik -- laut jüngsten Daten der Minenlobby World Gold Council die zweithöchsten
der Welt nach den USA, die mit
8133 Tonnen nochmals mehr als doppelt
so viel hält - stammen noch aus den 1950er-Jahren. Mit dem Wirtschaftswunder brummte der Export, viele Staaten bezahlten mit Gold.
You can
read the rest of the article in German here
* * *
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