The
profession of blind trust by the director of Germany's central bank for his
people's gold in the custody of others is remarkable. In other circumstances,
it might be humorous, even laughable. The German parliament representative
(are they really still 'representative' of the German people?) is not
convinced their citizens' gold is, indeed, present and accounted for.
What would Jay Leno do if he entrusted his rare car collection with the Fed,
but couldn't see them - even visit them for a peek-a-boo?
"Sorry
ole buddy, but your cars are unallocated in a pool with those car collections
of others. Bogart's are here, along with Jerry Seinfeld's, Ralph Lauren's,
and two dozen others, or so. I'm sure you understand. What we could do is
return one car a year for three years. We'll start off with a 1968 Corvair. Sound like a plan, pal? No? Hey, here's an idea:
why not start another collection!"... Paul Volcker,
former Fed chairman, 1987
German gold reserves stored in NY
Fed Reserve in safe hands - Dombret
‘Phantom debate' on German gold reserves safety adds to German public
uncertainty in tough European Union economic times, says Deutsche Bundesbank director Andreas Dombet.
Author:
Dorothy Kosich
Posted: Monday , 05 Nov 2012
RENO (MINEWEB) -
Andreas Dombret, a member of the Executive Board of
the Deutsche Bundesbank, the German equivalent of
the Federal Reserve, called a demand by German politicians and the country's
federal Court of Auditors to audit Germany's gold reserves now being held in
the U.S., "a discussion driven by irrational fears."
During a reception sponsored by the Bundesbank
Representative Office in New York City, Dombret
said, "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."
German is believed to have the second-largest gold reserves in the world,
second only to the United States. German politicians as well as Germany's
federal Court of Auditors have requested that the Bundesbank
audit German's gold reserves, the majority of which are in storage in
offshore banks.
Reports say the Bundesbank has agreed to ship 150
tons of gold currently stored at the New York Federal Reserve to Germany over
a three-year period. A newspaper report claims 50 tons of gold annually will
be returned to Germany to be meilted down to test
the overall purity before being re-cast into standard gold bars.
In his speech last week, which was addressed to attendees at the reception,
as well as Federal Reserve Board Governor William C. Dudley, Dombret said Germany's gold reserves were accumulated
over time, thanks, in part, to its economic boom in the 1950s and 1960s.
Germany's economic strength resulted in 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 US currency," he said. "As long
as this system was in force, which was up until 1981, the US Fed was
obligated to exchange its currency for gold."
"Any account surplus resulted in an increase in Germany's gold
reserves," he observed. "This gold was stored in US faults for
obvious reasons. This was not only the case for the gold held by the Bundesbank-it was, in fact, common practice."
"Thus, we are now looking back at 60 years not only of fruitful
cooperation in many fields and international fora,
but also of sorting gold and trading via the New York Fed," Dombret said. "As a matter of fact, it is sensible
for us to do so in New York, as Frankfurt is not a gold trading venue."
"Throughout these 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], I would like to thank you personally," Dombret declared. "I am also grateful for your
uncomplicated cooperation in so many matters. The Bundesbank
will remain the Fed's trusted partner in the 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, Dombret stressed.
"The days in which Hollywood Germans such as Gerd
Frӧbe, better known as Goldfinger,
and East German terrorist Simon Gruber, masterminded gold heists in US 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 US Fed accounting clerk," Dombret
suggested. "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."
Source: German gold reserves stored in NY
Fed Reserve in safe hands - Dombret
