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Stand and Deliver: How Germany Disrupted the World's Gold Market

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Published : June 27th, 2013
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( 15 votes, 4.7/5 ) , 12 commentaries
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Category : Gold and Silver

Someone asked, 'why would there be a desire to do a stealth confiscation of gold from the public holdings in ETFs and private stores through price manipulation?' Who could have been assigned the task of prying bullion out of the hands of the people, and for what conceivable reason? It appears to be happening, but why?

There are any number of possible reasons. Concerns that an innovative new round of QE and money creation might create a run on the gold price is one possibility. There should be little doubt in those who look into the evidence that central bankers are quite sensitive to gold and silver as alternative currencies and reflections of their own policy initiatives.

And that is quite possible. As I have pointed out, there is some precedent for it. In 1933 Franklin Roosevelt pulled back much of the publicly held gold in the US. And after this was done, the government revalued the gold from $20 to $35 overnight, and then used the gains to recapitalize the banking system.

Although this could happen again, it does not seem likely because it flies in the face of everything the central bank has achieved by putting the US on a purely fiat money regime, the last gold ties being severed by Nixon in the 1970s. They prefer to denigrate gold, even though they still hold it, and certainly speak about it quite a bit often through their intermediaries.

There is definitely a movement to revisit the Bretton Woods Agreement that established the dollar as the world's reserve currency. The BRICs, whose economic power is ascendant, are seeking to establish a new currency for global trade that is owned by no single central bank or entangled in the domestic policies of no single country. And they wish to add gold and possibly silver to that mix. And they are in the process of acquiring substantial reserves to accomplish it.

The Anglo-American banking cartel is resisting this movement with all their diplomatic and political might. One of the sensitivities of the recent spying scandal leaks is the concern that they may be trying to obtain intelligence that could be used in these negotiations which are ongoing, very quietly behind the scenes.

But one has to ask, 'what set off the firestorm of price manipulation against gold that started at the beginning of this year?' Unless one is a shill, or naïve about markets, the market operation to knock the price of gold, and also silver, down is fairly obvious and heavy handed. They are not even trying to hide it. Traders do not dump hundreds or even thousands of contracts at market in quiet periods with any other objective than to take the price down. It really is that simple.

My initial take on this was that this was part of the 'price-setting' negotiation for gold and silver in the basket of currencies that the BRICs are developing. But that seemed a bit thin, unless it was seen as a 'last stand' against including gold and silver by making the argument that they were too volatile.

So I looked back on the chart for what I saw was the pivotal moment, and then checked the news and tried to find some event that may have served as the impetus for it. And the truth of it was staring me right in the face.

How remarkable is it that Germany, at the urging of their citizens and despite the objections of their central banks, has requested the return of its sovereign gold from its custodial storage in New York? And that the Feds said, no. You can't have it, but we will be in position to return your own property in seven years time.

What was up with that? Venezuela had recently requested its gold to be returned, and that helped to push the price of gold up to its all time high, because the request had obviously been floated before it became public knowledge.

So why couldn't Germany have the return of its own property for seven years?

Think about this. And perhaps what is happening now will become more clear. It is all a part of the credibility trap, wherein past actions of officials must be hidden in order to protect careers and ensure the orderly functioning of the status quo, even to its own eventual detriment.

Oh this is wrong? This is some weird theory? Well I admit that part of the problem is that we are left to guess what the central banks and the markets are doing with our money and property far in excess of what might be expected in democratic societies. This is the failure of regulation and oversight, and the corrupting power of big money in politics.

But, ok. If this is just some distraction, then give Germany back its gold, in full, this year.

If you wish to prove your word is good and facts are straight, give Germany back its gold.

And if you wish to restore some level of confidence in the markets, make them more transparent and open so people can conduct their business efficiently and safely without fear of being cheated and defrauded at every turn.

If you wish the trust and respect of the world, redeem what you have pledged to hold in trust.   If you have taken some actions in the past that were made in good faith and for good reasons, but may have gone too far or turned out badly in retrospect, make good on them now.   The way to stem a scandal is to bring the truth to light.  It is never the initial act that brings down government, but the subsequent attempt at coverup that obtains a life of its own.

Do the right thing even if it is not convenient, because it is the right thing to do. 

Prove your full faith and credit to be worthy.  Fulfill your oaths.  Tear down the wall of secrecy that divides the people from their government. End this before it can go any further.

Stand and deliver.

"Oh what a tangled web we weave when first we practice to device."

Sir Walter Scott

"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it."

Sir Eddie George, Bank of England, in private conversation, September 1999

Data and Statistics for these countries : Germany | Venezuela | All
Gold and Silver Prices for these countries : Germany | Venezuela | All
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I have confidence in gold.

At the end of the day,with all it's machinations and theories etc, people will not buy $USD or other paper $THINGIES with their gold.
Rate :   1  3Rating :   -2
There are a number of problems with this article. First is the unfounded assertion that the NY Fed told the Germans that they would have to wait until 2020 to get 300 of the almost 2,500 tons of gold being held for them returned to their custody. The request to have the repatriation completed by 2020 came from Germany. There is no hard evidence that the Fed told the Germans that they would have to wait that long. That sort of claim can only be found in the work of the gold bug community, not in the statements issued by either the Fed or Bundesbank. It is nothing more than an assumption made by the gold bug community based upon their belief that the Fed sold and/or leased out their gold without permission.

At first glance such an assumption seems like it could be plausible. But when further questions are raised, one must begin to wonder. For example, why would the Fed have needed to sell and/or lease out gold that did not belong to them? It is impossible to imagine that an organization that does not get audited and can legally create money out of thin air was strapped for cash. And if we are to assume that nevertheless, the Fed was willing to be so underhanded as to sell and/or lease gold that did not belong to them, we must now further assume that the Fed has suddenly grown a conscience. After all, if they were willing to misappropriate Germany's gold, why were they unwilling to engage in some time tested double entry accounting procedure, credit themselves with the measly $36B it would have cost them back in Jan. to purchase the 300 tons and then gone out and bought it? Piece of cake for them really. Doing so would not only have covered their own tracks, it would have eliminated the possibility of a panic arising among the other nations holding gold at the Fed.

It really does seem rather a case of tinfoil tinctured thinking stating that the Fed brought gold down by a third in order to save on what would amount to no more than the printing costs of $12B. And really, it would not even be that much; just a minute of Helicopter's time to make the appropriate data entry. As the Fed does not get audited, it really would be a piece of cake for them to pull off. Heck, they could have offered Jamie Dimon a handsome premium for some of his if they could not find a measly 300 tons of gold in their own vaults. It would have only cost Helicopter another moment at the keyboard. But if we believe this type of reasoning that claims the Fed is knocking down the price of gold so as that they can buy on the cheap the 300 tons Germany wants back by 2020, then would it not be reasonable to believe that they will keep bringing the price down? After all, they have 6 plus more years before they must buy and if saving on their costs really matters to them and as they are so obviously masterful at manipulating the price of gold, why should we believe that they will not bring the price down to $29.95 before they go out in the market? If you hold this sort of logic to be true but have not yet sold your gold, then it must be asked, why have you not yet sold your gold so as that you can buy it (and more) back at a future date at a great discount?

As well, it must be wondered why, if the Fed really did say no to Germany as claimed, that alarm bells did not go off at the Bundesbank, causing them to ask for all of their gold to be returned, not just 12% of the total held in New York?

Additionally, it must be asked, if there is any truth to this story, why did not alarm bells go off at the 34 or 35 other central banks that also have some or all of their gold held at the NY Fed, causing them to ask for their gold to be repatriated? Just ask yourself what you would do if you were to learn that the bank with which you do business had told a fellow depositor that they would have to wait 7 years to complete their withdrawal. i know that I would be in there lickety-split demanding to withdraw my money. Yet no other central bank has asked for some or all of their gold back. Not even one. Is this more likely because none of them heard about the Fed's refusal, or because said refusal exists only in the minds of those particularly fond of a certain type of headgear fashioned from one of Alcoa's better known products?

The second problem with this article has to do with the author's contention that "The BRICs, whose economic power is ascendant, are seeking to establish a new currency for global trade that is owned by no single central bank or entangled in the domestic policies of no single country. And they wish to add gold and possibly silver to that mix. And they are in the process of acquiring substantial reserves to accomplish it." The first part of the contention is likely correct. It gets more dicey when claimed that they wish to add gold and possibly silver to the mix. That claim, not being based on any official pronouncement coming from the group as a whole, or from any of the 5 member nations, must be considered pure conjecture. And with regard the third part of the claim, the facts show otherwise. There is no evidence whatsoever that any of the nations aside from China has the slightest interest in holding silver as an official reserve and the evidence for China is sketchy at very best. With regard to gold, while there is rather compelling evidence for China and hard evidence for Russia showing that both have been increasing their gold reserves substantially, the same cannot be said for the other three. Brazil has only modestly added to their gold reserves, bringing them back to a level (67.2 tons) last seen in Nov. 2000. South Africa has about 125 tons of the stuff as reserves and in an official statement issued toward the end of May, stated they have no plans to add to that total. As for India, their gold reserves have actually dipped fractionally over the past 5 years, from 557.75 to 555.7 tons. And they have been doing whatever they can to make the importation of gold even more expensive in an effort to deal with their trade deficit. All five of them put together have about as much gold as Italy. Not the sort of total that you could hope to back a new reserve currency with and expect it to be taken seriously. So, if that really is their plan, we may have decades to wait before it comes to fruition.

Every dog has its day. Like it or not, that day for gold is not likely to be seen for another couple of years. That its day has not yet come is not the result of some giant conspiracy. It is all about how capital flows and confidence. Just go out to the local mall and ask people there if they believe the dollar is about to become worthless. For every person that answers in the affirmative, there will be 1,000 who think you are mentally unstable just for having asked the question. Until those numbers change, gold will not be seen for what it is: a hedge against government. Rejoice that this is the case. It gives you the opportunity to buy at what will be considered in the future to have been the opportunity of a life time. And if you believe in the conspiracy nonsense of the tinfoil hat crowd, then hope that their voices are silenced lest someone start to pay attention to them, the manipulation gets ended and the price of what you desire gets driven up beyond your means.

Rate :   0  10Rating :   -10
Your mall is in US. Mine is not. You fail to comprehend how irrelevant your mall and the people in it have become and that will be your undoing.
Rate :   6  0Rating :   6
Your pithy response revealed more about yourself then i managed to convey about myself to you in my post. For example, you would appear to be someone who is very comfortable making assumptions. Just why you felt confident to assume that my mall is in the US is rather a mystery. i have never said where i live and if you were really paying attention, you might have noticed that i tend to use British, not American spelling. And in fact, your assumption was incorrect.

Your response also demonstrated a shocking lack of sense. Your contention that the folks frequenting the malls are irrelevant is bizarre. If only 1 person in a thousand understands what is coming down the pipe and further understands that gold offers some insurance, gold will only continue to sink from profound disinterest. Gold will only rise to new heights when those people with disposable income, currently found at malls, decide in increasing numbers to give the very friendly folks at Miles Franklin a call. The more people that buy, the higher the price will go. Pretty simple stuff really; sales do matter. How is it that you failed to grasp that most obvious of all things to this market?

The gold community would do well to disassociate itself from the tinfoil headgear subsect within its midst. It does far more harm than good. To an outsider looking in with an interest to enter the market, they are going to run for the hills when they hear stories of massive market manipulations taking place, the Fed having no gold in their vaults and/or this all being a ruse to usher in a new world government. Wild conjecture and idle speculation by irresponsible scare mongers seldom works for a broad audience. Some will buy the nonsense, but most will turn aside politely and be on their way. And why wouldn't they be? The sales pitch put forth by the tin foil crowd is better buy now before prices come down even more. That sort of logic might appeal to a chronic snob, but to the average person at the mall going into 3 stores to find the best deal on a pair of sneakers, it will fall on deaf ears. But if you can approach them with facts and figures that show the depth of the sovereign debt crisis and tell them what has always happened in the past in such situations and you can also explain to them that gold offers a hedge against the sins of government, well, that person just might be interested in learning more.

All that aside, your response failed to address even a single question that i posed. What i think of this failing shall be left to your imagination; though doubtlessly, for public consumption, you would claim not to care a whit what i think of your failing.

"Truth is out of style."--MC 900 Foot Jesus

Rate :   0  5Rating :   -5
Vox, you may use British spelling, so does anyone from Australia, New Zealand, and Canada for the most part not to mention at least half a dozen other countries, but this whole thing about you not residing in the US is a just another red herring. You were the one in a post quite some time ago who stated you lived in the US, had the FBI knocking on your door as I recall, for being some sort of a whistle blower. Something about the media being camped outside your home as well. As the FBI did not operate outside of the US, certainly not in the time frame you referenced, you would have at least at one time resided within the US borders. Don't be an ass, I know I know, it seems to be hard for you to deviate from your base lack of morals but do put in some effort every now and then.

"Wild conjecture and idle speculation by irresponsible scare mongers seldom works for a broad audience." Yet you pull this same ruse at every opportunity available to you. Are you purposefully trying to lead others astray, or are you not and it's all just another bad Vox performance? Get over yourself, your not half as wise as you wish you were.

Rate :   6  0Rating :   6
Ah, my dear Verboten, how sad i was made by your post. It seems that your senile dementia is progressing.

Please allow me to refresh your failing memory. i would have never made the claim to residing in the US, for i never have done more than visit and i have always found it easier to stick to the truth. The story you recall is a garbled version of what you actually read. i very purposely did not place the event in an identifiable location. You mistook the unnamed local and federal police forces in my post for the FBI (though my post may have omitted mention of the federales). And you only imagined that i claimed to be a whistle blower. No such claim was made, for it would have been untruthful. Indeed, it is most unlikely that i would have even hinted at what earned me all the attention i received, for that would have made identifying me all too easy. But yes, you did manage to correctly recall that the international media spent considerable weeks camped outside my door.

You also made the preposterous claim that my response to Jesse's piece was some sort of ruse. It must be asked, to what possible end? My post merely pointed out the assumptions made in the article along with some of its factual problems and the absurd, though logical, implications stemming from holding such views. i finished off my piece not by speaking badly of the prospects for gold, but giving my opinion that its day to shine will come; only its day to do so may still be a few years off.

i would never attempt to lead anyone astray, unless of course they wanted to get to the Astray Café in NYC. You, however, are a horse of a different colour (Zimbabwean spelling). Your posts almost never deal with what the author has written. Rather than deal with what Jesse has written or any of my responses to his points, you have attempted to shift the dialogue from the subject at hand to a complete non sequitur (kind of like what you complain Jim C. does). Even if your meaningless sojourn down a completely beside the point path had been an accurate account, which it was not, it would not have served to move the dialogue even one silly millimeter further forward. But that is your usual modus operandi. You put down others, bringing into question their motives, sanity and/or character without ever offering anything original to advance the conversation. Is that because you are a dullard with nothing to offer?

As for your parting shot, "your [sic] not half as wise as you wish you were," you got that right. In truth, i am not even one ten millionth as wise as i would wish to be. That understanding keeps me questioning the validity of the things i believe to be true. And that is a good thing. You should try it sometime.

Just a suggestion, but you might want to take a look at the web site. They claim to be able to train your brain to better remember things and improve your cognitive skills.

"Seek not the favor of the multitude; it is seldom got by honest and lawful means. But seek the testimony of few; and number not voices, but weigh them."--Immanuel Kant

Rate :   0  6Rating :   -6
Cast the bait, jiggle the line a little, and look, Vox bites.

Directly from you post on 12/31/2012, "Receiving the sort of attention i got back then with newspaper and magazine reporters and television news crews parked outside my door for 5 weeks, to say nothing of receiving death threats from law enforcement, was more than enough to cause me to want to be unremarkable."

I can't think of what you might have done that would cause those in law enforcement, anywhere in the world, to threaten your life and garner that kind of media attention other than being a whistle blower. The FBI line was nothing more than an assumption due to everything that was taking place in US in 1974. You to make assumptions regularly so it was fair play. There is of course an alternative to all of this, I suspect you simply lied by creating this little fairy tale. Now unlike you, I don't require others to believe I'm important so I don't strut around throwing out my opinions trying to appear as if I know everything. As for your Zimbabwean spelling of color/colour... As I had indicated there are a number of countries that still use British (real English?) spelling. By the way, in that particular post Hart challenged you on your claim that there is no God and your ranting about the science of evolution and you never responded. Shall we all go away from this with the knowledge that you didn't have the wherewithal to give Hart an answer?

You are however obfuscating the truth by claiming that you don't attack people here. Please! You and Jim C are on top of the leader board when it comes to derailing discussions in these forums by using personal attacks. Just go back to the post I referenced above. That particular post contains some comments by yourself where you take issue with individuals personally. In fact you got very nasty indeed. You showed a lot of your real self in those posts and your real self is pretty ugly. While you do spend much of your time commenting on the subject presented you have no qualms about going after other individual commenters or the authors. To prove my point, go back over your comments (in various threads) and read them with a critical eye for a change. A critical eye is important for the mind that creates the problem can't easily see the problem. You did recently make me laugh although I suspect inadvertently, I've seen your attempt to schmooze up to OTE after he oh so delicately slapped you back down, it was rather pathetic. After going back over many of your comments it's easily determined that you use conjecture and presumption when commenting and you use this as a means to justify making remarks that devalue what someone else says. You use stats, often times questionable, to back you these presumptions in what shows itself as a not so clever attempt to validate your opinions.

Wiggle wiggle

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I sincerely apologize for failing to notice your trail of crumbs and exposing you to inconvenience of being forced to point it out to me. It is entirely my fault. Not being a native English speaker I would have missed even a Jamaican spelling. I also seem to have offended you by apparently assuming that you might be an American, and I apologize for that too. It’s tricky these days, and I’m obviously not careful enough. It appears it’s a common thing for Americans to pretend to be Canadians these days for some reason. I don’t really understand why. It’s one of those cultural things I guess. Now, when we positively established that you could not possibly be an American, returning to the subject of the mall location, may I point out that the mall phenomenon, in given shape and form, is mostly related to the American cultural and political sphere (The Empire), so I had to assume that you used it figuratively (or had no experience with the rest of the world whatsoever, but I decided in your favour). Anyway, the meaning of my comment is that people who believe physical gold is a store of value make things; the Empire makes nothing except for malfunctioning weapons. If you want goods, and your weapons do not work, you’ll need to have gold to pay for them. I do not intend to defend author’s assertions – they are not mine. I leave you to your job (or hobby if you are a masochist) and suggest you to develop several virtual personalities in order to get your rating between 20-30% here.
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I find that you yourself have made a number of assumptions in an effort to cast doubt on assumptions made by someone else.

"Yet no other central bank has asked for some or all of their gold back. Not even one." Do you have irrefutable proof of this? Your assuming that all communications central banks conduct would be in the public realm. You cast doubt on the BRICs adding gold and silver into the mix, can you at the same time provide proof that they are not? You see, your comments are based on nothing more than assumptions that run contrary to the assumptions you claim the author made. If you were able to provide documentation that outlined what the BRICs were really doing and within these documents there was no listing of gold and silver then you could hold your comments up as correct. Unfortunately it seems that the only worth your comments hold are based on your own opinion of them, not possibly unlike the authors?

"Brazil has only modestly added to their gold reserves, bringing them back to a level (67.2 tons) last seen in Nov. 2000. South Africa has about 125 tons of the stuff as reserves and in an official statement issued toward the end of May, stated they have no plans to add to that total." Are you privy to all of the current internal policies for either country that you could produce documentation to back up your claim? Can you with all certainty state that what may have been officially released is the sum of all activity they will be part of in PM's this year and next? You allow no room for private dealings within organizations (governments and CB's) which are very secretive. The fact that they released any figures would immediately cause alarm with anyone that has even a simple understanding of how these entities work and be identified as misleading.

Would the Fed really just print up the few billion it would need to buy back the gold Germany wants back without someone picking up on it? I don't know but your speculating that it could. I would counter that with all the attention that is focused on what it does every day there is a chance someone would discover this act, whistle blowers are everywhere these days don’t cha know. Is what I just said possible, yes. Can I prove it, no. Can you disprove it, no. Ergo it's possible till proven incorrect just as what you said is possible but neither can be held up as correct no matter how much value you place on your own opinions.

Effectively your speculation is no different than that of the gold bugs with the exception that what gold bugs believe has some value based on observable events in the world and with the US Fed especially. If you take an item such as the verifiable request by Germany to have an audit done of the gold it has in the US Fed and the audit being turned down there is much room for speculation of why there was no audit. From Der Spiegel: “"Finally, in 2007, "following numerous enquiries," Bundesbank staff members were allowed to see the facility, but they reportedly only made it to the anteroom of the German reserves.

In fact, auditors from the Bundesbank made a second visit in May 2011. This time one of the nine compartments was also opened, in which the German gold bars are densely stacked. A few were pulled out and weighed. But this part of the report has been blacked out - out of consideration for the Federal Reserve Bank of New York.”

At this point there is room for reasonable speculation based on a lack of performance on the Fed’s part. If the Fed let the inspectors in and even showed them some of the gold belonging to Germany why would they not right away show them all of the gold the held on Germany’s behalf?

Your opinions, well who knows what they stem from but there are so many more holes in yours that were the sum of your conjecture a canoe in the middle of a lake you need scuba gear to find it.
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Earlier I thought that China may be behind gold hammering, since they are benefiting from it the most. Recently, after asking myself what would happen after another stock market crash, I realised one cannot go back to bonds. They are overpriced and can go only down (like a rock if different forms of QE stop). One would have to have a very good reason not to go into gold – and there it is. Since April someone has been doing their outmost to dissuade people from leaving both stock market or bonds into barbaric relic direction. On one side you are pumping money in and, since April, you are preventing it from getting out. Pure desperation. Something has got to give and I’m betting my last penny we’ll see the end of the West as we know it before the onset of this winter. Buy gold while you can.
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Absolutely correct. " Buy gold while you can."
In other words not buy $USD with your gold...while you still can!
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Common sense would tell you, If New York Had the Gold they would return it. I believe, that they leased the Gold out never thinking Germany would want it Back. I feel Gold was taken down so they would not have to pay top Dollar for the Gold they would have to buy back to give to Germany. I also think Fort Knox has only the old coin melt Gold that is not in deliverable Bars. The rest has been sold off over the years. We need a Audit of the Country's Gold Reserves at Fort Knox, But It will never happen. Because it would bring down the GOV.
Rate :   8  1Rating :   7
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I find that you yourself have made a number of assumptions in an effort to cast doubt on assumptions made by someone else. "Yet no other central bank has asked for some or all of their gold back. Not even one." Do you have irrefutable proof of this? You  Read more
Hart - 7/8/2013 at 5:31 PM GMT
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