 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.
 Commented 3947 days ago |
