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Monday, May 1, 2017

Deutsche Bundesbank Had to Leave 1200 Tons of Gold in NY, they still can't go in and check or count the gold.

Deutsche Bundesbank Had to Leave 1200 Tons of Gold in NY, they still can't go in and check or count the gold. HT: Cryptogon. Source: Norberthaering.

With big fanfare, Deutsche Bundesbank announced on February 9 that ahead of plan they had repatriated 300 tons of gold from New York. This put a positive spin on a rather disturbing fact –1236 tons of gold that is supposed to be part of Germany’s currency reserve will continue to be kept outside of German control in New York – indefinitely.

The German gold in question is being kept in storage at the New York Fed, an institution that is owned and controlled by Wall-Street-banks, in a country, whose current president considers it an imposition that the law and so-called judges tell him what he is allowed to do and not allowed to do.

I am not criticizing the Bundesbank for storing 37 percent of Germany’s official gold in in a place there it has no control over it. It seems clear that they negotiated hard with the US and acted rather shrewdly. Their negotiation position was much enhanced in 2012 by the leakage of a report of the German Court of Auditors, which was very critical of the conditions under which German gold was being held in New York. This created public and political pressure on the Bundesbank to renegotiate and to get that gold out of New York. At the same time, the US-side could hardly afford to snub this demand, because there was lots of speculation, even in the US, that something was amiss with the gold reserves of the US and the rest of the world that were stored in the country. 

The way in which the official gold of the US, and the gold held in custody for other countries, is guarded against public scrutiny and shielded from its owners, gives fodder to any number of conspiracy theories. Had the New York Fed refused to let a foreign central bank, which was under such obvious pressure, retrieve some of their gold, these conspiracy theories around official gold might very well have become intense enough to damage trust in the dollar.

Reaching an agreement was apparently not easy. On the way, the Bundesbank announced a relocation plan for the next three years and then, very soon, superseded it by anouther one that allowed time until 2020 for finishing the intended relocations. First they said they were going to publish the report of the auditors, then they didn’t. This kind of behavior would not be expected if the semi-official story (from unnamed sources) was true, that the Bundesbank just had to say how much gold they wanted at what time and the Fed would have put it at the gate at that time with no further questions asked.
The Dutch Get in the Way

According to its (second) gold relocation and storage plan, unveiled in early 2013, the Bundesbank will be storing half of Germany’s gold reserves in its own vaults in Frankfurt am Main by 2020. This required a transfer to Frankfurt am Main of 300 tons of gold from New York and 283 tons of gold from Paris. 1236 tons will continue to be kept in storage in New York, plus (a much more reasonable) 432 tons in London.

In the summer of 2013 Bundesbank started with a first transport of 5 tons of gold to Frankfurt and then stopped the transports again right away. In hindsight, a plausible explanation for this unusual behavior could be a when secret repatriation program of the Dutch central bank, which was only made public when it was concluded in 2014. 

Apparently, the Dutch came out and said something like “If the Germans are allowed to take out their gold, we want to have our’s too.” This created the threat that more and more countries would use the precedent of the Fed’s lenience with the Germans to demand getting back their own gold. 

The withdrawals were halted until a plan was in place of how everybody could be treated the same and nobody could take out too much gold. Judging from what the Germans and the Dutch did, the scheme seems to be that the US will allow central banks to repatriate as much gold from New York as is absolutely necessary to allow them to have half of their gold at home.

After that was settled, the Dutch were first to be allowed to withdraw their allotment. They were finished in late summer 2014. The Bundesbank managed to get 85 tons out in the rest of the year. In 2015, another as yet unknown institution besides the Bundesbank withdraw gold -30 tons overall. The Bundesbank got 99 tons back. 

In 2016, finally, Bundesbank was alone in withdrawing gold from New York. This might explain why the Fed was more forthcoming than the Bundesbank had expected and handed out the final 111 tons of their 300-ton-allotment.
A hiden message

When the Bundesbank had announced their plan of where to keep how much gold in the future, it was craftily sold as a message to the German people and politicians that they would get a chunk of the gold that was in New York under their control and store half of the official German gold in Germany. This, however, was not the main message.

The main message had New York and Washington as addressees. It consisted in the promise that in exchange for getting those 300 tons, they would leave four times as much in New York and stop forever fussing about it. This is my reading anyway, based on what I understand is usual diplomatic custom and lingo in such affairs. 

This way of reading it is bolstered by the fact that the conveniently critical Court of Auditors has gone completely silent since the Bundesbank announced their new plan for where to store the gold. 

This is not what one should have expected. None of the concerns of the auditors has been addressed in any significant way. The Bundesbank can still not go in and check or count the gold. There are still the terms and conditions of the New York Fed, which say that they give no guarantee. 

If it should turn out that the gold has been stolen in some mysterious way, that’s bad luck. None of the other problems were fixed and no convincing reason was provided why it should be in Germany’s interest to keep such a large portion of its gold outside its control. The fact that a fifth of the gold that used to be kept in New York under such unfavorable conditions has been retrieved, is not a very convincing reason for the auditors to fall completely silent. After all, they had clearly said that the way that the German national treasure is stored there, is against the law. Read the full story Here.

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