germany and the gold

[charby]

I remember reading a story a few decades ago that said a LOT of gold was stored underground in banks in NYC. When countries exchanged the gold, it basically meant that X bars from Lower Slobovia were piled on a hand cart in the Lower Slobovian gold storage room, trundled down the hall to the Upper Volta gold storage room, and unloaded there. Entries were made in a record book, and the transaction was considered complete.

Now, if something fishy happened and some country's gold is unaccounted for or missing (and this thread is the first I've heard of it) . . . that ought to be a big, BIG story.

With stupendous repercussions.

I think its teaser fodder for the paranoid conspiracy theorists.

Also it appears that Germany did the melting, not the US

December 26, 2013

 Dear Ladies and Gentlemen:

 I am an independent financial journalist.

 In connection with the transfer of 37 tons of Bundesbank gold from New York to Germany, I came across the news that the bars were a melted before the transfer. May I kindly ask you for the following information:

 Why were the bars melted at all? And why couldn't that wait until the bars arrived in Frankfurt?

 Kind regards,

 Lars Schall

 ....
 January 3, 2014

 Dear Mr Schall:

 Thank you for your enquiry.

 At a press conference on the topic of Germany's gold reserves on 16 January 2013, Executive Board member Carl-Ludwig Thiele presented the Deutsche Bundesbank's new storage concept. In addition to the relocation of gold bars, this concept includes, amongst other things, measures to ensure that the specifications of the London Good Delivery (LGD) standard are met.

 In cases where these specifications were not already met, the Bundesbank had these original gold bars melted down and recast in order to meet this standard. This was achieved without any difficulties.
 .....
Statement by Peter Boehringer, president of German Precious Metal Society and co-initiator of the Repatriate our Gold campaign --

[AJ Dual]

Yes, there are now international banking standards/markings for gold bars. So if Germany did it, then that's at least more legit.

And possibly Germany is being polite/quiet if they're getting the same gold back or not and they did the re-casting to cover for us. So it doesn't totally remove the suspicion.

The other reason is possibly that there's been a fair number of bars and fakes filled with tungsten. Some cored with tungsten rods, and some just a whole solid tungsten bar clad in a few mm of gold.

http://static4.businessinsider.com/image/505a27c2eab8ea3430000000/how-a-manhattan-jeweler-wound-up-with-gold-bars-filled-with-tungsten.jpg

[brimic]

The obvious reason to recast the gold is because it is not what came to them from the Germans originally.
 The obfuscation explanation surrounding it is interesting- read the link I posted- he goes into a lot more detail-

 

Bingo!

If we had to pay off say China to keep them from dumping T-bills, we aren't going to do it with either greenbacks or bars of gold marked and serialized by a German bank.

If we do in fact have enough gold to repatriate German gold, you can bet your next year's salary that it going to be gold stolen taken from other countries' accounts, melted down, and recast. Its a real problem if the FRB appears to not have the gold- that's the main story- other countries will demand their gold back, sooner or later the music will stop and the last countries in line will find that there aren't any empty chairs left.

[charby]

Bingo!

If we had to pay off say China to keep them from dumping T-bills, we aren't going to do it with either greenbacks or bars of gold marked and serialized by a German bank.

If we do in fact have enough gold to repatriate German gold, you can bet your next year's salary that it going to be gold stolen taken from other countries' accounts, melted down, and recast. Its a real problem if the FRB appears to not have the gold- that's the main story- other countries will demand their gold back, sooner or later the music will stop and the last countries in line will find that there aren't any empty chairs left.

If China dumped our T bills, it would crash both economies.

[brimic]

If China dumped our T bills, it would crash both economies.

Sure it would, but we have A LOT more to lose than they do.

[HankB]

I remember seeing a show on Discovery/TLC/Something Cable Channel that was along the same lines, but it was in the Fed Reserve Bank in NYC . . .

It may in fact have been the FRB in NYC - it's something over 20 years since I saw the program, so I don't remember all the details.

[RevDisk]

If China dumped our T bills, it would crash both economies.

Heh. Even our national debt is a shell game. $4.4 trillion (ish) of the debt is government owned, mostly trust funds and retirement accounts. They blow the money, and replace it with IOU's.

PRC stopped buying Treasury instruments. Even if they have about $800 billion of our debt. Huge, but not zOMG huge.

[AJ Dual]

Sure it would, but we have A LOT more to lose than they do.

Actually, it's the flipside IMO.

We have the better military in place (not comparing future growth curves), China's sitting on market and command economy bubbles, and corruption (a trifecta, while U.S. just had market/corruption bubble) whole empty cities, and severe social strain that will explode if it's not ameliorated by factory jobs in their cities.

China basically has the willingness to do the "dirty work" when it comes to mining and manufacturing. Land-wise, skills-wise, infrastructure-wise, and raw resources-wise, if there were an economic crash and reset, the U.S. is in a fundamentally much better position than China is.

Letting the tails of our respective tigers go is definitely going to hurt both of us, and badly, but the U.S. would get up sooner, and be in much better shape.

[SADShooter]

Actually, it's the flipside IMO.

We have the better military in place (not comparing future growth curves), China's sitting on market and command economy bubbles, and corruption (a trifecta, while U.S. just had market/corruption bubble) whole empty cities, and severe social strain that will explode if it's not ameliorated by factory jobs in their cities.

China basically has the willingness to do the "dirty work" when it comes to mining and manufacturing. Land-wise, skills-wise, infrastructure-wise, and raw resources-wise, if there were an economic crash and reset, the U.S. is in a fundamentally much better position than China is.

Letting the tails of our respective tigers go is definitely going to hurt both of us, and badly, but the U.S. would get up sooner, and be in much better shape.

The innovation which occurs here, I think on a vastly greater scale (until the PRC buys/pilfers it), should also give us a significant edge from a recovery perspective.

[AJ Dual]

If things were dire enough for a time the .gov itself actually contracted here, it might even be better for the U.S. in the long run.

[Headless Thompson Gunner]

Those quantities of gold don't just disappear.  The amount of gold stored by the NY Fed are staggering, and any attempt to remove it, transport it, sell it, or store it somewhere else would be damn near impossible to hide.  The whole world would be screaming bloody murder if there was any solid reason to suspect it was missing.

As for marking specific bars, why on earth would anyone care how it's marked?  Gold is a commodity, it's fungible.  That's why you buy it, because any lump of gold is exactly the same as any other lump of similar size and purity.  And it's trivially easy to prove weight and purity.  You can't fake it.  

So I don't get it.  What are the conspiracists claiming happened, exactly?

I remember reading a story a few decades ago that said a LOT of gold was stored underground in banks in NYC. When countries exchanged the gold, it basically meant that X bars from Lower Slobovia were piled on a hand cart in the Lower Slobovian gold storage room, trundled down the hall to the Upper Volta gold storage room, and unloaded there. Entries were made in a record book, and the transaction was considered complete

Why would they even bother moving the bars?  Why not just make changes to the accounting books and leave it at that?  "The X bars of gold in Cage #112 used to belong to Lower Slobovia.  Now it belongs to Upper Volta."

[RoadKingLarry]

I'm sure once this gets to Congressman Issa's committee of investigation we will get to the bottom of things.

[freakazoid]

This is the first I've heard of this story at all, but, whaaa...t? How was that justified? I would think that would be "International Incident" material. I'd love to find some more historical references on this subject.

Nah, can't bother with all that news stuff, we have the next season of American Idle to worry about.

As for marking specific bars, why on earth would anyone care how it's marked? 

Because the proof mark shows where it had come from. If we were to take their gold and then use it to pay off something else then we wouldn't have their gold.

[Hutch]

Go watch it, and see how it relates to the German gold rodeo.

http://m.youtube.com/watch?v=wzzoBVK3fyE

Please share your thoughts

[Headless Thompson Gunner]

Because the proof mark shows where it had come from. If we were to take their gold and then use it to pay off something else then we wouldn't have their gold.

Who cares where it came from?  Gold is gold.  There's nothing special about German gold that makes it any different than any of the other gold in the vault.

Are the conspiracists arguing that there's been some sort of logistical error, that maybe the Fed gave the original German gold to the Canadians by mistake or something?  And now all they can do is melt down the Canadian gold and pretend it was the original German gold?

[Scout26]

Here's the scoop straight from Rumour Control.

My understanding is that many years ago they used to do the physical move of gold from cage to cage and re-mark the bars.  pure gold being rather soft, it was fairly easy to "erase" Lower Slobia proof/ownership marks and put Upper Volta's on.    Then they stopped moving the gold simply becuase they were just moving it back and forth every other day.   The more times you touch something the greater the chance of a screw-up.

So what happens is it's all pretty much in one big pile in one big cage, and they just keep track of it upstairs either in a ledger or on a computer.

Which is all good and well, now at this point you'll need your aluminum or tin foil beanie (gold would work also).

Okay so you get this up and comer, China, and they put gold in the vault.   They wait a few years and ask for some back, then some more, and later a bit more.  So they shipped back whatever easiest to grab and load.   It's all gold, right?

Wrong.  It appears that some of the bars may not be 99.9999% pure gold.  Not even close.   So certain .govs find out that some/many/most/a few bars may be salted.  So what do they do.  The smart thing: "I want MY gold back."   If they are your bars, with your markings then why melt them down and re-pour them?  Only if you suspect that you might have Iron Pyrite (Tungsten really, as it's the closest in weight to Au).

Now if you do have funny money, you really can't call them out, because 1) you don't have any real proof it was them, 2) Triggering the 2nd Great Depression after what you did the prior century will not win you many/any friends.   So you just kindly point out that "Hey, the Cold War's been over from 20+ years now, I really don't see Russia being able to get to Berlin without Ukraine and Poland at least slowing them down, if not stopping them, Plus their in NATO, so Uncle Sugar can save our bacon.  This Time.  

Oh, and then throw in the Nazi angle where maybe some of the former conquered countries are wanting back what was taken in War II.  There's always that.

So that's the poop from rumour control.  I've got to get back, I need another layer of foil.

[Headless Thompson Gunner]

So the fear is that some of the gold deposits were fake, and since all of the gold has been commingled it's now impossible to tell who did it or how bad the problem is?

[freakazoid]

Who cares where it came from?  Gold is gold.  There's nothing special about German gold that makes it any different than any of the other gold in the vault.

Are the conspiracists arguing that there's been some sort of logistical error, that maybe the Fed gave the original German gold to the Canadians by mistake or something?  And now all they can do is melt down the Canadian gold and pretend it was the original German gold?

I don't think it would look very good if they asked for their gold back and we didn't have it because we spent it.

[Scout26]

So the fear is that some of the gold deposits were fake, and since all of the gold has been commingled it's now impossible to tell who did it or how bad the problem is?

That's about the only reason you'd want YOUR gold back.   Although, I'm open to suggestions/ideas.

[Headless Thompson Gunner]

Digging deeper, I see so no great mystery why Germany might want its gold back now.  Much of the West's gold wound up in the US after WWII due to the threat of Soviet invasion and to facilitate foreign currency exchange once the Dollar became the reserve currency.  There's no longer the same military threat there once was, and there's no longer need for physical gold to be held in New York to do currency exchanges, so no need to keep gold in New York.  

Germany also had a bunch of gold in Paris and London, and they're taking some of it back to Germany, too, for the same reasons.

If this is link to be believed, the Bundesbank now says that Germany got its own gold back and recast it in Germany.  

... the Bundesbank yesterday seems to have told the German magazine Wirtschafts Woche (Business Week) that the gold was not recast until it reached Germany...

I'm having a hard time finding original German sources to back this up.  I google-translated the Wirtschafts Woche article cited by GATA, but the translation is too poor to tell definitively what the German Bundesbank officials said.

I notice that the people at GATA are trying hard to push the conspiracy angles.  GATA says Wirtschafts Woche " acknowledges concerns about gold market manipulation", but the google-translation is good enough to tell that Wirtschafts Woche is refuting those claims, not acknowledging them.

For the time being, I'm calling BS on the conspiracies.  I'll keep an eye on it because it's interesting, but so far the most noteworthy thing seems to be the lengths some people go to rationalize their crazy theories about gold and the Fed.

[Headless Thompson Gunner]

Found this in my travels:

Much of the gold in the vault arrived during and after World War II as many countries wanted to store their gold reserves in a safe location. Holdings in the gold vault continued to increase and peaked in 1973, shortly after the United States suspended convertibility of dollars into gold for foreign governments. At its peak, the vault contained over 12,000 tons of monetary gold. Since that time, gold deposit and withdrawal activity has slowed and the vault has experienced a gradual but steady decline in overall holdings. However, the vault today remains the world’s largest known depository of monetary gold.

As of 2012, the vault housed approximately 530,000 gold bars, with a combined weight of approximately 6,700 tons. The vault is able to support this weight because it rests on the bedrock of Manhattan Island, 80 feet below street level and 50 feet below sea level.

This is interesting for two reasons.

First, it shows that half of the gold once stored by the NY Fed has been returned to its original owners, seemingly without any great drama or fanfare.  This would not be possible if the gold had all been looted by the Fed.

Second, the vault currently has about 6,700 tons of gold.  Sounds like a lot, but it's "only" about $250 billion.  Even if they stole and spent every last ounce, it wouldn't be enough to fund FedGov for a month.  Doesn't hardly seem worth the hassle.

[freakazoid]

Found this in my travels:

This is interesting for two reasons.

First, it shows that half of the gold once stored by the NY Fed has been returned to its original owners, seemingly without any great drama or fanfare.  This would not be possible if the gold had all been looted by the Fed.

Second, the vault currently has about 6,700 tons of gold.  Sounds like a lot, but it's "only" about $250 billion.  Even if they stole and spent every last ounce, it wouldn't be enough to fund FedGov for a month.  Doesn't hardly seem worth the hassle.

Why wouldn't it be possible?
Also the a little over $250 billion is with todays spot price. It was a lot higher not that long ago. A little less than $385 billion.

And that still doesn't touch on why they wouldn't let them look at their own gold.

[Tallpine]

There's nothing special about German gold that makes it any different than any of the other gold in the vault.

Some of it came out of teeth ?   

[HankB]

Heh. Even our national debt is a shell game. $4.4 trillion (ish) of the debt is government owned, mostly trust funds and retirement accounts. They blow the money, and replace it with IOU's.

Just for giggles, take a look at the USA's year-by-year national debt at http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm, particularly during the Clinton years when we had a balanced budget, and even a surplus.

But for each and every one of those years - without exception - we finished the year with a LARGER national debt than we began the year. You have to dig a little to find the national debt includes both public debt and intragovernmental debt, both of which are components of the national debt . . . but when "they" brag about "surpluses" they only mean on one side of the ledger.

And the bottom line is we ended every single one of those "balanced" and "surplus" years deeper in the hole than we began it.

[Blakenzy]

All ze gold is at the NY Fed and Ft. Knox is for tourists. Germany will be sending in a fleet of construction trucks to retrieve what's theirs... in due time. Of course,  John McClaine, being under the employment of the privatized NYPD,  which is under contract of the various Manhattan super banks,  will promptly show up interrupting the withdrawal,  accompanied by his reluctant, wise cracking side kick,  Jésus. And that's pretty much it.