Monday, January 14, 2013

A significant development on the precious metals front

Intriguing article on the cutting edge blog Zero Hedge today.
It Begins: Bundesbank To Commence Repatriating Gold From New York Fed

In what could be a watershed moment for the price, provenance, and future of physical gold, not to mention the "stability" of the entire monetary regime based on rock solid, undisputed "faith and credit" in paper money, German Handelsblatt reports in an exclusive that the long suffering German gold, all official 3,396 tons of it, is about to be moved. 
Specifically, it is about to be partially moved out of the New York Fed, where the majority, or 45% of it is currently stored, as well as the entirety of the 11% of German gold held with the Banque de France, and repatriated back home to Buba in Frankfurt, where just 31% of it is held as of this moment. 
And while it is one thing for a "crazy, lunatic" dictator such as Hugo Chavez to pull his gold out of the Bank of England, it is something entirely different, and far less dismissible, when the bank with the second most official gold reserves in the world proceeds to formally pull some of its gold from the bank with the most. 
In brief: this is a momentous development, one which may signify that the regime of mutual assured and very much telegraphed - because if the central banks don't have faith in one another, why should anyone else? - trust in central banks by other central banks is ending.

Much more importantly, it is being telegraphed as such, with Buba fully aware of just what the consequences of this (first partial, and then full; and certainly full vis-a-vis the nouveau socialist regime of Francois Hollande which will soon hold zero German gold) repatriation will be in a global monetary arena, which is already scraping by on the last traces of faith in a monetary system that is slowly but surely dying but first diluting itself to oblivion. And in simple game theory terms, the first party to defect from the prisoner's dilemma of all the bulk of global gold being held by the Fed, defects best. Then the second. Then the third. Until, in this particular case, the last central bank to pull its gold from the NY Fed and the other 2 primary depositories of developed world gold, London and Paris, just happens to discover their gold was never there to begin with, and instead served as collateral to paper gold subsequently rehypothecated several hundred times, and whose ultimate ownership deed is long gone.

It would be very ironic, if the Bundesbank, which many had assumed had bent over backwards to accommodate Mario Draghi's Goldmanesque demands to allow implicit monetization of peripheral nations' debts has just "returned the favor" by launching the greatest physical gold scramble of all time.
The story, for those who follow precious metals, is a significant one.

Meanwhile Ireland is starting to question the status of their Gold.

As other nations scramble to build their Gold reserves or to protect the reserves they have already acquired, you may be wondering where all the Gold belonging to Canada is stored?

Canadian Watchdog bring us the wonder graph which reminds us that our country does not have any Gold...  we sold it all in the 1990s to pay our debts.


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  1. Buy high, sell low. Typical Canadians. What else do you expect?

  2. It is a big change,this is where people start wanting physical in their hands,even if you are a big entity.(University of Texas has a$1 million in bullion).
    I had no idea our Govt was so stupid(well,I'm starting to realize).
    I'm going to go fondle my gold now.

  3. In Hong Kong and Singapore they have implemented a 15% stamp duty on foreign investment to cool property prices. At first this had an impact on the Hong Kong property market, but the market heated up again. Since then, many more measures to discourage the over-heated market, but of no use. The property market in Hong Kong continues to be one of the costliest in the world. Being a financial center, with a high demand and limited space, it is a formula for high real estate pricing. Canada however, is not a financial hub, or limited space. Heck, we can't even boast about the pipeline! The native protests will eventually grow until the government backs down. Implement new rules to suppress high prices and it will be too effective.

  4. I was at Peter Schiff's talk last night in downtown Vancouver. He said that the US response to the German gold repatriation request was that the US needed 7 years to collect and send the gold back. Where is this part of the story?

    1. Exactly... this speaks volumes about the status of physical gold.