PowerSwitch

First, it was the Venezuela’s Hugo Chavez that kicked up a stink. He demanded Venezuela’s gold back from London and the US. That was a few years ago now.

Some astute nations took note. After all, Venezuela’s holdings are the 15th largest in the world – this was no piddling amount.

Then about a year and half ago, Germany was rumoured to be asking for an audit of its gold held in foreign depositories. Supposedly the American custodians said take a hike.

We don’t know if that’s true or not. But what we do know is that shortly afterwards, the Germans asked for much of their gold back. 674 tons, in fact – 374 from Banque de France and 300 from the US Fed in Manhattan.

Now, this certainly wasn’t a piddling amount either. But if the stuff was in the vaults, then what’s the problem?

Well, you can only imagine the Germans response to the announcement that the transfer, of their gold back to them, would take eight years to fulfil.

“What? Eight years? The Venezuelans took delivery within a couple of months. What’s going on here?”

What indeed? Perhaps the Americans placated the German delegation thus: “Now, now, keep calm. Don’t make a fuss. If you rock the boat and everyone gets nervous, this process could take a lot longer! We don’t want anyone else getting concerned.”

A full year after Germany asked for its gold back, a trifling 37 tons had been delivered. That’s way off the 87 tons envisaged… and even that figure was allowing eight full years for delivery. What’s more, a paltry five tons came from the US. The rest was from Paris.

When asked about progress on getting its gold back, the Bundesbank was rather coy.


Don’t worry, they said.

They would, though, wouldn’t they? It would hardly help to have other nations knocking on the Fed’s door asking for theirs back too now, would it?

UndercoverElephant wrote:Makes perfect sense to me. The bottom line is this: if the Americans could have given the Germans their gold back, why haven't they done so? Why act in a way that gets the rumourmill turning like this? There is no conceivable advantage or motivation, so the only explanation I can think of is that the Americans simply do not have that gold. It's gone.

kenneal - lagger wrote:Are you suggesting that there could be a run on the Central Banks?

adam2 wrote:

UndercoverElephant wrote:Makes perfect sense to me. The bottom line is this: if the Americans could have given the Germans their gold back, why haven't they done so? Why act in a way that gets the rumourmill turning like this? There is no conceivable advantage or motivation, so the only explanation I can think of is that the Americans simply do not have that gold. It's gone.

If the Americans do not have the gold, then they will presumably have to buy enough gold on the open market in order to fulfil their obligations.

adam2 wrote:One might suspect that some central banks might be holding a lot of "non physical gold" which after all DOES sound a little bit better than "gold that we claimed to hold, but that we no longer/never did have"