Tuesday 22 January 2013

German gold - time to worry?

Not sure how worried we should be by this.  But it seems that the Germans have decided to repatriate their gold reserves currently held in America, London and Paris.  States often keep their gold reserves spread in different countries, to protect it against invasion, wars or other things that can happen in the home country.  Germany, for example, wanted to protect its gold during the Cold War.  What does bringing it home mean?  This article provides some analysis, reasons why you would bring your gold home.  But ultimately it seems to imply a lack of trust in both the United States and the Euro.  Germany is battening down the hatches and preparing for serious economic changes in the world.

1.       Changing geo-political landscape

2.       Do not trust the custodian country to keep track of it when lending it out

Back in the mid-1920s, the head of the German Central Bank, Herr Hjalmar Schacht, went to New York to see Germany’s gold. However the NY Fed officials were unable to find the palette of Germany’s gold bullion. The Chairman of the Federal Reserve, Benjamin Strong was mortified, but to put him at ease Herr Schacht turned to him and said ‘Never mind, I believe you when you when you say the gold is there. Even if it weren’t you are good for its replacement.’

The fact that there has not been an audit of Germany’s gold for some time, not since 1979 in the New York Fed, gives some validity to GATA and others’ concerns. Added to this the refusal by the Federal Reserve to conduct an independent audit of the gold reserves in Fort Knox, as campaigned for by Dr Ron Paul, and worries build as to whether the custodian is ‘good for’ the gold.

3.       Do not trust the custodian country to protect the value of their own currency

Every few months there is a discussion regarding what China are planning on doing with the gold they both mine and import every year, with many believing they are hoarding the metal as an insurance against the billions of US Treasury bonds, notes and bills they hold. Many believe they will issue some kind of gold-backed currency in the short-term and dump its one trillion dollars’ worth of US Treasury securities. Whilst, at the moment the US seem to take their monopoly currency for granted, should the Chinese or anyone else behave in such a manner, the US will need to respond – most likely with gold, which on its own it does not have enough of.

4.       Foresee the need to protect the future of your own monetary system

Germany, like other countries in the EU, has a responsibility to protect its citizens’ wealth and standard of living. At the moment this is being threatened as the successful export country props up other fiscally different countries to its own. Gold, as we have long said, is a protector of wealth. The euro, many have said was designed to act ‘like a gold-standard’ unfortunately you can’t dress up a fiat currency to glister, as it seems the Germans have realised.

5.       It’s yours, you want it where you can see it.

According to the Irish Independent Ireland owns six tonnes of gold, the bulk of which is held at the Bank of England.  But apparently at its peak in the 1960s, Ireland owned more than 70 tonnes, and five and half tonnes disappeared when we joined the Euro (Frankfurt?).

1 comment:

  1. What does Our Lady of Medjugorje say about all this?