Mini-Me: Is Germany About to Start a Run on Gold Held at the New York Fed?

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Is Germany About to Start a Run on Gold Held at the New York Fed?

Economic Policy Journal, 8 March 2012

German lawmakers are to review Bundesbank controls of and management of Germany’s gold reserves. Parliament’s Budget Committee will assess how the central bank manages its inventory of Germany’s gold bullion bars that are believed to be stored not only in Frankfurt, but at locations outside Germany, according to German newspaper Bild.

What’s most interesting about all this is that Germany may follow in Hugo Chavez’s footsteps and repatriate their gold to Germany so as to have direct possession of and ownership of their gold reserves. It’s really the only way to protect a central bank’s gold ownership, since by simply going in and asking the New York Fed to show Germany “their” gold, the Fed can walk them in and show them a pile of gold and tell them that it is theirs. The next day they can walk Chinese officials in and show the Chinese the exact same pile of gold and tell them that the gold is theirs.

Possession is the only sure protection.

Germany’s huge gold reserves – 3,396.3 tonnes of gold are some 73.7% of Germany’s national foreign exchange reserves, and are held not only in Germany but at the New York Fed, in London and in Paris. Dumb.

What kind of pressure will the U.S. put on Germany to prevent them from repatriating their gold? The banksters clearly have German Chancellor Merkel in their pocket, but this is unlikely to be influence that is deep into German political leaders. Thus, a run on gold, started by Germany, is not an impossibility.

In this scenario, the noise you would hear is the spike in gold as Bernanke prints more dollars for open market purchases of gold to fill demand for delivery by various central banks. Yikes.

(ViaJamesMiller)

Phi Beta Iota:  Germany is at least a year if not two behind China and Russia.  Furthermore, what is really needed, apart from physical repossession and testing of all gold, is a complete audit of the New York Bank and all — without exception — all gold transferred to others after possession by the New York Bank.  This should not be a political issue — this should be a stake in the heart of the Federal Reserve and central banking.  Community banks and asset-based loans are the near-term solution for all who wish to disconnect from endemic fraud across the US banking system.