Why Deutsche Bundesbank had to promise to leave 1200 tons of gold in New York
norberthaering.de
norberthaering.de
Really digging this one. That's why I proactively not listen to investors/consultants who suggest to buy some gold derivates for savety purposes.
In other regards: What's the point of the author? That's how the "king's peace" works since forever. Having the biggest stick and control over the valuable stuff makes you the king. And as long as you provide a stable leadership live of people is mostly peaceful. That's why people are willing to accept this trade. It's unfair but we actually want it that way. And what should the others do? Say "yeah, we totally accept that he has us by the balls"? No they act like it would be their decision so that they also keep some of their own power.
It seems the author is smart enough to know all this, so seriously: What's he attempting to achieve here?
I'd recommend you reading this interview with M. Burry (guy who foresaw the real-estate crises in '08): http://nymag.com/daily/intelligencer/2015/12/big-short-geniu...
If one wants to get all conspiracy-minded: Vancouver, Toronto ... not the warmest of cities. Neither are they in red zones for rising sea levels. And, being in Canada, have more fresh water per person than most anywhere on the planet.
So you use your wealth to ensure that local authorities protect your interests. You setup people in power, vassal kings, to protect land interests above all others. Who is in charge now? Who are their friends? Do they own property scattered all over the globe? Do any of them care about a box of gold?
I wouldn't agree with what you say completely. I wouldn't say gold is replaced by real estate. That doesn't mean that real estate can't be a source of power, though.
Fiat currency has become worthless many times in many countries without a total breakdown of civilization to the extent that gold no longer has any value (e.g., Argentina, Yugoslavia, Brazil, Weimar Germany, post-revolution France, ...)
I struggle to think of ones where physically-held gold is better than cash. It only happens when your government fails. In that case (e.g. a Communist revolution or civil war) it's easier to kill you and take everything than negotiate. Where it might have had value, e.g. an American holding pounds sterling during the American Revolution, the old money held value. Selling gold to paranoid individuals is so profitable for a reason.
(The only time it may be useful is if you can tell someone about to harm you that you can pay them with something offsite. At that point, however, wired dollars are an easier sell than waiting for a gold shipment that may or may not be accompanied by Marines.)
Gold is for when that stuff hits the fan: no one will take your paper money or if they do, you'll need 50lbs of trillion billion dollar bills to buy a loaf of bread. By noon the price will double.
If you're net liquid worth is well into millions, why not have a few hundred gold coins laying around? You might lose money (compared to the stock market returns) but so what. Peace of mind. Never know. All eggs in one basket and all.
Telling the truth. If there's a doomsday scenario USA might refuse to hand you the gold. He's saying that gold not in your hand is not really gold, because when you might need it everyone else will and they have it.
His reasoning appears to be, "If the world is, as the Fed presents it, then we should be able get our gold back. But we can't." and then notes agencies that the auditing agency that was aggressively pushing even an accounting of the available gold has gone silent implying they have been made complicit somehow in the conspiracy.
Here on the outside we can't really know what is going on of course. And frankly if it got out that 1200 tons of gold was on the move I could imagine that would be a tasty target even for nation-state level thieves. But I also found it interesting when the Economist and others reported that the Fed was refusing to let auditors verify their gold deposits. That is a question that really needs an answer and we haven't gotten it yet.
NASDAQ claims a gold market volume of barely 5 tons at this time. Good luck buying 1200 tons at a decent price.
Edit: Whoops. I meant to reply to your parent.
All the bars look identical, to me anyway - there are no stacks of coins or goblets etc. that I could see. (Not all the cages are visible from the vault entrance).
The Fed states in the tour that sovereign nations can keep their gold in the vault, virtually free of charge. And take it back at any time. This is basically a service to the world that the US has provided since the second world war, when much of Europe wanted - for obvious reasons - to move their gold to a safe haven.
As the Federal Reserve is a very secure place, and great value for money, I think most nations have been fine to use that - much cheaper and easier than building a facility that is equally secure.
So personally I'm not sure about the conspiracy theories saying that the Fed refuses to release the gold; to me that is easy for any nation to test - just ask for it, it could be done publicly except that you signal to any thief the date/time of when to attack :-)
Until Simon Gruber shows up
Reading in between the lines, it seems as if a good chunk of gold has gone missing and there is an attempt by both sides to save face.
Pretty disappointing if you ask me. The entire gold vault (one million ounces of gold) is worth about a third of one percent of JPMorgan Chase's entire market capitalization.
The only thing that's safe to assess about that bullion is that for all human intents and purposes, it'll outlast infinite numbers of generations, and the other stuff --- won't. That alone tells of the impossibility and futility of putting any sort of currency number on it, in fact, any figure will do --- $100 or $100k, whatever the world perceives will be equally valid and equally workable. Doubly so since "you can't eat it", it's in the final consequence not broadly "needed at any price" for industry, and the actual supply for its prime purpose (preserve some proxy of wealth through the generations) need not be increased, and every physical ounce above or below ground is in extremis already owned by someone.
Revealing a "problem" with US-held gold would be a blow to US currency dominance. The value of such a shift in global power is vastly more than the total value of gold on the planet, which is about 8-9 trillion US$.
In other words, gold is nowhere near able to become a currency substitute, but it is potentially a bomb that can damage the dollar.
A good example to consider is aluminium. In early 1880s, the price of aluminium was around $10000 of today's dollars for kilogram -- actually the price of ounce made more sense, as you very rarely saw pieces of aluminium so large to weigh a kilogram back then. For example, the capstone for Washington Monument, weighing 9 kilograms, was the largest single piece of aluminium ever cast at that time.
Then, in 1888, the modern process of aluminium was invented, and soon its price rapidly fell by orders of magnitude.
Is there a cliff where gold as a store of value just starts crashing? Or would the fantasy continue for the non-institutional holders for a while?
Most central banks have foreign reserves ( https://en.wikipedia.org/wiki/List_of_countries_by_foreign-e... ) and and central banks' gold reserves are typically less than 1% of their reserves. So gold backing any currency is just a small part of all gold in existence (about 170 000 000 kg ~ 7T USD)
For "all currency", the money supply is a lot (converted to USD): US M0 is 10T, UK 2.85T USD, Eurozone ~8T, Australia ~1.8T. And China, Japan, India and so on also has big monetary bases.
You CONVERTING gold into USD on a current value. But rest assured if one million ounces are rendered untouchable for period of 100 years due to radioactivity, you can bet your bottom dollar the price of gold (remaining stock) will sky rocket.
What is it about gold that triggers wild conspiracy theories from seemingly rational people?
I will say that, like a stopped clock, it generates something meaningful once in a while. But so does a Markov model.
Or more likely: you do not want to cause any confusion in the markets. Ultimately the state of that gold has very little impact on the world as it moves. However any speculation about it, potentially can have impact (and most likely not positive one). When people in Europe started to question the state of that Gold Germany and other countries had to act in some form.
So for as long as the general population does not further dig into the issue (or we have some sort of cataclysmic event) the gold does not matter all that much.
https://en.wikipedia.org/wiki/Gold_repatriation
So for a while the U.S. was saying to Germany 'thanks for those cars, machine tool and other goodies, have some gold, we will keep it in the vault safe until you need it...' and, after a while, got a bit lax about moving the piles of gold from one vault to the next.
So it is not as if this gold got there due to the Germans prudently shipping it across the Atlantic for safe keeping, it is money that should have been paid in gold for goods exported by Germany to the USA. I think they were promised to be paid and no physical gold was ever moved or paid.
Also after WWII the US had accumulated essentially all the worlds gold reserves leaving their currencies without backing. The alternative to the Bretton Woods agreement was the US gifting gold reserves.
I have lost track of the clearest version of this story that I have seen, but it is mentioned in the 'Transfers by Clearing' section here: http://www.wondermondo.com/Countries/Au/MicronesiaFS/Yap/Rai...
Would explain the logistic challenges and the need to re-melt the bars if they had robbed chiseled apart.
It's a bit more complicated, isn't it? Wasn't it West Germany, in May 1971, that said "screw you" to the US and the Bretton Woods system (the same system that helped them rebuild their economy after the war) and performed a competitive appreciation by floating the currency, contributing to the resulting Gold crisis? The Nixon shock happened in August 1971, when the game was up.
It all started with the emergence of "Eurodollars" in the City of London, in the late 50s --- in itself, and their consequences, an inevitably that only a few thinkers such as https://en.wikipedia.org/wiki/Jacques_Rueff foresaw with any kind of accuracy (even though his favouring a gold standard isn't something I personally buy into as a good idea for the modern globalized economy --- same goes for a dollar standard or Euro standard or crypto-standard or any such notion though)
(and moving the gold physically is a pain, easier to have them all in the same location, that's what the FRBNY account is for)
a) Until 1971, gold was regularly moved between central banks. The United States exchanged U.S. Dollars against gold and Germany made use of this. Obviously, it was easiest to just leave the gold where it was bought - in the United States. This was also where a lot of other central banks had (and still have) their gold, so it also made exchanges easier.
b) After 1971, trading gold might have become less frequent, and at the moment the Bundesbank states it does not sell or buy any gold at all. But still: Look at Switzerland who has sold a lot of their gold after they joined the IMF. By selling gold out of the US Fed vault, they could offer delivery at the US Fed, avoiding a lot of logistical hassle. Maybe the Bundesbank just wants to keep this option open, even though they don't use it right now. It would be stupid to ship all the gold to Frankfurt, then decide to sell it in a couple of years from now, and then having to ship it back to the U.S. for the buyer.
c) Until 1989, it made sense to store gold outside of Europe to avoid it falling into the hands of the Soviet Union should they decide to invade (as suggested elsewhere in this discussion).
d) After 1989 and until recently, no one really cared about this topic. So it was easiest to just leave the gold where it was. Moving gold is a complicated business. The Bloomberg article linked above really makes it seem easier than it is. Yes, gold doesn't take up much space, but because it is so valuable you can't just put tons of gold into one plane / ship / truck - no one will sell you insurance for such a huge risk. You need to transport it in smaller batches, organizing secure transport and insurance for them, keeping the transports as secret as possible for security reasons. Also, you need to have sufficient storage available at the location where you want the gold to end up. And - again - you don't want to store all of the stuff in a single space because you won't get insurance for too much gold in one building.
I am not sure which explanation is the right one. I also find it a bit strange that they seemed to go through a lot of effort in melting these bars to make sure no one can inspect the originals. But this doesn't mean that there is no innocent explanation for all of this.
You're inferring a motive. The stated reason is that those bars didn't conform to the London Good Delivery specification.
(Opens up new questions for speculation, though: If that was the case, why didn't the Bundesbank disclose that as the reason for melting them?)
Your last sentence gets close to the key issue: if there is an innocent explanation, why have the parties who could remove the doubt over that explanation stopped talking about the issue?
IMO you need more than speculation to claim that. Besides, it is known that US gold bars are of poor quality (a lot of the Banque de France gold is being recast because of it).
"buyers don’t want the beat-up American gold" and “American gold,” the official says. “It is the ugliest.” https://www.bullionstar.com/gold-university/banque-de-france...
Compare and contrast with speculation about what happened to Ukraine's gold: http://www.zerohedge.com/news/2014-11-18/ukraine-admits-its-...
Sadly that's hardly the case for the most powerful countries.
> the New York Fed, an institution that is owned and controlled by Wall-Street-banks
No, it isn't.
> In a country, whose current president considers it an imposition that the law and so-called judges tell him what he is allowed to do and not allowed to do.
His rhetoric doesn't prevent the judiciary from acting or render the other two branches moot.
> The way in which the official gold of the US, and the gold held in custody for other countries, is guarded against public scrutiny and shielded from its owners, gives fodder to any number of conspiracy theories.
You can bet the largest repository of gold is off-fucking-limits. And, no, it doesn't.
> Had the New York Fed refused to let a foreign central bank, which was under such obvious pressure, retrieve some of their gold, these conspiracy theories around official gold might very well have become intense enough to damage trust in the dollar.
What? How? Negative.
If any bank prevents anyone from getting their deposited money, for reasons other than legal, there would be serious questions about their trust
Of course those countries having lost their gold is not good for them either, so it seems everybody has agreed to continue the lie.
This stuff sounds bad enough that it might turn me into a conspiracy theorist. But how is any of this even remotely acceptable?
> It consisted in the promise that in exchange for getting those 300 tons, they would leave four times as much in New York and stop forever fussing about it. This is my reading anyway, based on what I understand is usual diplomatic custom and lingo in such affairs.
No factual evidence is provided to back up those claims. And other news outlets about the same event (eg. https://www.nytimes.com/2017/02/09/business/germany-gold-res... ) don't feature any similar interpretations.
Suddenly the russian military help became quite expensive. Paid in gold of course. All of it.
Melting bullion is the standard way to determine that it is in fact gold. If it were "inferior coin-gold" (which I assume he means some form of alloy), that would have been detected through the process of melting.
This man is too far into conspiracy theories to present a neutral view of anything.
1300 tonnes of gold is therefore worth a bit more than $51bn, which is a lot, but approximately 1 year of the UK's defence budget, so in the scale of things not really all that much.
Now, this would mean that (given that Germany is a big economy) there would be what... 20 times that amount of gold available to back a gold currency - so about $1trn. I think that the world economy is about $80trn which leaves a big problem with the assertion that a gold backed currency could challenge the $.
If China really created gold-backed currency then gold price would skyrocket, increasing at lest 6 times (that's how much inflation we had since 1971, when the gold standard was abandoned)
They've accumulated an extraordinary amount of debt in a very short amount of time. Easily the greatest debt boom in world history. $40 to $50 trillion in new debt in about 13 years. Their combined debt to GDP ratio is now among the worst; counting the low estimates on shadow banking, it is the worst.
China needs to be able to abuse its currency going forward, for the exact same reason Japan is down to devaluing the Yen to keep the budget lights on. Low debt nations don't need to debase their currencies for such reasons - China will never be a low debt nation again (at least not this century); high debt nations get strangled to death by affixing their currencies to eg gold.
No, it's because we switched to much more productive things to back up our currency. Our currency is backed by the willingness of our citizens to work and the value of the land and other possessions.
The currency is stabilized by not printing more than what there is to back it up, nor less.
Gold is a terrible thing to use because you can't create more of it as the economy grows.
Don't think fiat money is not backed by something - it most definitely is.
I do not even understand why one country would need to negotiate about their properties held abroad.
There are two reasons I can come up with right now:
- Country A holding assets of Country B wants leverage over Country B or
- Country A does not hold 100% of these assets any longer
So keeping a relationship of balanced trust, yanking assets from one location will have an equal and opposite reaction probably in a completely different form somewhere else. The manipulated currency exchange rates will wiggle. Imported black forest cuckoo clocks will get a different tariff. The ratio of central bank interest rates will wiggle. Sometimes 3rd parties get roped into the deal so perhaps the GBP-USD ratio will wiggle in some manner. Something is gonna happen to balance it and you can either control what happens, influence what happens, or toss hands in air and hope the free market does the right thing. A lot of people are paid a lot of money to not do the later, so you can generally assume that politician-like or IT consultant-like, the strongly advised reaction by the people is never for their paycheck writing organization to do nothing.
So something of equal and opposite reaction, probably agreed upon ahead of time, is about to happen.
Ideally in some sort of pacifistic utopia it would be illegal for citizens to store movable assets in-country or invest locally. We're rather unlikely to bomb Germany again anytime soon, or unrestricted submarine warfare in the Atlantic, but it is sad to see the old (by my human lifespan standards) relationship on shakier grounds. Oh well.
I agree that mining, storing and transporting gold around the planet is a waste of resources, but there are only so many places to store wealth in a physical manner. The fact that gold has historically been useless in industry probably adds to its value.
Yes, storing and transporting gold for financial purposes may be a waste of resources. But gold is easier to store than most commodities - put it in a vault for several centuries and forget about it. You can't do that with strawberries. You can transport a lot of value in several ounces of gold without much space needed.
http://www.webmd.com/oral-health/guide/dental-health-filling...
Not sure why the article doesn't mention that fact, maybe it doesn't feed into the FUD/conspiracy theory?
until the world stops needing oil to function, no one is going to care much.
They didn't say how much gold they had at the Fed, just that they used to and that they no longer have any.
https://www.bullionstar.com/gold-university/central-bank-gol... has a bunch of data.
For example with the sell via the BIS, I assume they just transferred the gold within the Berne vault to BIS (BIS has an account there), and then let the BIS handle the sale. The London gold was likely already there.
Countries want an asset that can hold wealth through a crisis where the way things work radically changes. This asset needs to be:
* As indestructible as possible
* Easy to transport if an adversary is approaching (see also, European history :P)
* Hard to create
Gold satisfies these requirements really well; and as an added bonus it is nearly useless so hoarding it doesn't risk the real economy (see also; the US helium reserves and the risk to medical imaging or such when they run out).
EDIT I'll add that the 'easy to transport' part is what makes this Fed-Bundesbank business so completely weird - this quantity of gold is physically quite small and should be easy to inspect and audit.
The gold of the central banks is not for saving the asses of the common folk but for saving the ass of the government and to have at least the tiniest sliver of hope of being able to somehow rebuild an economy after the whole failing state business is over and done with.
One part of a market is holding your promises. If you don't all your current transactions are considered shady (standards& poors, ...), hence the notation agency on currency: it measures how likely you are to reimburse your debt.
USA being one of the largest emitter of bound on the market, the word they are being crooks on an important topic would damage on the long term reputation hence the value of their currency, hence triggering a strong recession + hyper-inflation.
In the case trust in USA Feb bank (which is private) is broken, USA may turn abruptly in Venezuela.
Since most notation agencies are in the USA, it might have a domino effect creating major chaotic fluctuations between currencies, hence automatically triggering a safe backing off from every hedge fund out of their countries ...
If USA lose the trust of the market since globalisation is labelled in US$ it means either people are going to diversify to Swiss Francs, Euro, CAD, Pounds ... and a big loss for USA.
No one want this. Not the big european, asian groups.
Workers and modests people would be totally glad, but it would mean a 1929 situation in the USA for sure, and in a lot of connected economies.
So no one wants this.
Nowadays, a chief reason is "because the others do, too" ;) it is also a brilliant instrument to stabilize/tweak currency fluctuations without buying/selling "too much" of another country's currency/debt or more generally, any third party's nominal promises/future obligations. It may prove exceptionally useful in future defence of a given currency's (global) purchasing power. Gold is the only asset that can accept any currency valuation (in both directions) without some broad group or other of real people, producers or consumers, complaining loudly (other than a tiny group of hobbyist speculators) while also showing a multi-millenium track record of durability, also in value, on a planetary scale and immunity to EMP or endless forks or Nixons. It need not perform any specific role 99% of the time, it need not even "perform" nominally at all, on the country scale (CB scale / oil wealth scale / giant old-family-wealth scale) it just needs to sit, tight and guarded, through changing times and the rare geopolitical/monetary transition or other.
Most of the gold in the world is used for jewelery approx 68-78% depending on the estimate. It does have its uses as an industrial metal, but if there wasn't gold tomorrow, the sun would still rise.
In the US, we don't have the same cultural relationship with gold that exists in India, China and elsewhere, where most of the demand is. Keynes called gold a 'barbarous relic,' and I think that's been adopted to some degree in our culture. Central banks hold many currencies, and in some cases baskets of currency. Gold is another that can't be printed, and has a multi-thousand year track record (what currency can claim that?).
More immediately, if I was in the shoes of a central banker, I would be looking to participate in the future gold-backed currency markets. Gaddhafi tried to start a gold-backed Dinar as a pan-African currency and to settle oil trades that would have competed with the petrodollar system. A bayonet and several bullets put these plans on hold. There has been talk of Russia, the top oil producer [3][4], and China moving to gold backed currencies [4].
I have exposure to gold mining stocks. For me, I'm thinking about the reasons above. I'm also thinking about the next financial crisis with the backdrop of rates barely above 0%, a massively leveraged derivatives market that will eventually be looking for real assets at the end of all of the complex chained structures, a massive debt overhang, and looking at what Moody's thinks about our pension system, Social Security, and Medicare [5]. Trying to stay hedged.
[1] https://www.cfa.harvard.edu/news/2013-19 [2] https://en.wikipedia.org/wiki/Peak_gold [3] https://www.bloomberg.com/news/articles/2017-02-20/russia-ov... [4] https://www.forbes.com/sites/nathanlewis/2016/05/05/china-is... (note: commentary piece) [5] https://www.moodys.com/research/Moodys-US-government-pension...
What the actual fuck? Why do we need permission from the US to have our own gold?
I'd be interested to know how the US came to hold the gold for Germany in the first place. Because it seems to me that Germany's mistake was to swap the gold for a promise.
Germany isn't being stiffed, strong-armed or muzzled. They are distributing assets amongst the world's soundest systems at will - at home in Germany, the UK, US and France. This guy isn't just speculating, he's making stuff up with absolutely no basis for it.
http://www.bundesbank.de/Redaktion/EN/Pressemitteilungen/BBK...
The real threat to the US dollar system comes from China; slowly thru many decades.
e.g. https://www.bullionvault.com/gold-guide/ready-to-buy-gold
Why did we drop 26,000 bombs on Muslim countries last year? Why is Snowden in Russia? Why did no one go to jail when evidence leaked of CIA torture, except the whistle blower? Why do the people of this planet produce a surplus of food and watch as some starve? Why did evidence the Bush admin lied about Iraq WMDs go unpunished?
The point is the leaders that exist dont mind cheating, and they usually get away with it. The advantage is that if they decide to take it, they can easily do so (and in the meantime it's significant bargaining leverage).
Chavez was the one I remember who got his gold back onto Venezualian soil: http://www.bbc.com/news/world-latin-america-15900885
This is my reading anyway, based on what I understand is usual diplomatic custom and lingo in such affairs.
Pass.
I'll admit that speculating about US influence over Germany is more debatable, but I'm fairly amused that you're "disgusted" by that debate.
When one ton of gold is supposed to leave germany for USA, it is accounted as leaving registered in accounting books as a +1 ton in USA fed reserv, but it actually stays on the territory and countend as -0 in germany... as long as the amount is not credited.
if flux of swap goes the wrong direction (more sell than buy from USA) then you also have to physically transport some gold.
In the case where exists a credible threat of attack by another power, you'd want to use a much stronger escort, ideally a carrier strike group and some attack submarines. Escorted aerial transport would be another option, requiring more flights and being more vulnerable in transit, but with each flight exposed to attack for a much shorter period, and significantly lowering the cost of a successful attack.
In any case, if you're concerned about perfidy among those entrusted with items of value, the classic response is to ensure that no one acting alone has sufficient leeway to steal, and ideally that massive collusion among many actors at all levels of your guard force is necessary to do so.
This is a great article about a similar problem: http://blogs.reuters.com/felix-salmon/2011/08/23/how-to-get-...
When you phrase it like that you help build an understanding that this is common.
Unless you have sources for this I'd ask you to avoid spreading that idea.
This guy is suggesting that Germany could invade Switzerland if they refuse to give back their gold, so this is a good reason to keep it there. I'm pretty sure such action would be illegal under UN rules, ie: you can't invade a country because they don't give you back your posession.
And Switzerland neutrality is highly debatable given that it's surrounded by NATO and part in a lot of EU mechanisms.
Also, an invasion would make no sense under the writers own assumption, that something is wrong in the gold market. A war in the heart of Europe will tank a lot of markets.
The thing about war is that most party's don't really want it. So sometimes it's possible to grab some advantage that theoretically should result in war.
How much damage to the Euro and to the European stock markets would such action cause? Not to mention other costs
Yes that would harm the EU in short term (1-5 years). But so would it get hurt if a powerful member of that alliance is not able to enforce rightful demands. Anyways if we include the EU into the discussion, it's very likely that a lot of other steps would convince Switzerland before the first tank needs to get manned.
Hitler went state shopping because the regions he started to invade had a majority of German speaking folks. As soon as he started to do something else (i.e. Poland) it started a war.
Yes its not exactly the US military but bloody hell, you would have a very very hard time trying to take over Switzerland - even these days. Road tunnels designed to be blown up, hundreds of thousands of modern trained soldiers with guns at home - fighting on their own terrain, ammunition dumps in individual towns, strong points, bunkers in every apartment block, supplies of modern anti armour weapons, lots of people trained in the use of explosives, etc etc
Good luck getting in there.
Aircraft caverns :) F18/A Hornets and modern equipments.
The idea of Germany invading Switzerland is surreal.
(Still I'm not sure what it would achieve to start an open war...)
The US, on the other hand could get away with it, being too big to fail.
Moreover, the one thing Switzerland has which is far more important than their pharmaceutical industry is trust. They are not in a strong-arm position like the USA, and any doubt in their solvency would cripple them back to the poverty they had in the 1950s.
So?
Since when would that make a difference to anyone?
The concept of UN "laws" or "illegal" just makes me laugh. The UN has treaties - countries agreeing to limits on their own behavior. The UN is not a government, and does not enforce any law.
So yes, you can just invade a country because they don't give you back your possession. Other countries might get mad at you, but the UN is quite irrelevant.
I am sorry, but as a layperson, I do not know what's to negotiate. If I own something, I should be able to take it home whenever I want?? This is mind-boggling. What's the point of property that you cannot access? That's not property.
E.g.: "It seems clear that they negotiated hard with the US and acted rather shrewdly." does not provide any source for the statement, and it's the same for almost everything in the article, just speculations.
One could also imagine, that Germany plans on lowering their gold holdings and having them on account at the FRBNY would be a convenient thing to make that happen.
That's the whole point. The US government effectively treats other country's good reserves as their own.
It was shrewd negotiation because they got much more than zero, and then US government/Federal Reserve has significant negotiating ability on its side by virtue of having the world reserve currency and the ability to impact monetary policy and systems so heavily on a global scale.
It could of course also be that the German gold is not moving out of the US Fed quickly because the German central bank has promised it as collateral for something, or it is involved in some other financial deal. The Swiss for instance were able to move about this much gold out of the Fed during the same time period with no problems.
Officially, they wanted to rebalance some of their holdings. The original plan was to remove 150 tons in 3 years, but due to undisclosed issues, that became a 300 tons withdrawal in 7 years, which was achieved three years ahead of schedule.
I'm also wondering why all those articles assume that moving tons of gold is trivial, is there any description at what is involved in X tons of gold transportation (insurance / planning / protection / etc.).
Yeah about that, in public, the only lever we can pull against Germany is stalling. Not exactly a show of strength. If you take away our leverage over you by removing your gold, we'll... um... ah... we'll punish you by doing it really slowly, yeah that'll teach you a lesson. Like trying to cancel your cable TV or a gym membership, the only influence they can exert is to make the transaction as slow and painful as possible. Which has certain implications WRT perceived long term odds of reconciliation.
In private more interesting deals might be going on of course. Just pointing out in public its the opposite of a show of strength LOL.
Against the Swiss we can, and have, and will again, pull the privacy lever so holding their shiny yellow metal is unnecessary to retain leverage over them. You do what we say, because we have your computerized account records, not because we have your gold. I don't think we've powned the German financial system to the level we have the Swiss.
I wonder why there is only a conspiracy for the FED but not for e.g. the Banque de France. Just because the amounts held by Germany are smaller?
If this was the case and Germans could prove this, it might not be in their interest to call out the Americans for cheating. The article point out that this could destabilize the world economy and that could be very costly for the Germans. Think about local banks collapsing and industrial exports plummeting.
1 - Why do Germany and Netherlands even store their gold in the USA?
2 - Why shall the USA/FED have any saying about Germany wanting their property back anyway? It's like me having to negotiate with my bank weather I can or not withdrawal my money from there.
Today: because it turns out they cannot get it back. Originally because countries did not want that when they were invaded by others that the invader would also run off with the wealth. So keeping it on the other side of the world in a 'neutral' country looked reasonable.
Of course they had to work out a 'deal' otherwise both/all banking systems come down.
yes. I spent too much time on goldbug blogs too. then I was reminded that cultures have used all kinds of objects as currency, and as stores of value. gold just happens to be the most historically relevant and widely understood, culturally.
Yet as far as I know just making 3 people keep a secret for years is next to impossible.
If people wants me to believe in frauds so enourmous that you'll need hundreds of people to never mention anything - then I will need pretty solid evidence.
If it is done by the state you can keep it confidential, can't you?
And I don't think that you need hundrets of people to steal gold. Several people with state orders to delete and change regord will be enough.
Someone did come forward.
Hard to tell without any transparency.
What would happen if we went to evidence based banking instead of just taking the word of people with obvious ulterior motives.
A system with no transparency or verifiability is just waiting for abuse.
https://www.washingtonpost.com/news/morning-mix/wp/2017/03/2...
Record 220-pound gold coin stolen from German museum in mysterious heist