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Comment by jjgreen | Hacker News Reader

Not really "should Germany move it?", rather "can Germany move it?"

The other article on France's gold reserves mentioned that France sold their older gold bars in the US, and used the money to purchase higher-standard gold bars in Europe. In their case, they did that over many decades and just finished now.

> In their case, they did that over many decades and just finished now

They repatriated the remaining gold (5% of reserve) over 2y.

The bulk of the gold that was held in the US was moved back in 60s.

And that is a way to cover up non-existence, packed as convenience

Of course, why not? Imagine anything blocking it would crash wall street.

Do you think Europeans are going to have a problem buying/selling US stonks any time soon?

Well, France did it, sixty years ago, didn't it?

And the US almost killed their president for it.

There’s also the tinfoil theory that France did the same to Gaddafi

What are you talking about?

The unproven but persistent conspiracy theory that the US was behind one or more assassination attempts on Charles de Gaulle. Often brought up in connection with gold, the exorbitant privilege, and beer.

Its persistence is truly a mystery. After all, the US never had, and probably never will, tried to overthrow or assassinate a country leader with strongly held anti-American views.

At today's prices, that's around 1400 tons of gold. It's made out of lots of individual gold bars, and they can certainly move it in increments, by road then air or sea, unless the American government stops them doing it.

People ship million-dollar assets all the time. It would be a huge task to make 160,000 such trips, though.

They can also sell it in the US, buy it in Europe, as France did. It's also the preferable route because IIRC the Chinese have had suspicions about the quality of their gold holdings held in the US for sometime now. That is, US-stored gold is not of the same quality grade as in the rest of the world.

The usual claim, which is difficult to prove without physical access to the bars, is that some bars were made by melting and casting the confiscated gold coins that FDR gathered in the 1930s.

Such bars would not be to the 99.9 percent gold standard set by the London Bullion Market Association. They would instead be at about 90% purity, since American gold coins had 10% copper added, which makes the gold harder and more wear-resistant.

See https://www.bundesbank.de/en/press/press-releases/bundesbank... however, no explanation is given, only that the bars were melted, purified and then recast.

> US-stored gold is not of the same quality grade as in the rest of the world

... to put it mildly. Nobody has audited the gold in decades and even its owners (banks of foreign countries) are not allowed to inspect it.

The Deutsche Bundesbank has a long list of every single gold bar in their possession (including those currently stored in GB and USA), including their weight (to 0.1 gram) and purity (at least 995/1000 as far as I can tell).

https://www.bundesbank.de/resource/blob/743058/9869caef634ce... - Federal Reserve Bank of New York starts at page 2016 (PDF:2019)

I don't read German well and don't care to run this through a translator, but this is fascinating. I wonder how this list was compiled, by whom, and when it is used (is the gold audited)? You could randomly sample bars from the list to check the status of the gold periodically. I'm curious if other countries maintain similar lists.

I don't think they regularly audit the gold bars. But according to an article I read, the German Bundesbank used these lists to check off each of the bars transferred between 2013 and 2017 (when they transferred ~ 300 tons each from Paris and New York¹). Back then, they brought the gold bars to Germany, weighed them at multiple checkpoints, and melted them here. AFAIK, no discrepancies between list and actual weight/fineness were found.

I think this list is not only used for internal audits but also to assure the public and banks that Germany indeed knows in detail where its gold is stored.

¹) https://www.bundesbank.de/de/aufgaben/themen/bundesbank-schl... (in German)

Yeah, gold that hasn't been audited but only records held by USA's "Trust me bro"s.

Or like france did. Sell in the US, buy in london with delivery to your european vault of choice.

If they don't want to push down the prices with excess supply, they'd have to sell very slowly. Like France did.

If they're buying the same amount elsewhere then the buy pressure equals the sell pressure, might make an arb opportunity across the currencies

> the buy pressure equals the sell pressure, might make an arb opportunity across the currencies

The arb means you’re still suffering a price difference. You’re just paying “the market” to solve it for you.

Yes, you're paying arbitrage instead of shipping fees. Which is not unreasonable for commodity markets with different settlement locations.

Yeah and in theory they should be equal.

> in theory they should be equal

Related. Not equal.

No, equal. If the profit gained from buying/selling gold in New York and doing the opposite in London is not equal to the cost of physically transporting the gold across the Atlantic then there is and arbitrage opportunity and in a perfect market it would be eliminated until those costs are exactly equal.

In reality markets aren't perfect, and also you'd have to take into account the benefit that doing things digitally is much faster, so it won't actually be equal. But in the magic world that economists live in it should be.

I can see that gold settled in London is worth more than gold settled in NYC given trust in both nations right now.

Compared with the logistics of moving that much gold safely, "moving" it by selling it and buying the equivalent in less fraught location need not be that much slower.

Would buying and then selling work? Or is the market simply not liquid enough for such a strategy?

> unless the American government stops them doing it.

Like they had any authority to dictate what Germany can do with their property, but hey

There’s nuance and a difference between ownership and possession

As is between authority and ability

Yes, it's called the nuclear umbrella, Potsdam '45 and the fact that the Soviets are out of the equation. Even with the Soviets in place the Americans had no second thoughts about getting rid of Bretton Woods when it suited them.

Possession is 90% ownership. In this case, especially with Trump, it's 100%

or rather "move when?"

Moving 1,400 tonnes might take years. The window to act is closing.

Window is not closing.. the stonk market would go to zero. Any doubt about being able to move assets out of the US would cause a run on US stonks.

Also the US has fairly strong private property rights.

We've seen time and again that rights and laws mean shit to the current administration.

My point is: Blocking withdrawal of financial assets from the US would be wall street ending.

No foreign investors would put money into US stonks.

It's not impossible, sure, but probably worse than the great depression.

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