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Gold Transfer Looks Strange

  • gold
  • 2 min read

gold12345 (1)Germany is recalling much of its gold. For many years, Germany stored its gold outside the country. The Federal Reserve was the largest custodian with London ranking second. 

Germany now sees the need to hold a large portion of its gold domestically so they are transferring gold from overseas back home. Is this something that could drive up gold prices? Julian Phillips speculates on this issue and the long-standing rumor that Central Banks don't have the gold, at least unencumbered:

We noted that it is going to take 7 years or 10 shipments a year to move it to Germany. This is odd because it can be done much faster. Are they allowing the banks from which it is being drawn to pull it back from those to whom it has been leased? If this is the case and they have to go out and buy the gold to supply Germany with, will we see the three central banks [the Fed, the Bank of England and the Banque de France] enter the open gold market as buyers of the gold they can’t access in that time or has seven years been decided on because this matches the maturation of the leases?

The seven-year transition seems strange as Mr. Phillips points out. Whether Germany's request and Central Banks' responses will re-start the upward movement in gold remains to be seen. 

2 thoughts on “Gold Transfer Looks Strange”

  1. It seems GATA has adequately presented enough data to unequivocally state that the precious metals paper market is as big a ponzi scheme as fiat currency or derivatives. All the world has devolved into a relativistic financial morass which reminds me of the story of a group of men being chased by a ravenous bear. One does not need to be the fastest runner in the group but the slowest is definitely in for a bad day.

    Economically, nations are running that race now and none wants to be the slowest to "adjust" the value of its paper and be devoured by a loss of competitiveness in international trade. And the entire mess is totally dependent on keeping the public blissfully unaware of what is happening. The government of Germany has taken the most aggressive step they dared while carefully avoiding upsetting the status quo. All of the questions about the fraud being perpetrated in the metals markets would have been quickly made crystal clear if Germany had demanded all their gold in 90 days.

    As to why they did it at all, quite simply nations just like individuals want to store their valuables in the most secure location practicable. The US used to be that place but is quickly being removed from the chessboard by an administation which has our demise as its objective.

  2. I wonder if this really counts as a "rumor" or really a question of the degree to which the gold is encumbered or even there.  It is not apparently a "rumor" that gold has been leased out.  The questions are: Where is that gold? Why has it been leased out?  This is where the rumors comes in:  It is in China, and it was leased out to cover the shorts of the bullion banks that have large short positions in order to suppress the price of gold.  Why are the bullion banks have large short positions?  The rumor is that they are trying actively to suppress the price of gold in order to prevent US dollar devaluation. To the degree that most investment portfolios have little or any exposure to precious metals, the scam would be working.

    Undoubtedly, Germany is worried about the safety of their gold.  The first ones who ask for their gold back will be the most likely to receive delivery. Will the lasts ones to ask even receive their gold?  This is questionable.  The real issue seems that profligate quantitative easing is destroying trust.  Welcome to the beginning of the new world order.

    All this leads to the desirablity of having physical metal.  Even a fine derivative like Sprott Physical Gold or Silver Trust can apparently be shorted, and your broker can lend out your shares to another client.  This is something to think about:  For every short position in GLD or SLV and the other physical metal ETFs, it's like temporarily creating even more paper gold and silver than what trades on the futures markets.

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