Is the Banque de France eager to show it still has its gold?


9:24p ET Monday, March 12, 2012

Dear Friend of GATA and Gold:

After the Netherlands, Switzerland, and Germany, maybe gold suspicion now has struck France, for the Banque de France has just granted a newspaper reporter, Le Figaro's Katia Clarens, a tour of its vast gold vault beneath the streets of Paris, where she discovered many bars of shiny yellow metal, some, perhaps, repatriated from the vault of the Federal Reserve Bank of New York almost a half century ago. (As all true Americans -- revolutionaries and anti-imperialists -- might say, just as was shouted in defiance by the denizens of Rick's Cafe Americain in December 1941: "Vive la France! Vive la democratie!")

Thanks to our friend J.S. and Google Translator for the attempt to put the Le Figaro story into English below. Clumsy as it is, it still may convey the point. But do check out the original story with its photos at the link under the byline.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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At the Bank of France, 100 Million Euros in the Basement

By Katia Clarens
Le Figaro, Paris
Saturday, March 10, 2012

It's called "the Underground." In this highly secret place -- one hectare underground in the heart of Paris -- is our national treasure. Here are pictures, never seen before.

This is one of the most secure places of the Republic. Located in the eighth basement of the Bank of France, in the first arrondissement of Paris, "the Underground," a spectacular bunker room of 11,000 square meters, contains 658 columns between the gold reserves of France: 2,435 tons of precious metal in coins and bars. At current prices, the loot amounts to more than 110 billion euros. After the United States and Germany, France, neck and neck with Italy, is third-largest holder of gold in the world.

The robbers changed their minds; the temple of Saturn is inviolable.

The entrance is at 20 Rue du Colonel Driant. One must first obtain an access badge. The visitors and their belongings, flanked by security agents, are then scanned. On the roof of the building, the old guard tower draws a path of metal railings. Below is the kingdom's billions.

At the fourth basement elevator, an empty room offers a cloakroom for visitors. Then a reinforced door opens to 7 tons on rails, after which there is a cinderblock of 17 tons. At closing hour, it will reside on a rotating turret of 35 tons, forming an unbreakable lock. Access to the Underground is by a second elevator to the eighth basement. Again a door, again a cement block on rails. It happens in a world of aesthetic prison. An ocher-tiled floor, a long corridor leading to a pale grid. At this last one, you can see the columns and finally the checkered floor.

... Dispatch continues below ...


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Over time, to improve security, the room has been walled up. In the partitions between the columns, even doors bar access. They are opened with different keys. One of them is in the hands of the controller, the other ones with the cashier. They are accompanied by an official body. Behind the doors, there are greenhouses. They are home vaults in which rests, motionless, the gold of France. Not a display of bullion, as one would have hoped. No, almost invisible, the treasure is packed in pallets, boxes, or metal cabinets. He waits, secure in the extreme, in one of the most gigantic buildings ever built in France.

The decision to build a new vault was taken around 1920. It followed the bombing of Paris in 1870, then the bombinbs of World War I. Is the fear now that of an enemy occupation or a popular uprising?

The bunker must be unobstructed. Work began in 1924. From May 1924 to November 1927, 1,200 workers worked day and night on site. At 20 meters deep, they will remove 150,000 cubic meters of fill and will use 10,000 tons of steel, 20,000 tons of cement, and 50,000 tons of sand. Tthis building will be award-winning 10 years later at the International Exhibition of Paris.

In addition to the greenhouses of gold, chests, and vaults, part of the Underground is equipped with kitchens, sinks, and refrigerators. In case of conflict, 3,000 people can take refuge there. A spectacular place. Allowed to visit, Stefan Zweig wrote in 1932: "Heaven and hell had the seven circles of Dante. The vaults of the Bank of France have perhaps even more," speaking as "a treasure that neither Caesar or Crassus or Cortes or Napoleon or all the emperors and the great families of this planet, nor any mortal since the beginning of time have never seen together."

But what is such a gold reserve? "Gold is a safe haven," says Denis Beau, chief operating officer. "A store of value, it contributes to ensuring monetary credibility. It is especially an asset diversification that can reduce exposure to the currency risk of the dollar. An important part of French reserves is in dollars. It was found that the dollar's value is generally inversely proportional to that of gold."

If the first gold coins were minted in 550 BC, the precious metal knew its heyday in the 19th century with the triumph of the gold standard adopted by England, Portugal, Germany, Austria-Hungary, Russia, Japan, and France and its partners in the Latin Union. Therefore, the monetary unit is defined with reference to a fixed weight of gold, net settlements between countries are made via gold reserves, and central banks must cope with the demands of conversion into gold of banknotes in circulation.

The system continues but after many incidents (world war, the 1929 crisis, and devaluations) France abandoned gold convertibility in 1937. In July 1944, with the signing of the Bretton Woods agreement that began an international monetary system, the dollar became the only currency convertible into gold. But in January 1976, the system collapsed; it is over the monetary role of gold.

Over the following decades, the metallic treasures lie dormant in the basement.

Recently, however, gold has found a new modernity. With the financial crisis, its price has tripled in five years. "Three factors explain this phenomenon," says Denis Beau. "The increase in demand for jewelery came from emerging countries, as well as industrial demand" -- gold has unique chemical properties: fastness, excellent electrical conductivity, for example -- "and finally a strong aversion to credit risk. There is also, and what is new in recent years, a phenomenon of financialization of gold due to the interest of portfolio managers in raw materials, and especially gold."

Volatility sometimes means a new price. Eager to boost the portfolio currency of France, Nicolas Sarkozy, then minister of economy, in 2004 agreed with the governor of the Bank of France for a sale of more than 580 tons of gold. The minister, however, indicates that "the pace of implementation of the sales program" will depend on the judgment of the governor of the bank. Executed between 2004 and 2009, the program is criticized by the Court of Auditors. Reason: In 2007, the financial crisis caused the surge in gold prices, which, according to the wise, should have curbed the sales program, yet completed it in 2009. The Bank of France, however, has defended the operation, as the dollar was bought low during that summer, according to the institution, and profitably placed.

Gold is more popular than ever with its "yellow flashes that ignite and excite a curious way the human eye." However, about the gold of the Bank of France we had only very limited information. Until 2003, when one day the cashier discovered a chest full of Underground documents. It is there that all the tribulations of the stacked gold of the Bank of France during World War II were recorded. They reveal the fantastic adventure of the French treasury. The founder of the historic mission of the Bank of France, its honorary director general, and author of "The Secrets of Highly Documented gold," Didier Bruneel seizes it. "After so many years at the Bank of France, to discover so many new things, it was great!" With regard to these documents, the gold comes alive. It is about incredible travel, transfers, and removals from the early 1930s until the end of World War II.

But the adventures of gold began long before. An anecdote among many: We are in 1871, at the Paris Commune. There are fears about a decision on the Bank by the Communards. The gold is then in the cellars of the Hotel de Toulouse, then headquarters of the bank. The vault is 32 meters long, 8 meters wide, and 4 meters high. It is accessible only by a narrow spiral staircase, where two people cannot cross together and whose top is closed by a heavy iron plate.

The evacuation of gold is no longer possible and time is short. At the bank we seek a solution to protect the treasure. The chief finally decided to silt up the stairs to the vault right to its summit. The city never took the gold from the Bank of France.

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