To recover just a small part of Germany's gold, Bundesbank will need 7 years
9:14a ET Wednesday, January 16, 2013
Dear Friend of GATA and Gold:
The Deutsche Bundesbank's plan announced today to repatriate some of Germany's gold reserves from the Federal Reserve Bank of New York is so incomplete and slow as to increase, not diminish, doubt that all the gold is really available.
Venezuela last year managed to repatriate all its gold from the Bank of England in a matter of months, but apparently the Bundesbank will need seven years to retrieve only a small fraction of its gold from the New York Fed.
Bundesbank board member Carl-Ludwig Thiele's comment today, defending such a minimal repatriation, seems silly. "If I hold gold in my own vaults, I have to check it myself," Thiele said, according to the Reuters story appended here. So, Herr Thiele, if you keep it somewhere else you don't have to check it?
Appended are the Reuters story on the Bundesbank's announcement, the full text of the Bundesbank's statement, and an incisive response from Peter Boehringer on behalf of Germany's Repatriate Our Gold campaign and the German Precious Metals Association, who notes the need for a full audit of Germany's gold that guards against impairment of the reserves through leases and swaps.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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Germany's Bundesbank Brings Gold Reserves Home
By Eva Kuehnen
Wednesday, January 16, 2013
FRANKFURT -- Germany's Bundesbank plans to bring home some of its gold reserves stored in the United States' and French central banks, bowing to government pressure to unwind a Cold War-era ploy that secured the national treasure.
Germany amassed gold reserves in the post-war era thanks to rapid economic expansion that saw growing exports to the United States, where its dollar claims were turned into gold under the Bretton Woods agreement that Germany joined in 1952.
As the Cold War set in, Germany kept its gold reserves put, keeping them out of reach of the Soviet empire. But government officials have grown uneasy about the storage set-up and have called for the Bundesbank to inspect the bars.
The Bundesbank now wants to change the arrangement too, even though it has said it does not see a need to count the bars or check their gold content itself and considers written assurances from the other central banks as sufficient.
... Dispatch continues below ...
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With the end of the Cold War it was no longer necessary to keep Germany's gold reserves "as far to the west and as far from the Iron Curtain as possible," Bundesbank board member Carl-Ludwig Thiele told reporters on Wednesday.
The German Federal Court of Auditors, which oversees the government's financial management, called last October for an official inspection of the gold reserves stored at foreign central banks, because they have never been fully checked.
"To hold gold as a central bank creates confidence," Thiele said. "If I hold gold in my own vaults, I have to check it myself," he said, adding that "a complete shift is not appropriate."
Beginning this year, the Bundesbank plans to transfer 300 tonnes of gold from the Federal Reserve in New York and all of its gold stored at the Banque de France in Paris, 374 tonnes, to Frankfurt.
By 2020, it wants to hold half of the nearly 3,400 tonnes of gold valued at almost 138 billion euros -- only the United States holds more -- in Frankfurt, where it stores about a third of its reserves. The rest is kept at the Federal Reserve, the Banque de France, and the Bank of England.
The Bundesbank gained more space in its vaults after the transition to the euro from the deutschmark.
It did not want to disclose how much the gold transfers would cost and how the gold would be transported.
Before German reunification in 1990, 98 percent of Germany's gold was stored abroad. The Bundesbank then started to bring its gold home and in 2000 transferred 931 tonnes from the Bank of England to Germany. It will continue to hold about 13 percent of its gold reserves in London, even after 2020.
With the introduction of the euro, the Bundesbank sees no need to hold any reserves at the Banque de France as it will no longer need them for exchange for foreign currency.
"This is above all a historical anomaly which is now being corrected," said David Marsh, chairman of think tank OMFIF, which issued a report this month in which it foresaw growing importance for gold due to uncertainty stemming from the rise of China's renminbi as an alternative to the dollar.
* * *
Deutsche Bundesbank's New Storage Plan
for Germany's Gold Reserves
A Statement by the Deutsche Bundesbank
Wednesday, January 16, 2013
By 2020 the Bundesbank intends to store half of Germany's gold reserves in its own vaults in Germany. The other half will remain in storage at its partner central banks in New York and London. With this new storage plan, the Bundesbank is focusing on the two primary functions of the gold reserves: to build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centres abroad within a short space of time.
The following table shows the current and the envisaged future allocation of Germany's gold reserves across the various storage locations:
...................... 31 December 2012 .... 31 December 2020
Frankfurt am Main ........ 31% ................... 50%
New York ......................45% ................... 37%
London ......................... 13% ................... 13%
Paris ............................. 11% ................... 0%
To this end, the Bundesbank is planning a phased relocation of 300 tonnes of gold from New York to Frankfurt as well as an additional 374 tonnes from Paris to Frankfurt by 2020.
The withdrawal of the reserves from the storage location in Paris reflects the change in the framework conditions since the introduction of the euro. Given that France, like Germany, also has the euro as its national currency, the Bundesbank is no longer dependent on Paris as a financial centre in which to exchange gold for an international reserve currency should the need arise. As capacity has now become available in the Bundesbank's own vaults in Germany, the gold stocks can now be relocated from Paris to Frankfurt.
* * *
Statement by Peter Boehringer
on behalf of
Repatriate Our Gold
and the German Precious Metals Association
Wednesday, January 16, 2013
We welcome the Bundesbank's announcement to repatriate significant portions of Germany's gold held abroad.
All reasons cited in the past for this storage had either been false or at least outdated since 1990 (with the end of the Cold War and the theoretical military threat to the Bundesbank's domestic gold vaults).
We are also satisfied that propaganda arguments (e.g. "chauvinistic/nationalistic demands for repatriation," "repatriation too expensive," "absurd debate questioning the integrity of US/UK central banks," etc.) have not been repeated at the Bundesbank's press conference today. Actually, by announcing some repatriation, the Bundesbank has implicitly acknowledged our point of view of gold as real money and integral part of a nation's monetary reserves.
But we do not approve of the speed and volume of the planned repatriation.
The Bundesbank has just announced that it will repatriate only 675 tonnes by 2020 by then bringing the total of German gold held in Germany to approximately 50 percent (1,700 tonnes) of total German gold reserves. The Banque de France will allegedly be given up as a Bundesbank storage facility (374 tonnes) and up to 300 of 1,535 tonnes will be repatriated from the New York Fed.
In our view, there is a lot of room for speeding up and increasing the volumes for this repatriation.
In addition, the Repatriate our Gold campaign insists on proper and independent physical and full audits of the Bundesbank's own vaults in Germany. This includes the publishing of bar number lists, which has been overdue for years. These gold bar number lists are important to prove or disprove multiple ownership of specific bars which could have come about through gold loans. This is one more reason to audit and repatriate all gold bars -- as an incomplete audit and incomplete lists would not fulfill this important purpose.
To quote from the statement of purpose of the Repatriate Our Gold campaign:
"Gold has been natural money for thousands of years. It has been used throughout history either as physical coinage or as the solid cornerstone for stable paper currencies. Up until 1913 most Western societies prospered and grew steadily and naturally under a monetary standard with at least partial gold backing. The gradual abandonment of the gold backing throughout the 20th century and the ultimate delinkage of all currencies from gold in 1971 is the fundamental cause of the ongoing inflation (the U.S. dollar has lost 98 percent of its purchasing power since 1913) as well as the main reason for the global financial crises since 2007. We believe it is essential to re-introduce a partial gold backing for the world's monetary system. And to back future national currencies, the gold needs to be physically present in the respective country. Gold needs to be re-monetized -- at least on a voluntary basis as a means of payment the people are free to choose at any time.
"We therefore campaign for:
"-- Independent, full, neutral, and physical audits of the gold hoards of the world's central banks.
"-- The repatriation of all central bank gold; that is, the physical transport into the respective ownership countries."
* * *
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