Where the *Bleep* is Germany’s Gold?

You may have heard something about this story, but I think it’s important to take a few minutes to restate the facts clearly. In the modern news environment, stories come and go so fast – and in so many parts – that it’s very easy to get lost along the way.

So, here’s what we know so far:

  • In 2012, the Bundesbank (the central bank of Germany) asked to visit the vault of the Federal Reserve in New York, to view the 1,536 tons of gold they have stored there.
  • The Federal Reserve told them no. They were not allowed to see their gold.
  • In response, Germany said that they wanted 300 tons of their gold back.
  • The Federal Reserve said that they’d need seven years to get the gold back to Germany. (Something that should take them seven weeks, tops.)
  • One year later, the Fed has returned only 5 tons of gold to Germany. At this rate, it will take 60 years for the Germans to get less than one fifth of their gold back.

Though I don’t know precisely what, it is very clear that something strange is going on here… something that the prestigious central bankers want to keep away from the light of day.

Shipping 300 tons of metal is hardly a new and difficult technical challenge. Companies involved in metal trading do this all the time. Sure, gold requires extra security, but security is also something that lots of people know how to provide.

Give me half a percent as a premium, and I’ll have it arranged by next week!

The German Responses

The initial German response was the one mentioned above: Give us back our gold. But that happened over a year ago, after they weren’t allowed to see their gold. There have been further responses, following the very lame delivery of five tons.

These responses have come in just the past month or so:

The president of Germany’s top financial regulations group said that manipulation of gold and silver “is worse than the Libor-rigging scandal.” (The Libor scandal was and is a big deal, and lots of lawsuits are underway over it.) That’s a big accusation.

Then, Deutsche Bank, the biggest German bank, dropped out of the London gold fixing pool; the group of bankers that set the official price of gold. This is also related to the investigations by European regulators into the suspected manipulation of precious metals prices by banks. Again, this is a very significant event.

Germany does not seem happy about what the Fed is doing to them. These responses may seem timid, compared to what you or I might do if someone refused to give us back our gold, but they very clearly show that the German banks are objecting. (What’s going on behind the scenes remains unknown to us.)

In addition to this, the Financial Times ran an article advising investors to demand physical delivery of their gold. Bloomberg published an article on gold price manipulation. Whether they were pushed to do this by the Germans remains an open question.

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