German Gold Euro 2005 (Photo credit: Wikipedia)
Germany reportedly stores about 1,700 tons of gold in the New York Federal Reserve Bank. Germany recently announced that it would repatriate some of that gold back onto German soil at the rate of about 50 tons per year.
Some commentators believe the repatriation of German gold is one of the most important events in recent financial history.
For example,
According to Jim Sinclair, “Germany’s repatriation of her gold is a salvo fired at the concept that the USA has all the gold it claims and all the gold it stores for others. If true, this event is the most important gold development since Charles De Gaulle [demanded gold for US dollars in the late 1960s].
According to Bill Murphy, “Let’s say the GATA camp is only partly correct about the gold loans, gold swapped, and gold no longer there [in Ft Knox and the NY Federal Reserve vaults]. If other central banks, or the investment world, believes GATA is correct, it could set off a panic. Numerous central banks could call in their gold loans. Where would the gold come from?”
• Why is the repatriation of Germany’s gold so important? Because the perceived value of the fiat dollar is based on a series of interrelated lies than Germany’s repatriation threatens to expose. Consider a little history:
1933 Gold (Priced at $20/ounce) Removed from Domestic Circulation in the US
The US government—with a national debt of over 1 billion ounces of gold equal to $2 trillion of today’s dollars—compelled Americans to surrender their gold to the government.
Government, without constitutional authority, and under the lie of a “banking emergency” that’s been falsely sustained for 80 years, essentially robbed the American people of much of their wealth.
And thus, the lies needed to support the paper dollar began.
1934 Gov-co revalues gold from $20 to $35/ounce
By raising the price of gold, gov-co reduced the value (purchasing power) of the paper dollar—and the national debt by 44% from $2 trillion (today’s dollars) to about $1.1 trillion.
Under the lie of an “emergency,” gov-co defrauded its creditors out of nearly $1 trillion (in today’s dollars).
1944 The Big Lie
While WWII was raging and foreign nations were still terrified, the US and 44 other nations entered into the “Bretton Woods” Agreement whereby the US agreed to redeem all foreign-held dollars for gold and the paper dollar would be deemed “good as gold”.
Although foreign dollars were said to be redeemable in gold, it was supposed that foreign governments would trade in dollars without ever converting them into physical gold.
1953 The Last Complete Audit of the Ft. Knox Gold
For over 60 years, Americans have had to accept government’s claim for how much gold it’s stored—without any evidence to prove those claims. Attempts to audit the gold in the national treasury have been rebuffed, thereby raising suspicions that some or all of the gold supposedly in Ft. Knox is gone.
Gov-co’s refusal to publicly audit Ft. Knox exposes Americans to possible deceit and fraud and allows other lies to persist.
1965 De Gaulle
Consistent with the Bretton Woods Agreement, France’s president Charles De Gaulle started exchanging US paper dollars for physical gold. In order to maintain the “big lie” that paper dollars were “good as gold,” the US gov-co kept selling its physical gold to France at paper-gold (paper-dollar) prices ($35/ounce). France exploited the “big lie” and US Treasury lost its assets (physical gold). But—to sustain the “big lie”—the US government continued to sell its physical gold to foreign governments at paper-gold prices.
1968 Paper dollar no longer redeemable in silver
The paper dollar became a pure fiat currency within the US and was only backed by gold in relation to foreign governments and foreign central banks.
The American people were deceived and defrauded by their government’s use of fiat currency.
1971 Nixon Closes Gold Window
Nixon ended the Bretton Woods Agreement by refusing to redeem foreign-held US dollars with gold. By doing so, Nixon implicitly admitted that the price of “paper gold” (US dollars) was not equivalent to the price of physical gold and that the idea that paper dollar were “as good as gold” was a lie. The paper dollar was reduced to a pure fiat currency both within and without the US.
Nevertheless, people and businesses around the world had become so dependent on using paper dollars that the “lie” continued, though to a diminishing degree expressed as persistent inflation.
1971-1973 Nixon Creates “Petro-Dollars”
The Nixon administration negotiated a treaty with Saudi Arabia whereby the US would guarantee Saudi security and the Saudis guaranteed to sell their crude oil only for fiat dollars. Other OPEC nations reached similar agreements and, soon, any nation that needed to buy crude oil had to first acquire fiat dollars. The result was a global demand for fiat dollars that gave the fiat dollar an apparent value. The dollar was implicitly backed by crude oil and retained its status as the “world reserve currency”.
Both fiat dollars and “petro-dollars” were sophisticated lies intended to deceive and defraud American people and the people of the world.
1998 GATA created
The Gold Anti-Trust Action Committee (GATA) was organized to expose, oppose, and litigate against collusion to control the price and supply of gold and related financial instruments. From its inception, GATA has chronicled the lack of free markets. GATA contends that the price of gold has been manipulated by a gold cartel of central banks and other financial institutions since 1995 and that the claimed quantities of physical gold held and traded by the world’s central banks, the London Bullion Market Association (LBMA), futures exchanges and the US Treasury were lies.
Initially, GATA’s claims were ridiculed as conspiracy theories. Today, they’re taken for granted as fundamentally true.
GATA was the first institution to make a concerted effort to expose the financial lies and deception that had been perpetrated by the gov-co since A.D. 1933.
2000 “Gold Bullion Reserves” becomes “Custodial Gold”
James Turk reports that in A.D. 2000 the Treasury Department changed the designation of nearly 1,700 tons (21% of the US 8,200 ton Gold Reserve) held at the US Mint’s facility in West Point, New York from “Gold Bullion Reserve” to “Custodial Gold”. The US Treasury has, so far, offered no explanation for this change.
If “Gold Bullion Reserve” means US gold, and “Custodial Gold” means gold owned by foreign governments, then 1,700 tons (21%) of US gold were re-designated as “foreign-owned” gold. This re-designation of “reserve” gold to “custodial” gold is consistent with GATA theories that some substantial amount of US gold is no longer in our Treasury.
Evidence of governmental lies was beginning to accumulate.
2000 Iraq sold crude for euros
. . . and thereby threatened the petroleum backing for the “petro-dollar” and the dollar’s status as “world reserve currency”. I.e., if Iraq were allowed to sell its oil for currencies other than fiat dollars, other OPEC nations might soon follow suit, the fiat dollar would no longer be implicitly backed by crude oil, and the perceived value of the fiat dollar would plummet from an irrationally high level supported by lies to low level consistent with truth.
The gov-co’s big lie was threatened.
2003 US Invaded Iraq
Under the pretext of destroying nonexistent “Weapons of Mass Destruction,” the US invaded Iraq. In the process, the US flew in planeloads of US paper dollars and changed the Iraqi monetary system from one based on gold to one based on fiat dollars.
I believe that the real reason for the invasion was to protect the “big lie” that the fiat dollar had significant value.
2009 China discovers counterfeit gold bars
In 2009, China reportedly purchased roughly 60 tons of gold bars. When assayed, some or all of these gold bars had tungsten cores. China investigated the source of these counterfeit gold bars and concluded that during the Clinton Administration, roughly 1.4 million 400-ounce tungsten blanks [more than 16,000 metric tons; nearly double the mass of the 8,200 tons of US gold] were manufactured by a US refiner and subsequently gold-plated. 640,000 of these counterfeit gold bars (about 7,300 tons) were allegedly shipped to Ft. Knox where they presumably remain.
The other 750,000 gold/tungsten bars (about 8,500 tons) were allegedly “sold” into the international market. If so, the global market is polluted by a multitude of counterfeit gold bars of a mass comparable the 8,200 tons of gold allegedly owned and held by the US.
Result? No one (including the NY Federal Reserve and the US gov-co) can currently sell a gold bar unless that bar is thoroughly assayed for a tungsten core. If so, all of the remaining counterfeit gold bars are essentially worthless since they can no longer pass for real gold bars.
Insofar as the world believed China’s report, the world lost more confidence in the US government’s integrity. If the US was making and selling counterfeit gold bars, could the US be relied on to own as much gold as it claimed or store the gold it held for foreign countries?
The “big lie” and all the associated little lies needed to sustain the fiat dollar were beginning to unravel.
2010 Taking Physical Delivery
For years, many believed reports that the U.S. government and commodity markets had used “paper” gold (accounting and stock “tricks”) to artificially suppress the price of physical gold. In other words, when the commodity markets calculate that today’s price of “gold” is, say, $1,700/ounce—that’s a lie since it’s not the price of real, physical gold—it’s the price of paper gold. The apparent price of physical gold was therefore cheap.
If the price of paper gold is a lie being used to deceive the public and artificially suppress the price of physical gold, then the day must come when the truth is revealed and the price of physical gold skyrockets up to the truth.
Believing the price of physical gold must eventually make a huge upswing towards truth, major commodity market investors started taking delivery of physical gold.
2011 Venezuela Repatriates its gold
Based in part on fears precipitated by China’s discovery of counterfeit gold bars, Venezuela’s president Hugo Chavez demanded a return his country’s 160 tons of gold stored in New York Federal Reserve and European vaults.
At the time, Chavez was portrayed in the media as some sort of nut. In retrospect, he may have been brilliant. He protected his country by refusing to believe the “big lie(s)” concerning gold and fiat dollars.
The point behind all of the previous history concerning gold, fiat dollars and global finance is that the truth behind these subjects is routinely hidden behind walls of lies. German repatriation of gold threatens to expose the truth and thus destroy those lies.
2013 Germany Repatriate its gold
Germany will repatriate only 50 tons of gold this year, 50 next year, and 50 more in the following year. 50 tons are about 3% of the 1,700 tons of German gold held by the NY Federal Reserve. 50 tons is less than 1% of the 8,200 tons our government claims to own and possess. That’s not much. By itself, the repatriation of 50 tons of gold out of over 15,000 tons of gold that are allegedly owned or stored by the US gov-co and New York Federal Reserve is a physical triviality.
But the political implications are enormous—especially since Germany declared that all of the repatriated gold bars would be assayed to verify legitimacy. That means Germany suspects that the US has been persistently lying about the amount of gold that it still owns or stores on behalf of others.
What if other nations also distrust US claims to have the 8,200 tons of gold? What if other nations follow Germany by demanding to repatriate—and assay—their gold that is allegedly secure in the US vaults? If German gold is discovered to be mostly or even partially tungsten, there’ll be a financial panic and the world will demand recovery of its gold from New York Federal Reserve. To prevent such panic, the NY Fed must insure that every gold bar sent to Germany is “certified tungsten-free”.
ZeroHedge.com reports that it will take the NY Federal Reserve seven years to repatriate just 300 tons of gold to Germany. 300 tons is about 18% of the 1,700 tons of German gold held by the Fed. 300 tons is about 5% of all the gold the NY Fed claims to hold.
Imagine you went to your bank and tried to close out your account. Imagine your banker told you it would take seven years before you could recover your funds. Would you think your bank must be broke?
Similarly, if the NY Fed really holds as much gold as it claims, why should it take seven years to return just 300 tons? At that rate, it could take 35 years to repatriate all of Germany’s gold.
The slow rate of repatriation of German gold will fan the fears of other nations storing their gold with the NY Fed. After Venezuela’s (2011) and Germany’s (2012) decisions to withdraw all or some of their gold from the NY Fed, how many more nations will also try to withdraw their gold? There are reports that the Netherlands and Azerbaijan may also soon repatriate gold reserves.
Surprisingly, Switzerland is reported to be storing over 600 of its gold in foreign (though unnamed) countries. A Swiss movement to repatriate its gold started in A.D. 2012 and is predicted to take place later this spring.
• If the NY Federal Reserve refuses to repatriate more tons of gold to legitimate foreign owners—or merely drags its heels—a panic could result among the foreign owners of gold stored at the Federal Reserve. The world might become convinced that there is little legitimate gold left at the Federal Reserve and/or the US Treasury. The price of gold could skyrocket. The fiat dollar might die.
Germany’s decision to repatriate and assay some of its gold from the New York Federal Reserve is of vital importance since it may:
1) Trigger a wave of demands by other nations to repatriate their gold; and/or,
2) Provide proof that current claims of the magnitude and fineness of gold still held by the NY Fed and US gov-co are lies.
Once the lies used to sustain the illusion of value in fiat dollars are exposed, the apparent value of fiat dollars will fall, the dollar’s role as world reserve currency will end, and the price of gold will jump.
We live in a world based in large measure on financial lies. The German repatriation of gold just might expose the truth about the Federal Reserves and US gov-co’s gold. Once the truth is exposed, the lies and all the institutions based on those lies, should collapse.
German repatriation of gold may be less about regaining gold than it is about exposing lies. As such, German repatriation may be the single most important financial event in the past 40 years.
