The High Risk Of “Safekeeping” Gold In A Central Bank Custodial Vault

missingGLDAlthough the western media at large, and especially the mainstream  media in the United States, remarkably never reported the event, the United States Government defaulted on Germany’s request to have some portion of its gold shipped from the Fed custodial vaults back to Germany.  That’s right – the U.S. outright defaulted.

Clearly, if the U.S. were “safekeeping” Germany’s gold in a segregated custodial account, it should have been nearly effortless to ship 300 tonnes back to Germany via two cargo flights.   After all, Venezuela received 160 tonnes of gold in about 4 months from several different Central Bank vault locations.

As it turns out, GATA.org found a Reuters article yesterday which surreptitiously reported the fact that Central Banks keep a portion of their gold outside of their own vaults and in the custody of investment bank vaults.  This enables the investment bank to “serve central banking customers with large bullion reserves to manage.”  Here’s the article link:  Central Bank gold trading operations.   The GATA link also contains a link to a policy paper from the Central Bank of France which describes Central Bank gold trading policies.

While those of us who follow the precious metals market professionally know that Central Banks actively dump their bullion on the market for the purposes of managing the price, the Reuters article stunningly acknowledges that a significant portion of Central Bank custodial gold is being held outside of Central Bank custody.

As the example of the U.S. default to Germany demonstrates, any entity that keeps its gold in a western Central Bank for “safekeeping” is at great risk of never having it returned.

 

8 thoughts on “The High Risk Of “Safekeeping” Gold In A Central Bank Custodial Vault

  1. A recent article on the SGT website suggested Germany purposely agreed on an extended delivery schedule so the remaining bullion could be used to suppress price. Any thoughts on Germany being complicit in the suppression scheme?

    1. I kind of doubt it, although we’ll never find out the real truth until the U.S. implodes. I think Germany was actually trying to get its gold back because 1) they initially wanted more than 300 tonnes and 2) the Govt is under enormous pressure from the public and opposing political parties to get it all back.

      Americans don’t understand gold. But Germans and Austrians have always viewed gold as the only real currency. It’s been baked into their cultural DNA for 100’s of years before the U.S. was even a British colony.

      What I think happened is that when Germany realized it wasnt’ going to get its gold, and if that fact was made public, it might have caused a collapse in the dollar AND the euro. It’s one thing to default on gold to a military and political ally, who can let it slide with an understanding wink, but it’s another to default on gold to the biggest holder of your fraudulent Treasury paper and to a country who can bring you down economically by dumping it. I think if the U.S. had to delivery Germany’s gold back to it, it would have caused an LBMA default into China.

      1. “they initially wanted more than 300 tonnes”

        What is this claim based on? Initially they were only going to repatriate 150 tonnes over 3 years (from their US holdings), this was increased to 300 (along with their holdings in Paris).

        “nearly effortless to ship 300 tonnes back to Germany via two cargo flights”

        Why take the risk if they are comfortable with the Fed holding the metal? Smaller shipments which pose less risk makes sense. Also they are recasting the bars in Europe on the way through, so it’s not as straight forward as you’ve suggested.

        1. You clearly don’t have ANY of your facts straight. What fuck man? They recasted the meager 5 tonnes worth that was shipped over there because the Fed couldn’t even fucking produce 400 oz LBMA bullion bars, let alone the original bars Germany shipped over here to keep away from the Russians right after WW2. Where on earth do you get your information? Dr. Seuss books?

  2. Good article. Thanks for this.

    It never fails to amaze me that the Fed can refuse to return Germany’s gold as requested, and so few analysts even raise an eyebrow over it. How more obvious can it get?

  3. It’s one thing to stiff the Germans (of their gold), it’s something entirely different to stiff the Chinese. Good observation, Dave.

    1. And now the CME wants to get in on the act by advertising that they are worthy of the responsibility with future world gold dealings via China…really !?!?

      They certainly have acted upon the handling of past responsibilities pertaining to gold and silver in peculiar ways.
      In ways that were less then honest with regards to smack downs on the physical several times.
      When taking into consideration everything that the CME has stood for pertaining to physical gold and silver , those 3 letters can only stand for 3 words ; Crime Made Easy.
      Sorry CME , you’ve shown your true colors. And they ain’t gold and silver !

      1. Apparently the PBOC is going to require that all futures trades are settled in yuan. That will reduce the CME’s ability to manipulate. There is also accountability for physical delivery there.

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