Tuesday, January 21, 2014

The mystery of central banks' gold reserves

For several years there have been allegations that central banks (including those of all First World nations) have been hiding the fact that they've sold off their gold reserves, or treated them as the foundation for gold futures sales that may have resulted in each physical ounce of gold being pledged 'on paper' more than once - perhaps many times more than once.

Grant Williams has put together the rumors from the 1990's onwards, and linked them to known facts about related companies, banks and commercial dealings (link is to an Adobe Acrobat document in .PDF format).  He also examines the German Bundesbank's attempts to repatriate its gold from New York - attempts that have to date been singularly slow and relatively unsuccessful, almost as if the Federal Reserve didn't have the gold available to return to them.

To add to the fun and games, Zero Hedge has a long article examining the Bundesbank's dilemma in the wider context of gold reserves.  It suggests that there may be a lot going on behind a veil of secrecy, and offers suggestions as to what that might be.  It's speculation, certainly, but there are solid grounds for a great deal of that speculation.

When one puts these articles into the context of central banks' rampant money-printing, a.k.a. 'Quantitative Easing', over the past few years, one has to ask:

That's all speculation, of course . . . but with that much smoke around, I get the distinct impression there's a bloody great fire behind it.  Fellow blogger Silicon Graybeard appears to share my impression, judging by two articles (very good ones) he's posted over the past couple of days.  The present situation makes me wish I had enough in the way of reserves to buy some physical gold of my own, because if all this speculation is true, there's a 'fiat currency' meltdown brewing of seismic proportions.  Go read all four of the linked articles for yourself, and make up your own mind.



Palm City Girl said...

Gold is only as valuable as we make it. I would imagine that gold was picked as currency due to its rare nature and because it does not react with a lot of different things, not because of any other "value"

One could just as easily use any other object for trading, as we have done for many years with paper money. Paper money gets its value from perception and easing the transactions. After all it is easier to carry multiple bills instead of a ton or two of vegetables.

So you can poke at it all you want, so long as it maintains its illusion and usefulness I doubt it will go away.

Anonymous said...

PalmCityGirl- history does not support your conclusion. The only thing supporting fiat currency is confidence- as soon as that is gone, for whatever reason, printed currency will be worth what is is printed on.

Anonymous said...

As long as America is the global military top dog, the us dollar has value.

Tailwind said...

There does appear to be good reason to question what is going on within the hallowed halls of the Federal Reserve and its outright failure to perform its fiduciary duties.

Today, another bombshell fell describing some rather interesting developments in Germany as well as an excellent summary by Alastair Macleod over at Harvey Organ's website. VERY educational indeed.

Will said...

When it first hit the news that Germany couldn't get their gold back, there was an article about it that said that the physical gold holder (a US bank?) had sold it many years ago, and that Germany only owned the rights to the when sold price of the gold. Don't recall the details, and can't find the article now. IIRC, essentially it said that they only held the paper rights to the gold, not the actual gold itself. Sounded like some sort of typical investment scam that works as long as nothing much happens in real life.
My memory, it not so good anymore. Sigh...