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:

• What if there's little or nothing in the way of hard assets backing up the 'full faith and credit' of those central banks, or the nations they represent?
• What if the 'fiat currency' they issue with such gay abandon is all they have in the way of assets?
• Is this why China is importing as much physical gold as it possibly can, even as it holds the world's largest reserves of foreign currency?  (It's been suggested that China may hold as many as 7,000 tons of gold by now - many times more than any other nation.)
• Has China realized that those piles of 'fiat currency' - and, therefore, its huge foreign currency reserves - may be worth only as much as the paper on which they're printed?

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.

Peter