There have been all sorts of shenanigans in both the physical and paper gold markets. An audit of U.S. government gold may either clarify matters or add to the confusion. The latter is the betting favorite. From Alasdair Macleod at alasdairmacleod.substack.com:
It is Indicative of European central bank thinking about leasing, storage, and possession
Today’s Daily Telegraph reported that there is a movement in Germany to get back its gold amounting to 1,200 tonnes, held earmarked at the NY Fed. The Bundesbank denied it, expressing complete confidence in the Americans.
Well, they would, wouldn’t they.
The article quotes two politicians who had been pushing for this and/or audits/inspections before Trump was even elected. At its face, the article is therefore speculative. But it was unlikely to be published unless there was more to it than at first appears. We should read between the lines.
Politicians and the Bundesbank as custodian for Germany’s gold are bound to be concerned. But the Bundesbank is in a difficult position. It had problems with the Americans over repatriating just 300 tonnes, first announced in 2013 and not completed until 2017. Apparently, the bar numbers didn’t match Bundesbank records, and Bundesbank officials were previously refused access to inspect their earmarked gold.
The problem is that either the gold is not there, or if it is there it is encumbered by being leased out to other parties. In other words, it has at least two owners with further rehypothecation extremely likely.
We don’t know what the Bundesbank committed to in order to get just 300 tonnes returned over a ridiculously long period. But it is likely that they had to agree to leave the rest with the NY Fed. And does the Bundesbank dare to threaten the entire gold market paper system by renewing demands for the return of more of its gold?
