
Why Deutsche Bundesbank had to promise to leave 1200 tons of gold in New York - akrymski
http://norberthaering.de/en/home/32-english/news/787-bundesbank-gold
======
erikb
> Gold is money, which is based on physical ownership, not on trust in the
> willingness and ability of another party to honor their promises. If you
> have gold, but you do not have it under your control, it is almost pointless
> to have gold.

Really digging this one. That's why I proactively not listen to
investors/consultants who suggest to buy some gold derivates for _savety_
purposes.

In other regards: What's the point of the author? That's how the "king's
peace" works since forever. Having the biggest stick and control over the
valuable stuff makes you the king. And as long as you provide a stable
leadership live of people is mostly peaceful. That's why people are willing to
accept this trade. It's unfair but we actually want it that way. And what
should the others do? Say "yeah, we totally accept that he has us by the
balls"? No they act like it would be their decision so that they also keep
some of their own power.

It seems the author is smart enough to know all this, so seriously: What's he
attempting to achieve here?

~~~
sandworm101
Gold is no longer tied to power. Real estate now defines who is to be king.
Look to the wealth funds of the middle east. They dont trade oil for gold
these days. They buy land, the real international currency. The man with the
most diversified land across many countries is king.

~~~
b5u
Land may be valuable at the moment, but that will likely change in the future
when fresh, clean water will be more scarce and climate changes will render
parts of Earth uninhabitable.

I'd recommend you reading this interview with M. Burry (guy who foresaw the
real-estate crises in '08): [http://nymag.com/daily/intelligencer/2015/12/big-
short-geniu...](http://nymag.com/daily/intelligencer/2015/12/big-short-genius-
says-another-crisis-is-coming.html)

~~~
gumby
That's still a real estate issue; you're just saying that the three important
factors in real estate are "location, location, and location" and that those
factors aren't stable over time. Tell that to the Carthaginians.

------
patrickk
Bloomberg has a very interesting article on this topic also:
[https://www.bloomberg.com/news/features/2015-02-05/germany-s...](https://www.bloomberg.com/news/features/2015-02-05/germany-
s-gold-repatriation-activist-peter-boehringer-gets-results)

Reading in between the lines, it seems as if a good chunk of gold has gone
missing and there is an attempt by both sides to save face.

~~~
mannykannot
This puts me in mind of the rai stones of Yap, and particularly of one that
was lost at sea, but which continued to be used in transactions because of a
general agreement that it still existed and so its ownership could be
recognized.

I have lost track of the clearest version of this story that I have seen, but
it is mentioned in the 'Transfers by Clearing' section here:
[http://www.wondermondo.com/Countries/Au/MicronesiaFS/Yap/Rai...](http://www.wondermondo.com/Countries/Au/MicronesiaFS/Yap/RaiOfYap.htm)

~~~
slv77
One funny thought down these lines is that after 50+ years the gold in the
vaults has been cold welded together. Gold is soft, malleable and heavy and
after years maybe it's effectively a solid chunk of metal.

Would explain the logistic challenges and the need to re-melt the bars if they
had robbed chiseled apart.

------
21
> Switzerland is a small, neutral country without a serious army. They would
> hardly refuse to hand the gold back on request.

This guy is suggesting that Germany could invade Switzerland if they refuse to
give back their gold, so this is a good reason to keep it there. I'm pretty
sure such action would be illegal under UN rules, ie: you can't invade a
country because they don't give you back your posession.

And Switzerland neutrality is highly debatable given that it's surrounded by
NATO and part in a lot of EU mechanisms.

Also, an invasion would make no sense under the writers own assumption, that
something is wrong in the gold market. A war in the heart of Europe will tank
a lot of markets.

~~~
erikb
As Russia-Ukraine has shown you can take stuff by force without creating big
scale war. And remember how Hitler just went state shopping before there was a
war?

The thing about war is that most party's don't really want it. So sometimes
it's possible to grab some advantage that theoretically should result in war.

~~~
21
So you are saying that Germany would begin military action against Switzerland
for $50 billion worth of gold (rough value of 1000 tons of gold).

How much damage to the Euro and to the European stock markets would such
action cause? Not to mention other costs

~~~
erikb
Not 100% what I'm saying. I'm saying that if Switzerland holds a lot of
Germanys gold and has promised to give access whenever and don't hold up to
that promise, Germany just moving some tanks over, then taking the gold, then
moving the tanks back, is quite a possible scenario.

Yes that would harm the EU in short term (1-5 years). But so would it get hurt
if a powerful member of that alliance is not able to enforce rightful demands.
Anyways if we include the EU into the discussion, it's very likely that a lot
of other steps would convince Switzerland before the first tank needs to get
manned.

~~~
NotSammyHagar
Such an action would destroy trillions of dollars of wealth. For less than
apple has in cash. It doesn't make sense, $50 billion of gold is still just
$50 billion.

------
krona
> _The US had paid for its imports with pieces of paper on the promise, that
> these pieces of paper were as good as gold and would be exchanged for gold
> at a fixed rate upon request. In 1971 Nixon just said screw you, you can
> keep those papers and we will keep your commodities and the gold. We stayed
> friends anyway. We had to._

It's a bit more complicated, isn't it? Wasn't it West Germany, in May 1971,
that said "screw you" to the US and the Bretton Woods system (the same system
that helped them rebuild their economy after the war) and performed a
competitive appreciation by floating the currency, contributing to the
resulting Gold crisis? The Nixon shock happened in August 1971, when the game
was up.

~~~
dualogy
This Germany may have done, but "the gold crisis" / general Bretton-Woods-
Exchange-Mechanism crisis brewed since the mid-late 60s and culminated visibly
in France (de Gaulle I think) sending a tanker to collect their $ trade
surpluses in physical bullion form, see the ending of the
[https://en.wikipedia.org/wiki/London_Gold_Pool](https://en.wikipedia.org/wiki/London_Gold_Pool)
\--- all Nixon did in Aug 1971 was basically just confirming to the world the
completion of a transition that had been in progress for years, at that point.

It all started with the emergence of "Eurodollars" in the City of London, in
the late 50s --- in itself, and their consequences, an inevitably that only a
few thinkers such as
[https://en.wikipedia.org/wiki/Jacques_Rueff](https://en.wikipedia.org/wiki/Jacques_Rueff)
foresaw with any kind of accuracy (even though his favouring a gold standard
isn't something I personally buy into as a good idea for the modern globalized
economy --- same goes for a dollar standard or Euro standard or crypto-
standard or any such notion though)

------
f_allwein
I think the background to this is that, during the Cold War, Germans were
worried about a possible Soviet invasion, so storing gold in the US at the
time made sense. As the article states, conditions have changed somewhat and
there has been political pressure to return some of the gold in recent years.

~~~
erikb
You read the news "Robberies in <your area> have increased by 30%". Would that
make you more willing to redirect half your savings to my account? If so, I'm
happy to discuss further via email.

~~~
snovv_crash
If the alternative was keeping it under my mattress, and you were known to be
a respectable citizen, then I don't see why not. Isn't this basically what a
bank does already?

~~~
mcv
A bank is bound by more rules than the US.

------
Kenji
"I am not criticizing the Bundesbank for storing 37 percent of Germany’s
official gold in in a place there it has no control over it. It seems clear
that they negotiated hard with the US and acted rather shrewdly."

I am sorry, but as a layperson, I do not know what's to negotiate. If I own
something, I should be able to take it home whenever I want?? This is mind-
boggling. What's the point of property that you cannot access? That's not
property.

~~~
jtc331
> that's not property

That's the whole point. The US government effectively treats other country's
good reserves as their own.

It was shrewd negotiation because they got much more than zero, and then US
government/Federal Reserve has significant negotiating ability on its side by
virtue of having the world reserve currency and the ability to impact monetary
policy and systems so heavily on a global scale.

~~~
kasey_junk
The blog post implies, without much proof, that it is the US Fed that is
causing the gold to be moved slowly, which conforms to the blog posters
political opinions.

It could of course also be that the German gold is not moving out of the US
Fed quickly because the German central bank has promised it as collateral for
something, or it is involved in some other financial deal. The Swiss for
instance were able to move about this much gold out of the Fed during the same
time period with no problems.

~~~
tonfa
Is there anything on record claiming that the Bundesbank tried to withdraw
more than 300 tons but was denied (besides the speculations)?

Officially, they wanted to rebalance some of their holdings. The original plan
was to remove 150 tons in 3 years, but due to undisclosed issues, that became
a 300 tons withdrawal in 7 years, which was achieved three years ahead of
schedule.

I'm also wondering why all those articles assume that moving tons of gold is
trivial, is there any description at what is involved in X tons of gold
transportation (insurance / planning / protection / etc.).

------
mercurialshark
It's difficult to take this article seriously.

> the New York Fed, an institution that is _owned and controlled by Wall-
> Street-banks_

No, it isn't.

> In a country, whose current president considers it an imposition that the
> law and so-called judges tell him what he is allowed to do and not allowed
> to do.

His rhetoric doesn't prevent the judiciary from acting or render the other two
branches moot.

> The way in which the official gold of the US, and the gold held in custody
> for other countries, is guarded against public scrutiny and shielded from
> its owners, gives fodder to any number of conspiracy theories.

You can bet the largest repository of gold is off-fucking-limits. And, no, it
doesn't.

> Had the New York Fed refused to let a foreign central bank, which was under
> such obvious pressure, retrieve some of their gold, these conspiracy
> theories around official gold might very well have become intense enough to
> damage trust in the dollar.

What? How? Negative.

~~~
raverbashing
Can you really say with a straight face that if they can't produce what they
say they are storing for a third party that their reputation is not going to
go down the drain?

If any bank prevents anyone from getting their deposited money, for reasons
other than legal, there would be serious questions about their trust

~~~
mcv
Absolutely. If countries want their gold, and the US refuses to give it to
them, what does that mean? Has the US stolen it? Has someone else stolen it?
If this is true, it suggests that all those countries were wrong to trust the
US, as the US is untrustworthy one way or another.

Of course those countries having lost their gold is not good for them either,
so it seems everybody has agreed to continue the lie.

This stuff sounds bad enough that it might turn me into a conspiracy theorist.
But how is any of this even remotely acceptable?

~~~
tmsldd
"Has the US stolen it? Has someone else stolen it?"... to complete your line
of thought I would make one more question: Has it ever existed? The whole
thing about gold lies in the impossibility of speculation. Of course, it
doesn't hold if one single institution controls of all of it...

------
jbmorgado
I'm not really understanding what is going on here and the article doesn't
address that:

1 - Why do Germany and Netherlands even store their gold in the USA?

2 - Why shall the USA/FED have any saying about Germany wanting their property
back anyway? It's like me having to negotiate with my bank weather I can or
not withdrawal my money from there.

~~~
the_mitsuhiko
> 1 - Why do Germany and Netherlands even store their gold in the USA?

Today: because it turns out they cannot get it back. Originally because
countries did not want that when they were invaded by others that the invader
would also run off with the wealth. So keeping it on the other side of the
world in a 'neutral' country looked reasonable.

------
haddr
That reminds me of the history of Spanish gold. In summary: the republican
government made an arrangement with Russia to send their gold reserves to not
let Franco capture it.

Suddenly the russian military help became quite expensive. Paid in gold of
course. All of it.

~~~
prodmerc
Yeah, they have a history of keeping other countries' gold "safe", forever...

------
powera
"In 2013 and 2014 they melted 55 of the 90 tons they retrieved in these two
years, destroying all evidence if anything should have been wrong, like some
of that gold being inferior "coin-gold", for example." \- and I'm done.

Melting bullion is the standard way to determine that it is in fact gold. If
it were "inferior coin-gold" (which I assume he means some form of alloy),
that would have been detected _through the process of melting_.

This man is too far into conspiracy theories to present a neutral view of
anything.

------
sgt101
I think that at 41k per kilo one tonne of gold is worth $41m.

1300 tonnes of gold is therefore worth a bit more than $51bn, which is a lot,
but approximately 1 year of the UK's defence budget, so in the scale of things
not really all that much.

Now, this would mean that (given that Germany is a big economy) there would be
what... 20 times that amount of gold available to back a gold currency - so
about $1trn. I think that the world economy is about $80trn which leaves a big
problem with the assertion that a gold backed currency could challenge the $.

~~~
mamon
Gold is valued at only $41k per kilo because central banks managed to convince
us that we don't need it to back up our currency.

If China really created gold-backed currency then gold price would skyrocket,
increasing at lest 6 times (that's how much inflation we had since 1971, when
the gold standard was abandoned)

~~~
ars
> because central banks managed to convince us that we don't need it to back
> up our currency.

No, it's because we switched to much more productive things to back up our
currency. Our currency is backed by the willingness of our citizens to work
and the value of the land and other possessions.

The currency is stabilized by not printing more than what there is to back it
up, nor less.

Gold is a terrible thing to use because you can't create more of it as the
economy grows.

Don't think fiat money is not backed by something - it most definitely is.

~~~
sgt101
I think that fiat money is backed by the state's ultimate monopoly on
violence.

~~~
ars
If that were true people would not use the currency outside the country. But
they do.

------
chinathrow
" It seems clear that they negotiated hard with the US and acted rather
shrewdly."

I do not even understand why one country would need to negotiate about their
properties held abroad.

There are two reasons I can come up with right now:

\- Country A holding assets of Country B wants leverage over Country B or

\- Country A does not hold 100% of these assets any longer

~~~
VLM
Centuries ago countries, or strongmen anyway, used to formalize allegiances by
trading human hostages. We're friends for all eternity because your cousin is
a valued "guest" of my court and vice versa. We do that with central banks and
gold now a days.

So keeping a relationship of balanced trust, yanking assets from one location
will have an equal and opposite reaction probably in a completely different
form somewhere else. The manipulated currency exchange rates will wiggle.
Imported black forest cuckoo clocks will get a different tariff. The ratio of
central bank interest rates will wiggle. Sometimes 3rd parties get roped into
the deal so perhaps the GBP-USD ratio will wiggle in some manner. Something is
gonna happen to balance it and you can either control what happens, influence
what happens, or toss hands in air and hope the free market does the right
thing. A lot of people are paid a lot of money to not do the later, so you can
generally assume that politician-like or IT consultant-like, the strongly
advised reaction by the people is never for their paycheck writing
organization to do nothing.

So something of equal and opposite reaction, probably agreed upon ahead of
time, is about to happen.

Ideally in some sort of pacifistic utopia it would be illegal for citizens to
store movable assets in-country or invest locally. We're rather unlikely to
bomb Germany again anytime soon, or unrestricted submarine warfare in the
Atlantic, but it is sad to see the old (by my human lifespan standards)
relationship on shakier grounds. Oh well.

------
rwmj
Why do countries bother to hold gold? Wouldn't it be sensible to sell as much
of it off as possible? (I'm asking like "ELI5" because I'm sure there is a
reason)

~~~
tonfa
They do. Switzerland sold more than half of their gold in the past 20 years,
including all their holdings at the Federal Reserve in New York (that's like
1300 tons of gold that was sold, in comparison the hundreds of tons that are
mentioned on the article for germany and netherlands).

Not sure why the article doesn't mention that fact, maybe it doesn't feed into
the FUD/conspiracy theory?

~~~
chinathrow
Did Switzerland sell them themselves, i.e. were they flown back to Switzerland
first or was the sale done by the Fed?

~~~
tonfa
I would assume the gold is typically never traded by moving it physically
between location, but just brought into a vault where both parties have an
account (like the Fed, or London)

They didn't say how much gold they had at the Fed, just that they used to and
that they no longer have any.

[https://www.bullionstar.com/gold-university/central-bank-
gol...](https://www.bullionstar.com/gold-university/central-bank-gold-
policies-swiss-national-bank) has a bunch of data.

For example with the sell via the BIS, I assume they just transferred the gold
within the Berne vault to BIS (BIS has an account there), and then let the BIS
handle the sale. The London gold was likely already there.

------
mdekkers
_...the US will allow central banks to repatriate as much gold from New York
as is absolutely necessary to allow them to have half of their gold at
home...._

What the actual fuck? Why do we need permission from the US to have our own
gold?

~~~
erikb
Try to take the gold from someone with a bigger stick. You know how that'll
end, right?

~~~
mdekkers
Indeed. FYI, I'm Dutch, not German, and am just wondering about the whole "the
world needs permission" kind of thing.

------
mercurialshark
Everyone, stop. This guy is literally batshit insane.

Germany isn't being stiffed, strong-armed or muzzled. They are distributing
assets amongst the world's soundest systems at will - at home in Germany, the
UK, US and France. This guy isn't just speculating, he's making stuff up with
absolutely no basis for it.

[http://www.bundesbank.de/Redaktion/EN/Pressemitteilungen/BBK...](http://www.bundesbank.de/Redaktion/EN/Pressemitteilungen/BBK/2017/2017_02_09_transfer_gold.html)

------
chvid
Germany or Europe is no threat to the US dollar dominance; if anything the
euro and the usd are "same" currency thru central bank arrangements.

The real threat to the US dollar system comes from China; slowly thru many
decades.

------
joosters
If there really is a doubt that the US holds less gold than it claims, surely
this would be reflected in the pricing of US-held gold? Yet I've never heard
that such a price gap exists. What am I missing?

~~~
pg314
You're not missing anything. It's just another conspiracy theory. They'll
claim that the gold price is being kept at an artificial level.

~~~
tonfa
Also all that gold is not in open market, just in central banks and
international institutions (e.g. IMF) balance sheets. So I assume the argument
is that they're covering it up.

------
joosters
For anyone interested in reading more about the standards of gold storage and
exchange, the company BuillionVault has some good information on their
help/FAQ pages, such as explaining what 'good delivery' bars of gold mean, and
how professional gold vaulting works. (Naturally, the pages also promote their
own services, but you can ignore all of that)

e.g. [https://www.bullionvault.com/gold-guide/ready-to-buy-
gold](https://www.bullionvault.com/gold-guide/ready-to-buy-gold)

------
mariuolo
If not stolen, what's the advantage for the USG in keeping it there?

~~~
saalweachter
1200 tons of gold is worth $50B; Germany currently owes the US $175B. [1]
Could it just be collateral?

[1]
[http://www.bbc.com/news/business-15748696](http://www.bbc.com/news/business-15748696)

~~~
tonfa
And according to that site, the US owes Germany over $400B, so not sure what
the point would be.

------
kelvin0
The opposite of this is 'Gold repatriation'
[https://en.wikipedia.org/wiki/Gold_repatriation](https://en.wikipedia.org/wiki/Gold_repatriation)

Chavez was the one I remember who got his gold back onto Venezualian soil:
[http://www.bbc.com/news/world-latin-
america-15900885](http://www.bbc.com/news/world-latin-america-15900885)

------
micahgoulart
I'm surprised to see on HN an article clearly written by a conspiracy theorist
without any proof. As soon as he started adding in his own opinions of what
might have been taking place, I checked out.

 _This is my reading anyway, based on what I understand is usual diplomatic
custom and lingo in such affairs._

Pass.

------
maehwasu
The article really dances around the obvious answer to the question in the
title: "because Germany is a conquered puppet state of the US."

~~~
mschuster91
Good grace. In Germany, this opinion is considered to be in the militant right
wing spectrum (aka sovereign citizens/Reichsbürger movement), I'm surprised
and disgusted to see this here on HN as the top-rated comment.

~~~
maehwasu
The fact that Germany was conquered is an indisputable historical fact. Most
people in the present day, myself included, are happy about that outcome. The
fact, however, is clear.

I'll admit that speculating about US influence over Germany is more debatable,
but I'm fairly amused that you're "disgusted" by that debate.

------
perlgeek
How do you even transport 300 tons of gold? Load it onto a military ship,
maybe in smaller batches, and hope the crew isn't too corrupt?

~~~
rdl
Lots of smaller shipments, each secured. Potentially air or sea (probably
would do 1-10 ton air shipments for JFK-FRA). Plenty of $100mm-1b items get
shipped around the world routinely, although gold is pretty uniquely fungible.
It is mostly determined by insurance or willingness to self-insure, though.

This is a great article about a similar problem:
[http://blogs.reuters.com/felix-salmon/2011/08/23/how-to-
get-...](http://blogs.reuters.com/felix-salmon/2011/08/23/how-to-
get-12-billion-of-gold-to-venezuela/)

------
pyvpx
if you're into reading about gold, you can do a lot worse than reading the
archives of [http://fofoa.blogspot.com/](http://fofoa.blogspot.com/)

------
lemonsqueeze
The gold is long gone. There's nothing there.

Of course they had to work out a 'deal' otherwise both/all banking systems
come down.

------
darkhorn
The gold is stolen.

~~~
mamon
You mean from Jews, during World War II? Then you're probably right :)

~~~
darkhorn
No. By the civil servants in the USA.

~~~
reitanqild
I also hear 9/11 was set up by the Americans, the moon landing was faked etc
etc.

Yet as far as I know just making 3 people keep a secret for years is next to
impossible.

If people wants me to believe in frauds so enourmous that you'll need hundreds
of people to never mention anything - then I will need pretty solid evidence.

~~~
darkhorn
You mean just like NSA warrantless surveillance.

If it is done by the state you can keep it confidential, can't you?

And I don't think that you need hundrets of people to steal gold. Several
people with state orders to delete and change regord will be enough.

~~~
reitanqild
The NSA case however strengthens my argument:

Someone did come forward.

------
tmaly
It could have been just swapped out for gold coated lead bars.

Hard to tell without any transparency.

~~~
tmaly
The down vote is exactly why polls will continue to get it wrong. Every time I
make a comment on economics or tax policy on HN, I get down voted. I will
stick to tech, and everyone can keep getting surprised every election.

------
tomohawk
When we build systems, we run tests to see if they actually work the way we
think the should. We verify, as independently as possible, because it is
important.

What would happen if we went to evidence based banking instead of just taking
the word of people with obvious ulterior motives.

~~~
throwanem
Somebody'd figure out how to game a blockchain, or just render it irrelevant.
You cannot engineer around human ingenuity. But it's always so much fun to
watch people try.

~~~
tomohawk
That's not the point I'm trying to make. A simple way to test this system
would be to allow the 'owners' of the gold to count it once in a while. As it
is, there's no verification of anything.

A system with no transparency or verifiability is just waiting for abuse.

------
JackFr
Best reason NOT to repatriate it:

[https://www.washingtonpost.com/news/morning-
mix/wp/2017/03/2...](https://www.washingtonpost.com/news/morning-
mix/wp/2017/03/28/record-220-pound-gold-coin-stolen-from-german-museum-in-
mysterious-heist/?utm_term=.44a89a7374c7)

Record 220-pound gold coin stolen from German museum in mysterious heist

