Koos Jansen
BullionStar Blogs
Koos Jansen
Posted on 16 Mar 2014 by

New York Federal Reserve Lying About Gold Storage?

There is about 6700 metric tonnes of gold stored 80 feet below street level on the bedrock of Manhattan, in the vaults of the New York Federal Reserve. None of this gold is owned by the New York Federal reserve, they are merely the custodians for the US treasury (that holds approximately 400 metic tonnes in NY), 60 sovereign countries and the IMF; completely free of charge! From the NY Fed website:

The New York Fed charges account holders a handling fee for gold transactions, including when gold enters or leaves the vault or ownership transfers (moves between compartments), but otherwise does not charge fees for gold storage.

NY Fed

 

What would be the NY Fed’s incentive to provide this free service? My local gold storing company charges me more than 1 % per annum for the safekeeping of my bullion (lucky me gold is dirt cheap at the moment). If we subtract the 400 metric tonnes, which the NY Fed stores for the US treasury, from the 6700 it stores in total, the outcome is 6300 metric tonnes. At current market value 1 % of 6300 metric tonnes is more than $2.5 billion. I’m sure sure the big guys can store gold at lower prices, it’s still very kind the NY Fed doesn’t charge its depositors one dime.

But let me get to the point. The NY Fed also states on its website:

All bars brought into the vault for deposit are carefully weighed, and the refiner and fineness (purity) markings on the bars are inspected to ensure they agree with the depositor instructions and recorded in the New York Fed’s records. This step is vital because the New York Fed returns the exact bars deposited by the account holder upon withdrawal—gold deposits are not considered fungible.

This is where it might wring. For one, the Bundesbank succeeded to repatriate 5 mt from the NY Fed in 2013 (although they wanted to withdraw 37.5 mt that year to repatriate 300 mt before 2020). Did they get back the exact same bars they once deposited? No, the bars were remelted. This is only logic as we know New York has a big gold leasing market which is largely facilitated by gold from the NY Fed vaults. No, gold leasing is not a conspiracy, it’s just part of the gold market. (Note, it’s also possible the BuBa leased out their gold themselves.)

The Netherlands have 300 mt of gold stored in New York. The Dutch gold is managed by De Nederlandse Bank (DNB, The Dutch Central Bank). Senior policy maker financial markets at DNB Jan Lamers wrote an essay in 2006 named “Gold Policy Of The Dutch Central Bank“.  I translated a few snippets that explains a bit about central bank gold leasing:

From the beginning of the eighties of the last century there has been a gold leasing market of some size. DNB also participated in it. Because gold leasing is often seen as something magical, I will explain that this is just a normal activity that is part of responsible management of the official gold reserves.
…The lease market made it possible for central banks to lend gold with interest. In a gold loan the gold is physically delivered to the counter-party, the lender gets a claim denominated in gold on the counter-party. When DNB therefore lends 1000 kilograms, it gets a claim of 1000 kilograms of gold on the counter-party. When the loan is repaid the gold bars that are returned are not the same as the ones loaned out, but they meet the same quality standards. Such a transaction is similar to the lending of € 1000 in the form of banknotes. …The debt does not have to be paid back with the same notes, as long as the banknotes are legal tender. If we look at it this this way there is really nothing magical about a gold loan.

…In the eighties of the last century gold producers were looking for a tool to to secure revenues from future mining production and bring down high interest rates for borrowing money. Moreover, it was difficult to attract equity capital to finance mining. As a solution was to borrow gold on a large scale from specialized banks, who in turn borrowed gold from central banks. The borrowed gold was sold in the spot market and with the proceeds the miners financed the production of gold. In later years the mining output could pay of the gold loan. This process serviced mines relatively cheap financing and also they covered the price risks.

…The supply of gold loans is mainly from central banks around the world, only a fraction is being supplied by private gold owners.

 

Although not every gold lease requires a movement of physical gold, it can also be a a book entry, the statement from the NY Fed they grant to return the exact same bars deposited by the account holder upon withdrawal is hard to swallow. As we have have seen by the repatriation of some German gold from the NY Fed.

Koos Jansen
E-mail Koos Jansen on:

  • Wil Martindale

    “gold deposits are not considered fungible.” (?!?!?)

    That is perhaps the most outrageous statement I have heard since someone proclaimed that the price of gold is NOT being manipulated. And you are right Koos, it is right there on the Fed web site in the link provided. What an incredible find. What a prepesterous proverication!

    • http://www.bullionbaron.com/ Bullion Baron

      Why is it outrageous? It’s simply noting that if a central bank deposits their Gold with the Fed, that it won’t be mixed with other holdings. It is not a comment on the physical attributes of the metal itself if that is what you are implying…

  • Marie

    The big question remains, how many times is/was the same (expected) collateral, used as collateral…….?

    Pulling it all together (Incl OTC-Derivatives) without fractions, 20 would only be a very conservative guess.

    We will find out in our lifetime.

    • 9/11WASANINSIDEJOB

      COKE SUCKERS!

      • Zhanglan

        Cocaine is God’s way of telling you that you are earning too much; don’t suck it, snort it

  • Zhanglan

    In fairness, I think there is some ‘wiggle room’ in those statements:

    a. The Fed could be saying that a withdrawal occurs at the point the bars are transferred to the new owner (whether or not they are physically removed); at that point, they may indeed have been the same bars as were originally deposited by e.g. DNB

    b. The decision to lease the bars appears to have been taken by the DNB, not the Feds; the Gold has not been stolen or misappropriated – it has been Sold & Repurchased by its legal owner. This may or may not be a good or prudent thing to do with your nation’s Gold reserves, but it doesn’t in itself point a finger at the Feds themselves

    c. There is no indication in any of the facts uncovered in Koos’s investigation that leverage or multiple-claims-on-the-same-gold are involved; of course, once the Gold has entered the open market, who knows what has gone on, but there is no immediate evidence of a leveraged paper market going on within the walls of the Fed Reserve itself, much less one operated by the Feds

    d. In fact, much of what is disclosed here goes some way to indicate that the Bundesbank’s inability to recover a fairly piffling amount of Gold – in its original format – may perhaps NOT be down to the Fed Reserve having misappropriated it, but the Buba itself. There is of course noway of knowing how long the Germans may (or may not) have leased their metal out for, nor indeed whether there is any real expectation that they will get the same bars back, but there is also no immediate smoking gun indicating ‘it was the Fedz wot dunnit.’

    e. Who borrowed the Gold from the DNB and the Bundesbank? If, as it appears, it was not necessarily another Central Bank (or the IMF), but more probably a commercial operator, then any subsequent use of the metal to suppress prices in the open market may perhaps have been a commercial decision rather than as a consequence of direct government intervention or Fed policy. There are sometimes legitimate reasons for borrowing Gold which do not involve immediately dumping it in the market in order to distort the price downwards – what proportion of leases are for such purposes I have no idea of knowing, but it is certainly not the case that every lease is evidence of another act of price suppression

    The whole thing stinks, but we should be hesitant about jumping to easy conclusions – especially those repeatedly suggested to us and rammed down our throats as fact; many commentators in the Gold community have every bit as much incentive to tell us convenient lies based on carefully selected half-truths, as have the Governments and the Banks in circulating bullshit to the contrary. Personally, I am fairly confident that the market is rigged and manipulated, but I am far less certain by whom, and I have absolutely no idea why (well, at least not one based on any shred of concrete evidence). Many players have both the means and the motive, and in this particular game of Cluedo, not all the cards are on the table

    Where there is money, there will be shady business and turpitude; it is therefore hardly surprising that the Gold market is manipulated by crooks in sharp suits, but this article suggests that the Wise Guys may just as easily be German or Dutch as American (and I think you already know just how much affection and respect I normally have for most Americans)

    • Salacious Monk

      “There is of course no way of knowing how long the Germans may (or may not) have leased their metal out for”
      According the GFMS figures, the current total global hedge book of gold miners is less than 200 tonnes if I remember correctly. It takes the BuBa 7 years to get back its 300 tonnes of gold. Suppose it’s the Buba’s decision to lease out the gold for 7 years. Then who needs such long term gold lease from the Buba? Jewellers? I doubt.
      1 possible theory is that it is the Fed itself that leased the gold from the Buba…
      As for the Fed’s buying 300 tonnes of gold in the open market, I’m not sure the Fed could manage that without sharply moving up the price.

      • In Gold We Trust

        The Chinese can.

      • In Gold We Trust

        Question: does EVERY gold lease require a physical movement of gold? Or can it be a book entry?

    • Kissinger

      An easy answer to the question of who manipulates the gold market is to ask: who can get away with it, i.e. avoid prosecution. Maybe the same people who manipulate LIBOR and get away with it? Maybe the same people who fund the campaigns of both parties in the US? Maybe the people that have their cronies stacked up in the SEC, CTFC and the US Treasury. Maybe people who don’t answer to the US DOJ. Do the creators of currencies and their member banks answer to any legal system? Do the central banks make a profit from the money they create? (Hint: yes 6%) Is gold a threat to their profitable fiat money system? Do these people have incentive to suppress the gold price?
      When you pull it all together and connect the dots, it seems pretty obvious.

      • Troll Finder General

        Suspicion is not Proof (except in cases involving Witchcraft and, apparently, Gold)

        Yes, the markets are rigged, but here in America we have the Rule of Law, and only in cases where that don’t work do we revert to more persuasive tactics such as Waterboarding and Lynch Mobs

        If there is any manipulation going on, you can bet a dime to a dollar that theres Commies behind it – just lool at how they manipulate their currencies and rely on “hanging chads” to rig their rubberstamp elections

        God Bless America – the Greatest nation in the Entire World, Ever

    • Marie

      “c. There is no indication in any of the facts uncovered in Koos’s investigation that leverage or multiple-claims-on-the-same-gold are involved; of course, once the Gold has entered the open market, who knows what has gone on, but there is no immediate evidence of a leveraged paper market going on within the walls of the Fed Reserve itself, much less one operated by the Feds”

      If there ever was any direct indication, the black-smith scenario would be a pale ferry tale. Although spare dots are sometimes spilled, like Charles de Gaulle and lately German repatriation just to name a few.

      Nevertheless, w’ll find out in our lifetime.
      Imo, a quote who fits best here is, that – all war is deception – Sun Tzu.

      • Zhanglan

        deception, eh? How far do you care to go with that one?

        1. There is no gold

        2. There never was

        3. The Federal Reserve doesn’t actually exist *

        4. Gold doesn’t actually exist either, anywhere. It’s all paper claims

        5. Nor does Germany – it was lost to the Soviet Red Army in 1944 and nobody had the heart to tell the rest of the EU ever since

        and so on…….

        IMHO the critical event was the decision to call for repatriation of Germany’s gold – everything that has happened since was either fairly predictable or maybe inevitable, but just represents the Fat Lady singing.

        The message is clear: some people think that America can no longer be trusted
        (I am one of them)

        * if you think this is absurd, check out this Muppet who has gone on public record saying that there are no banks in China – they are all imaginary – http://www.zerohedge.com/contributed/2014-03-17/sol-sanders-chinese-emperor-has-no-clothes Maybe my sister in law (who works for Bank of China) is too – at least, sometimes I hope she is…….

        • Marie

          Thx reply !

          Before continueing please accept, my perception of the word – deception – May be slightly differ with yours.

          Isn’t the 1st job of a Bank (CB) working within a (fractional) fiatsystem, seeking the bounderies of trust with deception? (Extending the life of a fiatcurrency just over the 40 years, especialy the last period it becomes more vulnerable) Ever thought why they don’t teach wat real value is…..

          Boys have always been boys no? Like in the past, bankers hiring the quickest transport to get the Gold from one place to another to show their Gold before the audit enters. (the tunnel of the FED building to JP Morgan vault just comes to mind, although i haven’t seen it with my own eyes they remain just thoughts from my side ofcourse :-))

          Nowdays its so easy to polarize, and often one is pulled along into the battle of opposites. If one could take enough distance, sometimes the pieces fall right on their place.

          The Freegold concept i read also here on Koos’s Blog offers imvho a unique escape to this polarization. If not reached by consensus it will happen naturally, the first may be preferable, the (almost) invicible hand of the BIS suggest years of preparations. Although if the latter it comes with less attractive consequences.

          Agree the German repatriation is only a (good) symptom along the line
          to finaly reache a new balance.

          The picture of your sister in law suggest she is a heavy weight ;-))

          To close with ANOTHER quote;

          – If one can only see value in paper currency terms then one cannot see value at all !

          • In Gold We Trust

            Small note. Although I’m open minded towards freegold, I do not permanently reside in that camp.

          • Marie

            Whatever you want Koos.

            Your expression “not permanently” is most briljant !

          • Zhanglan

            My Sister in Law is the only Party Member I know, and when I say “Party”, I don’t wish to imply that this very intense lady is going to be “getting down on it” any time soon. She is fascinating – a real work of art and everything you could ever imagine an evangelical Communist would be like. Her sole redeeming feature is that she cooks fantastically good Jaozi (dumplings, probably made from leftover body parts of Falun Gong members* I don’t know) but other than that she can tend to be a bit wearing

            For those of you with limited direct experience of contemporary Chinese popular culture, here is a home video my wife’s sister took whilst on Summer Camp in Zimbabwe last year
            http://www.tudou.com/programs/view/2M6x0No9Y1Y

            * I had a lengthy conversation with a drunk Falun Dafa member in a restaurant in Singapore’s Chinatown last week, and I can assure you that they are they best PR and advertising tool available to the Chinese Communist Party. If you thought Scientologists and Breatharians were a but “special”, you are gonna love these guys. Their views could be most charitably be described as “niche”

  • Plaxo

    The gold was melted by the Germans not the US.

    • In Gold We Trust

      Says who? The Buba?

      • Plaxo

        Yes. They are a million times more credible than the ludicrous, hysterical and wrong bullshitters of the US and GB precious metal sales industry (Turk, Sprott, McLeod, Maloney et al). Dissappointed with this article, had come to expect better from you, but I guess bullshit and confirmation bias generate a lot of clicks.

        • Zhanglan

          Good comment Plaxo, but unnecessarily nasty barb at the end

          I have no time for the Snake Oil Salesmen either, but as far as I can tell Koos isnt actually selling anything

          • Plaxo

            “unnecessarily nasty barb at the end … ”

            True. I apologize to the author.

          • In Gold We Trust

            Noted, I try to run a balanced blog here. And I’m just like all of you, seeking for some truth. If such a thing exists.

          • Zhanglan

            I applaud that.

          • http://goldchat.blogspot.com/ Bron Suchecki

            Technically Koos is selling advertising and a donate button, so Plaxo’s comment re generating clicks is valid in that there is a motivation to produce a conclusion that is attractive to a large audience. However I think in this case that was not a factor and the article was driven by a bias of (selective) distrust of governments and government statements/figures.

            I am not casting the first stone here, I’ve been guilty of jumping to a conclusion that fits my gut assessment. But an analyst after the truth needs to be on constant guard against these biases.

            The article’s (unqualified, ie no “maybe”, “possibly”, “likely”) conclusion is based on the assumption that the NY Fed melted the bars. Given Bullion Baron’s research, it is clear that Koos did not research this assumption far enough, in which case the post title and conclusion should not have been so emphatic and implying 100% proof.

            I can only recommend drilling down to the source of any statement rather than taking another commentator’s repeating of it. First because it helps determine the reliability of the fact but secondly because you’ll often find a lot of nuance at the source article that is lost in the retelling of it by others that gives you new avenues of investigation.

            Just one other comment on the statement “How kind the NY Fed does not charge its depositors” which is saying that it is impossible to offer such storage terms as there are material costs to doing so (as the reference to 1% retail storage rates implies). Because storage is a fixed cost business (eg insurance is only done on a first lost basis for a billion or two max), the marginal cost of additional storage is basically zero. Once you have a significant amount of metal, the cost per ounce across the entire becomes almost zero.

            This is why they can do it, and why sub 0.15% that the bullion banks charge
            ETFs to store their gold is such a profitable deal. More information here http://goldchat.blogspot.com.au/2009/10/slv-and-jeff-nielson.html

          • Any Old Irony

            Oh BRON!!!!!!!

            I was an avid fan until you wrote that Comment. Did the holiday in Singapore not chill you out even slightly?

          • http://goldchat.blogspot.com/ Bron Suchecki

            OK, my comment was a bit blunt. Once you step back into the blogosphere any holiday chill disappears quickly.

          • In Gold We Trust

            Thanks Bron. What did Barron write?

            Do we know for sure about all gold dealings of central banks? Are all their leases and swaps etc, on their books?

            I’ll change some words in the article for the sake of journalism.

          • http://goldchat.blogspot.com/ Bron Suchecki

            His comment here http://www.ingoldwetrust.ch/new-york-federal-reserve-lying-about-gold-storage#comment-1287656820 where he says that “Bundesbank confirmed they were involved in checking/supervising retrieval of the bars and smelting”

            Unfortunately there is a significant lack of transparency by CBs around their gold reporting, but as I discussed here http://goldchat.blogspot.com.au/2014/01/central-bank-gold-reserves-transparency.html this differs between CBs. Mostly likely those that do report leasing activity are those whos actions are so small they don’t have a market impact.

          • In Gold We Trust

            Oh that Barron..

        • rowingboat

          Resist the temptation and try to stay independent, Koos.
          Ed Steer’s daily emails sometimes include links to your work preceded by statements like the one below. Sometimes his links take you to GATA’s website instead of your own.
          Remember when Jeff Christian told you how a misplaced comma cost him a million bucks? Well a Question Mark added to the title of this latest article of yours makes a big difference! I Agree with Bron Suchecki’s sentiments further down.

          “Gold researcher and GATA consultant Koos Jansen explains today….”

          • In Gold We Trust

            I enjoyed the debate about this post in recent days (in several ways).

            However, I feel more comfortable “with the question mark” ;-)

  • http://www.bullionbaron.com/ Bullion Baron

    Koos, the bars were remelted, but I have no doubt that this was done under strict supervision of Bundesbank, not by the NY Fed.

    According to this Bullion Vault article the removal of the bars from the NY Fed was supervised by Bundesbank who crossed off the bars as they left the vault (indicating that they did indeed get the same bars):

    http://goldnews.bullionvault.com/gold-bars-012020146

    As for the reason the Fed does not charge for the Gold, how about as a relationship & trust building exercise between friendly nations? Not all benefits can be measured in dollar denominated value.

    Gold leasing is not a conspiracy, but implying that the NY Fed is leasing out the Gold owned by other central banks is. I would implore you don’t take this site over the line from rational & factual observations to borderline conspiracy & speculation where many other commentators have traveled only to never return…

    • Salacious Monk

      So that things that you don’t like or you disagree on are just conspiracy and speculation? What you represent is factualness and objectiveness? And Koos needs your advice that there is a line in the sand that he mustn’t step over? Good…

      • http://www.bullionbaron.com/ Bullion Baron

        Koos can take whatever direction he likes with the site, but to date his commentary has usually aligned with verifiable data and facts that can be linked back to official sources and I hope it remains that way.

        Bundesbank confirmed they were involved in checking/supervising retrieval of the bars and smelting:

        http://www.bundesbank.de/Redaktion/EN/Interviews/2014_02_19_thiele_handelsblatt.html

        So BY DEFINITION any other story is conspiracy or speculation.

        Salacious Monk, If you don’t believe the Bundesbank is telling the truth, then do you also question the Gold delivery figures that SGE (founded by PBoC) produces (republished in charts by Koos on this blog)? And if you dismiss the Bundesbank story, but believe the SGE figures, can you provide a detailed breakdown on the reasons you trust one official source over the other? Do you think the Bundesbank is a less trustworthy source than the PBoC and can you explain why?

        • Salacious Monk

          1. Please don’t change the topic. Did I mention anything related to PBoC or Bundesbank? I was talking about a commentor.
          2. Did I say I trusted the SGE’s figures 100%? No. Actually, that’s what you were trying to allude. However, the SGE figures can to some large extent be supported by the import and export data of Hong Kong. The reporting entity in HK is NOT a subsidiary of the PBoC.
          3. So according to YOUR definition, a public statement by some governmental entity should be a fact and others must be conspiracies. Brilliant! Then in the run-up to the 2003 Iraq War, there were quite a number of public statements regarding to the numerous WMD in Iraq. So it should be a fact that there are numerous WMD in Iraq, right? By the way, why do you like to label other opinions as CONSPIRACIES? In order to create an unfavourable public image for other opinion holders? Wonderful!
          All right. Since I’m not paid to argue with you, then I shall stop here. You can enjoy having the last word.

          • http://www.bullionbaron.com/ Bullion Baron

            lol nice straw man. I did not say that all official statements are fact, but was pointing out that stories / narratives that counter the official story are speculation unless they are SUPPORTED BY EVIDENCE.

            It might interest you to know there are plenty of conspiracy stories that have turned out to be conspiracy fact. How do they usually change from speculation to fact? More often than not the confirmation comes from OFFICIAL statements or documents that have been released or leaked… go figure (just look at all the documents that GATA has published over the years detailing Gold manipulation from 30-40 years back).

            Bringing it back to the original post (rather than Iraq? lol)… there is NO EVIDENCE in the article to support the suggestion that it’s not Bundesbank’s original Gold bars being returned, hence that is speculation by Koos. If you feel there is evidence to support that the bars differed on withdrawal then I would be interested to hear what you have found. Your silence will speak for itself.

          • In Gold We Trust
          • http://www.bullionbaron.com/ Bullion Baron

            Not sure blackmail is the right word :)

            I was not using the SGE example to be critical of your analysis here Koos, it is better than any other I have seen on the Chinese data/markets and I am appreciative of the time you put into researching and writing your posts.

            The point I was making is that we shouldn’t dismiss an official statement or data without sufficient evidence to do so. As I pointed out on Twitter earlier, the official Bundesbank statement is:

            “The Bundesbank’s gold is stored in the form of individually identifiable bars.”

            Also as linked above in another interview, they have stated categorically that they have checked the bars are as expected:

            “The gold was removed from the vault in the presence of the internal audit team and transported to Europe. Only once the gold had arrived in Europe was it melted down and brought to the current bar standard. Some of the bars in our stocks in New York were produced before the Second World War. It was confirmed after the melting process, as anticipated, that these bars were absolutely fine.”

            So I believe in this case, you are wrong, that the bars are identifiable and Bundesbank is checking them off against their audit list as they are removed from NY Fed vault.

            It is in the best interests of the central banks to trust each other, I think the Fed would have a lot to lose if they were really leasing out the Gold of other central banks (unknowingly to the owners), who would ever trust them again?

          • Zhanglan

            Does it matter in any hardcore commercial or economic sense? There is quite a leap of reasoning – a veritable Grand Canyon of Logic if you will – between the notion that some of the numbers on some of the bars check out, and the conclusion that all of the original bars are there ready and waiting for collection at a moments notice

            Is there perhaps some nostalgia value associated with the original German bars? Or, on the other hand, is there perhaps a little too much “nostalgia value” associated with the original German bars, and it might have been considered prudent to get them melted down before the Jewish Dentist’s Association started asking questions.

            Who knows? Maybe the Fed was only ‘Acting Unter Orders’, but Gold is Gold, and Germany still hasn’t got 295 tons of its back yet. I bet if you gave the average German Civil Servant (see photo above) the choice between anonymous kilobars today and good old Third Reich Adenauer-era Gold in 2020, he’d bite your hand off (Germans can be a bit funny like that – especially the fat ones, when they get hungry)

          • http://www.bullionbaron.com/ Bullion Baron

            Just IMO the leap of reasoning comes from those that believe the bars are not all there given those they have removed from the NY Fed vault (granted a small portion) so far check out.

            Too many people seem to make rash conclusions with little evidence, i.e. the delivery is slow and Germany was denied a visit to check all their Gold in the past so it must not be there… big jump.

            Maybe I will be wrong & the Fed doesn’t have (all) the German Gold, I am not closed minded to either conspiracy or theft/leasing of foreign Gold by the US, but it would take evidence to convince me, which I am yet to see presented by any of the commentators who have discussed this topic and quickly come to the conclusion that the Gold is missing.

          • Zhanglan

            I don’t think it is “missing” or that there needs to have been a conspiracy: my suspicion is that the Gold probably isn’t currently there in any format because the Germans and the Dutch themselves have leased it out, not the Feds

            They can have 300 tons of Gold, one day, but not now, because right at this moment it isn’t theirs they will have to wait until the leases expire, at which point who knows what form of physical bars they will get back (if any)

          • In Gold We Trust

            That’s a possible scenario. All countries have the opportunity to lease their gold they have stored in NY. For that reason they want it to be in NY. Jim Rickards told me last week the Germans don’t want their gold back because there is no lease market in Frankfurt. The repatriation schedule is just politics.

          • Zhanglan

            I think that is an entirely plausible explanation

          • In Gold We Trust

            But why than did the Germans repatriate 900 tons from London in 2001?

          • http://www.bullionbaron.com/ Bullion Baron

            Zhanglan, Koos. The Bundesbank has been very open with their Gold & operations (at least more so than many other central banks), you can see from the history published on the Bundesbank website that they don’t have any Gold leased (current as of 2012):

            https://www.bundesbank.de/Redaktion/DE/Downloads/Bundesbank/Wissenswert/gold_entwicklung.pdf?__blob=publicationFile

            The column marked ‘Goldleihe’ (Gold lending) shows leasing history from 1997-2007, but nothing currently (at least I think it highly unlikely that the Bundesbank would engage in Gold leasing in 2013/2014 when they know some of the Gold will be repatriated).

            Furthermore when I asked Bundesbank questions about this for my blog:

            “The Deutsche Bundesbank can withdraw gold from its holdings with foreign central banks at any time.”

            http://www.bullionbaron.com/2013/08/is-germanys-gold-repatriation-causing.html

            Now you can call the central bank a liar, but until sufficient evidence is provided for any other story I think the official story stands.

          • In Gold We Trust

            Do they perhaps not disclose some leases and swaps?

            http://www.gata.org/node/12016

          • http://www.bullionbaron.com/ Bullion Baron

            In my opinion there is a very big difference between a central banks who does not disclose any information about their leases/swaps (i.e. keeps it secret), to one who publishes a detailed transaction log like the Bundesbank has, but then leaves critical information out of it. That would practically be a lie, rather than keeping operational secrets and I think it’s highly unlikely that has occurred in this instance.

          • Navigator

            Please explain why Venezuela was able to get all of their gold back in a short time and Germany can not. Could it be that Germany’s was leased out and Venezuela’s was not or simply that the FED does not have the gold at all now to send to Germany?

          • http://www.bullionbaron.com/ Bullion Baron

            Or simply that there is no rush to transfer the Gold given that Bundesbank trusts the Fed.

            The Gold is primarily being repatriated due to political pressure & decision of the court, rather than a desire of the Bundesbank to have it returned, so why would they rush it?

          • Navigator

            Problem is that they are not even on schedule for the 7 year repatriation plan. For the first time ever the Germans do not want to meet a schedule? Have you ever ridden a German train where the train leaves the station when the second hand strikes 12?

          • http://www.bullionbaron.com/ Bullion Baron

            Have you ever ridden a German train that departed the station at top speed or do they normally take awhile to get up to speed & yet still make their destination as scheduled?

          • Zhanglan

            German trains are run by the Bundesbahn, not the Bundesbank

            I think we are all pretty clear about 2 things –

            1. 300 tons of Gold is readily available in the open market if somebody felt the need to accelerate repatriation or cover their tracks.

            2. The key point is surely the decision to call for repatriation, which belies a nervous distrust of the Feds. The Gold is less important than the collapse in trust

          • Navigator

            Now your point makes absolutely no sense. The Germans had a schedule for gold repatriation. The schedule was not met. Germans are detailed oriented people who always meet their schedule. The schedule was not met for the first year and so that probably means the Germans were not at fault and that there is a problem at the FED meeting the schedule. One year is not anywhere near leaving the station at full speed. The FED had no problem meeting Venezuela’s request and they were considered an unfriendly nation so why do they have a problem with a friendly nation? Geez are you not able to follow logic?

          • http://www.bullionbaron.com/ Bullion Baron

            I am the one not following logic? Take a look in the mirror Navigator

            Here is the schedule:

            http://www.bundesbank.de/Redaktion/EN/Pressemitteilungen/BBK/2013/2013_01_16_storage_plan_gold_reserve.html

            THE BUNDESBANK SCHEDULE IS 300 TONNES (FROM THE NY FED) BY 2020.

            It is not 2020 yet. There is no reason that the Gold has to be transferred in even amounts every year. That is the point I was making about trains, they don’t start at their top speed when leaving the station, it takes time for them to get up to speed.

            Read the interview I already linked above if you want more info on schedule:

            http://www.bundesbank.de/Redaktion/EN/Interviews/2014_02_19_thiele_handelsblatt.html

            There is no mention of any specific targets for 2014, so how can you claim they are no on schedule?

          • Navigator

            Time to get up to speed? LOL They were certainly up to speed all at once with Venezuela or does Venezuela not count in your opinion? Your approach is inconsistent.

          • http://www.bullionbaron.com/ Bullion Baron

            How have I not been consistent? I have consistently pointed back to official statements & have suggested that without evidence to the contrary, I have no other choice but to take them at their word.

            You on the other hand choose to bring in the metaphors and other examples as if it is proves something sinister is going on. Your continued attempts to obfuscate the issue are noted.

            Are you going to admit that you were wrong when saying the schedule was not met or are you privy to a schedule that no one else has seen?

          • Navigator

            It is you who should recognize that the schedule is for all practical purposes way behind and sure I admit that the FED is on schedule simply because 2020 is not here yet. And you continue to ignore the case of Venezuela to bolster your own illogical conclusions that the schedule will be met. My final conclusion is that it is very unlikely that the schedule will be met if you like to split hairs with semantics.

          • Any Old Irony

            Get a room!

          • Greece

            Venezuela got their gold a few months after we were in Tripoli. Libya had a little over 160 tons. I think Venezuela repatriated 180 tons.

            Germany may get a little more than 5 tons this year since Ukraine just shipped us their gold.

          • Iminurbase

            It’s not that they don’t have a gold, it’s that they need that gold to play fractional reserve gold banking to game the markets.

            They slowly have to acquire said gold through the open market, but slowly enough not to make the price spike all of a sudden.

          • MoneyMattersToo

            Not the half with the mouth, I suspect… ;¬)

      • Troll Finder General

        There is no need or even room for Conspiracy theiries, just plain hard facts: it’s the Commies, pure & simple, same as every time. Did you know that the German manwoman Merkel is a born Commie and grew up as one in the Soviet Block and that the Germans actualky moved their seat of Government from Bonn to Berlin so as to be closer to Moscow?

        • DameEdnasPossum

          Here we go again…someone left the gate unlocked on the dumbass cage again and set this purile fool free …

          A paid for shill with nothing of value to contribute.

          Keep up the good work idiot-boy.

  • cocoabean

    You failed to add the key point that this mine hedging activity doesn’t look so hot in a rising gold environment.

  • Matt

    Don’t see issue here. The Fed will lend out gold which its owners wish to be lent out. In that case the bars will change. If they do not lend them out they will not. The Buba’s gold was remelted on instructions from the Buba.

  • Zhanglan

    A note in passing

    I tend to get quite frustrated with certain Commentators in the Gold & Precious Metals space who set themselves up as self-styled experts and gurus, but who often have neither the civility nor the humility to engage in sober discussion of the opinions they express. My concern is not whether their views are right or wrong, but whether they are willing to discuss them. A distrurbing number are not, and in my mind this undermines their credibility somewhat.

    A good example of what I consider reasoned debate is Keith Weiner from Monetary Metals, with whom I tend to disagree, but who will always show the simple courtesy of responding (sometimes quite forcefully) Another person for whom I have deep respect for precisely the same reason is Ben Hunt of Epsilon Theory, who will also give me the time of day whether I agree with him or not

    And so to the point of this Comnent – Koos: almost unique in the Gold blogosphere, this guy maintains the conspicuous ability to tell it straight, without spin and with no apparent agenda other than to discover the truth and publish it. As you can read below, I dont necessarily always agree with his interpretations, but he is always consistently rational, civil and measured, and as someone old enougj to be his father, I salute him for that. Lord knows, he rubs shoulders with enough sleazebags in this sector, but I don’t think you will ever find him publicly bad-mouthing anyone, gloating about suicidal bankers, or making absurd predictions about events beyond his control and current knowledge

    Why can’t all Gold blogs be like this?

    • http://www.bullionbaron.com/ Bullion Baron

      +1

  • In Gold We Trust

    Thanks for all the comments here and on Twitter. I will do some more research on leasing and the NY Fed. I’m sure this post will get a follow up!

  • Nikon

    While the article is interesting, I do have to agree with “Bullion Baron” below.
    All publically available reliable sources seems to indicate that Bundesbank did in fact get the correct bars, and that the recasting was done at the request of the Bundesbank.

    Plenty of conspiracy websites do claim that Bundesbank did not get the correct bars, and that the FED melted the bars to hide this fact. But I don’t consider such websites to be particularly reliable sources of facts.

    What sets the ingoldwetrust site apart from other bullion bug sites is that it primarily deals in hard facts from reliable sources. I’d hate to see this change.

    • In Gold We Trust

      You consider the words from a central banker as a hard fact? After all the lies? Maybe I missed something but did the BuBa ever publish an audit report of its holdings in NY?

      BuBa in 2014 (Thiele):

      “Our internal audit team was present last year during the on-site removal
      of gold bars and closely monitored everything. The smelting process is also being monitored by independent experts.”

      “We have enjoyed an excellent relationship of trust with the New York Fed for many decades. As regards the details of the contracts, however, we are bound by confidentiality which we cannot unilaterally break. From my visit to New York, I can tell you that a number of bars selected by us were removed, inspected and reweighed even while I was there. The inspections conducted by our internal audit team, during which an external auditor was also present, were also completed to our utmost satisfaction.”

      http://www.ingoldwetrust.ch/buba-half-german-gold-reserves-will-stored-germany-2020

      They are bound by confidentially? What can the reason be? Why doesn’t the BuBa (or its external auditors. Btw who was that?) publish ANY EVIDENCE of their audit in NY?? Any single piece of data. How hard can it be to show a single shred of evidence?

      IF there maybe is some gold missing, or bar numbers changed, the only option for Thiele is to come out with a statement like this, or there would be panic. If necessary politicians and central bankers MUST lie, that’s a fact.

      Why should we simply believe the words of Thiele?

      Also please read the comment of Peter Boehringer (founder of German repatriation initiative) on Thiele’s statement.

      http://www.ingoldwetrust.ch/bundesbank-attempts-to-subdue-concerns-gold-repatriation

      • http://www.bullionbaron.com/ Bullion Baron

        It is not common for central banks to publish Gold audit results, apart from the recent revelation that the United States has (seemingly as a result of political pressure).

        Koos, do you believe the PBoC has at least as much Gold as when last reported and if so why would you simply believe their word?

        • In Gold We Trust

          Why is it not common? What’s there to hide? They publish the total amount do they?

          I dont beleive the PBOC on their gold reserve holdings. You?

          • Zhanglan

            a few days ago a contributor to another discussion thread on this website commented that Bank of China held a lot of gold; I assume he meant PBOC (Bank of China is a commercial bank, and not even the largest in China) and I checked its accounts and, yes, if you assume that BoC’s entire holding of Precious Metals is all Gold, then they do indeed have rather a lot – more than 650 tons in fact

            so I decided to compare this to the holdings reported by Western banks; but despite all the GAAP, IFRS, post-Enron and Sarbanes Oxley nonsense which is supposed to have yielded greater accounting transparency, none of the Western banks I looked at appeared to publish a figure for Precious Metals or Gold on their Balance Sheet.

            This yields a range of possible interpretations

            – The Chinese are habitual liars, and Bank of China probably has No Gold / Twice that amount / its all paper Gold anyhow

            – Bank of China doesn’t exist: as noted in an earlier comment I made in this thread, this was in fact suggested in public by one or other soi disant experts at a recent conference in Paris

            – China doesn’t exist. Yay! All the Western media’s wet dreams have come true all at once!

            – Western Banks have to hide their Gold to stop the evil Commies from stealing it / buying it / copying it

            – Western Banks have oodles of Gold but are controlled by TPTB and The Cartel and The Queen and the Rothschilds and have to do whatever the Bilderberg Group tells them

            alternatively, its just that – contrary to expectations – the Chinese are sometimes far more open, less secretive and far less ‘inscrutable’ than their Counterparts in the West. Either that, or they have less to hide than HSBC, Barclays, JP Morgan,UBS, Bank of America, RBS, Royal Bank of Canada and BNP Paribas

          • In Gold We Trust

            Wikipedia:

            中国大陆外汇储备作为国家资产,由中国国家外汇管理局及中国人民银行管理,实际业务操作由中国银行进行。

          • Zhanglan

            yes, I know. My wife’s sister works in the Treasury Department at BoC in Beijing. Conducting “business operations” on behalf of a client doesn’t normally end up with you carrying a bullion position on your own Balance Sheet equivalent to 3 months global production, although my point was more about accounting disclosure than who actually owned the pile of gold

          • In Gold We Trust

            Can you get me in touch with her?

          • Zhanglan

            She’s married, Koos! And her husband is one of my best friends and fishing buddies!

            Apart from that, as I mentioned above, she is a card-carrying Member of the CCP (which, in itself, is quite an achievement) and is fairly straight-laced. We never ever talk shop at home, even though it was she who introduced me to her sister / my wife during the Beijing Olympics

            I will drop you an email with some other contacts in the same team

      • Nikon

        The trustwothyness of central banks is a different discussion.
        In the article above it you stated that the BuBa did not get the same bars back. But you cite absolutely no reference for this piece of information.
        Just because you may not trust what central bankers say, does not mean what you say automatically becomes the truth.

        All publically available sources of information says that the BuBa did in fact get the correct bars. And that these very old bars were refined at the request of BuBa according to the modern standards for gold bars.

        We may or may not trust this. But to claim as a fact that the BuBa did not get the correct bars, without any evidence whatsoever to back up that claim, is what only conspiracy theorists do.

        • In Gold We Trust

          Ah, the “conspiracy” word. Lovely, kills all debate. (history is full of conspiracy FACTS)

  • Rod Holden

    How about everybody takes delivery of their own gold, audit it and we start all over…..www.returnaussiegold.net.au

  • http://GoldSilver.com/ James Anderson

    RIP OFF -> 1% per annum to store and segregate one’s gold holdings?!

    Koos… 1% is way too expensive a price to pay for 3rd party fully insured vaulting.

    You can use Brink’s Singapore – Brink’s Hong Kong – Brink’s SLC for as low as 20 basis points per year ( 0.2% or 1/5th of what you state you are paying in gold vault storage fees ).

    Readers, 1% for silver storage fees is a bad price, 1% for gold storage fees is a complete rip off.

    Switzerland is notorious for taking advantage of bullion investors via exorbitant storage rates.

    The Singapore Freeport is top-notch, Brink’s Singapore offers vaulting there for 0.2% gold and 0.5% silver. You can get a walk through of the facility here => http://goo.gl/3pJmAs

    • In Gold We Trust

      I rather keep my gold in town (Amsterdam), to be able to get it out fast if I want to..

  • Zhanglan

    Well, Koos – I think you are on for some kind of record with this Post

    In the greater scheme of things, whatever has been driving the price of Gold (upwards and the suddenly downwards) it clearly isn’t the unfolding events in Ukraine – Gold didn’t gap up as things got more heated, and yesterday’s gap down cannot be attributed to anything Putin, Kerry or Nuland have said or done.

    I sense it may take some time for the true import of Yellen’s first FOMC speech to sink in – the more so as it appears to have been poorly delivered; overall, it should perhaps be net positive for Gold, but the market had perhaps been getting slightly ahead of itself and was due for a pullback. I can’t remember the precise arithmetic, but when I did the sums last Friday (right before going out and buying another 10 oz Bar) it seemed that, if the YTD compound rate of increase had continued throughout 2014, we would have ended the year somewhere above the all-time highs above $1900. Now, 2013 may have been a bad year, but there has so far surely not been any discernible “tipping point” which would warrant such a full-on bull phase (and, as above, Ukraine clearly hasn’t provided it)

    Personally, I think the biggest single factor driving Gold during Q2-14 will be the “Weather Taper” – as it finally dawns on people that the US economy really is a basket case, and there are no facile excuses to hide behind. It is abundantly clear that, despite all the huffing and puffing and wet dreams, China isn’t about to implode (and that the price of Copper is clearly being driven by something entirely different from economic fundamentals), and I sense that Gold itself is not really being influenced by “event”-type global affairs as much as by perceptions of the value of the US$. A regional war or two might help rally sentiment in favour of the dollar, and my preferred venues are Nigeria and ((since Crimea) the South China Sea, but those are sideshows to the broader picture of the Decline & Fall of the American Empire, and although I had previously scoffed at direct historical comparisons between the USA and Ancient Rome, I may now start dusting off my copies of Tacitus’ “Annals” and Gibbon and take a second look

Copyright Information: BullionStar permits you to copy and publicize blog posts or quotes and charts from blog posts provided that a link to the blog post's URL or to https://www.bullionstar.com is included in your introduction of the blog post together with the name BullionStar. The link must be target="_blank" without rel="nofollow". All other rights are reserved. BullionStar reserves the right to withdraw the permission to copy content for any or all websites at any time.