Tag Archives: gold

Germany wants 300 tons of its US gold

Back in November, German politicians were grumbling that they wanted to see their gold deposits being held at the New York Federal Reserve Bank.

Now, they’ve upped the ante and are beginning to cash out, demanding shipment of 300 of their 1,536 tons of gold held in the U.S.:

In what sounds like the setup for a stylish Hollywood heist movie, Germany is transferring nearly 700 tons of gold bars worth $36 billion from Paris and New York to its vaults in Frankfurt.

The move is part of an effort by Germany’s central bank to bring much of its gold home after keeping big reserves outside the country for safekeeping during the Cold War.

Shipping such a large amount of valuable cargo between countries could be a serious security headache. A gold robbery — the subject of such movies as Die Hard 3 and The Italian Job — would be embarrassing and expensive for Germany.

The high-stakes, high-security plan is to move the precious metal — 374 tons kept in vaults in Paris and 300 tons stored at the New York Federal Reserve Bank — to the Bundesbank in Germany’s financial center over the next eight years.

The speed at which the German central bank’s transition from an audit to actaully moving gold has been rather swift. As they are now in negotiations Lufthansa Cargo to move the 300 tons of gold across the Atlantic, they’ve allowed themselves until 2020 to complete the process of being able to store half their gold reserves in the Heimatland (homeland).

By 2020, the Bundesbank intends to store half of Germany’s gold reserves in its own vaults in Germany. The other half will remain in storage at its partner central banks in New York and London. With this new storage plan, the Bundesbank is focusing on the two primary functions of the gold reserves: to build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centres abroad within a short space of time.

Interestingly enough, stashed away in the extended Bundesbank press release was an interesting nugget (translated from German):

Function of Gold – Why do Central Banks hold Gold?
- Diversification
- Universal Acceptance
- Resilience to Shocks (State or currency risks)
- Confidence

This money-like exchange of gold for foreign currencies will likely embolden critics of Ben Bernanke and the Federal Reserve. Bernanke, who was queried by Ron Paul in a 2011 Congressional Committee famously folded on the issue, stated that gold wasn’t actually money, rather “it’s tradition. Long term tradition.”

In Germany, that tradition is alive and well, and demanding the Federal Reserve hand it over.

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Germany wants to see its US gold reserves

Der Spiegel has an article about how German politicians are getting anxious about their gold reserves held by the Federal Reserve:

This demand, which even the bank’s inspectors saw as nothing more than routine, alarmed the Berlin political establishment. Indeed, the partially blacked-out report read like the prologue to an espionage thriller in which the stunned central bankers could end up standing in front of empty vaults in the US.

For decades, German central bankers have contented themselves with written affirmations from their American colleagues that the gold still remains where it is said to be stored. According to the report, the bar list from New York stems from “1979/1980.” The report also noted that the Federal Reserve Bank of New York refuses to allow the gold’s owners to view their own reserves. see more…

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Ron Paul wins inflation bet, makes estimated $300K in one day

Buried at the end of this Nasdaq.com hosted Benzinga article on Ron Paul’s winning stock strategy is the announcement that he may have made a cool $300,000 on Friday, when the rest of the market was running for the exits. Incidentally, this is the most liked article of the day (110 votes and counting), in stark contrast to the second closest article about Apple, which has a mere nine likes.

Given the “max value” of each position and holding it constant to today’s prices, Paul’s portfolio submitted to the Office of the Clerks was potentially worth over $3.5 million. With massive increase in gold prices, gold and silver mining stocks and funds have been performing very well today.

According to the stocks and funds Paul owned back in 2010, his dollar-weighted return today is 7.11%. Increasing his portfolio from yesterday’s close of about $3.5 million to over $3.8 million today. Currently, the S&P 500 is down 1.9%. So, Ron Paul’s portfolio is outperforming the S&P 500 by over 9.0% today.

For the sake of perspective, the most recent “Rise for Liberty” money bomb that began on May 17th managed to net $750K over the course of several days.

An article covering Paul’s portfolio was posted over at The Wall Street Journal last December, where an expert gave a great quotable:

At our request, William Bernstein, an investment manager at Efficient Portfolio Advisors in Eastford, Conn., reviewed Rep. Paul’s portfolio as set out in the annual disclosure statement. Mr. Bernstein says he has never seen such an extreme bet on economic catastrophe. ”This portfolio is a half-step away from a cellar-full of canned goods and nine-millimeter rounds,” he says.

There are many possible doomsday scenarios for the U.S. economy and financial markets, explains Mr. Bernstein, and Rep. Paul’s portfolio protects against only one of them: unexpected inflation accompanied by a collapse in the value of the dollar. If deflation (to name one other possibility) occurs instead, “this portfolio is at great risk” because of its lack of bonds and high exposure to gold.

Unexpected? Huh.

Mitt Romney may have clenched the Republican Party presidential nomination and now spreads platitudes, but when the curtain closes on who truly understood monetary issues in 2012, it’s going to be Ron Paul who is (once again) in the position of simply being able to point to his record and say “I told you so.”

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