wealthcycles.com / By The WealthCycles Staff / January 23, 2013
The global trend of nations “repatriating” their gold reserves from the custodial vaults where it has long been stored continues. The issue, as WealthCycles has reported extensively, is the near certainty that not all the gold recorded to be held in the bullion banks is really there. Much of it has been pledged and repledged against the debt that keeps the world’s monetary system afloat. The more physical gold that is reclaimed and delivered to sovereign treasuries, the less that remains to back up all the pledges. When the chips are called in, many of those who believe they own gold will find themselves holding nothing but pieces of paper. At that point, “price will solve everything.”
As WealthCycles reported almost a year and a half ago, in the fall of 2011, Venezuela was the first nation to demand the return of its gold held abroad. At the time we also quoted Wikileaks, which shared with the world the Chinese administrations’ view on gold.
Since those heady days of unmitigated “recovery,” we have sunk further into “recovery,” and as expected, trust has waned and repatriation of gold has accelerated. We reported on the trend almost a year later saying (again) that “the same gold is claimed by multiple owners.”
Germany, having second-mover advantage, decided to remove the demand pressure of a mandated rate of repatriation (50 metric tons per year), andsettle with bringing 300 metric tons home over almost an eight-year period. Besides doubling the total amount to be repatriated from 150mt to 300mt, Germany also decided to take its 374mt held in the Bank of France back to Frankfurt. We feel the Bundesbank restructured its request without a defined pace of repatriation so as to not “break” the equilibrium in the fractional physical bullion market, should unencumbered gold prove difficult to acquire for the N.Y. branch of the privately held Federal Reserve Bank. In other words, the Bundesbank did not want to pull the pin out of the grenade, setting off a scramble to obtain physical gold. Nations currently repatriating gold:
1. Switzerland – GoldInitiative.ch