More On the German Gold Situation: Some Light from Deutschland and Canada

Journalist Lars Schall was kind enough to forward this excerpt from one of his articles that is printed below.

I think it 'frames up' the situation with regard to the repatriation of Germany's gold from the US very nicely.

How sovereign is Germany relative to the US? Indeed how sovereign are a number of the western nations vis-à-vis the Anglo-American establishment? The recent search for the elusive Snowden cast some light on the issue of sovereignty.

And as a corollary, how complacent and compliant are the western people to the Banks?  Have the Banks quietly assumed the role of government, without proper accountability to the people?

And secondly, what exactly is the problem with the gold? Is it there or gone? And if it is there, is it already spoken for, in the manner of modern banking rehypothecation? And if so, why?

Jeff Nielson casts some light on that subject of central bank leasing in his recent article here. It is finely reasoned. Short selling is legal, but like many legal things it can become illegal if it is done with an intent to manipulate prices, even with the blessing of entities who, through their association with a sovereign, hold themselves to be above the law and public accountability.

This is the excerpt of Herr Schall's interview. You may make up your own mind as events unfold, but it does seem to parse the subject quite nicely.

Lars Schall: In January this year, the Deutsche Bundesbank announced that it wants to repatriate some of its gold holdings at the NY Fed and all of its gold from the Banque de France. Do you consider it a bit strange that apparently it will take seven years to bring roughly 300 tons of gold from New York City to Frankfurt and five years to bring roughly 370 tons from Paris to Frankfurt? Moreover, the Bundesbank will leave a huge amount of its gold in New York City and London to have in the event of a currency crisis ”the ability to exchange gold for foreign currency […] within a short space of time.” Does this argument convince you?

Norbert Haering: The specifics of the plan for partial repatriation of gold seem to be designed to quash the public discussion about gold storage abroad. For many years to come, the Bundesbank will be able to answer these calls by saying: we are already working on it. And that will work well as a communication strategy. But the truth of the matter is that there is no good reason to store your national gold treasure abroad. The issue and the way in which the Bundesbank got itself tangled up in conflicting statements and justifications during these discussions makes one suspicious that either there is a problem with the gold or that Germany might not be as sovereign a state as we like to think. I do not know which one is true.

Lars Schall, Money Lies Disguise Banking Truths: An Interview with Norbert Haering

I find the refusal of the Federal Reserve to release the national gold of Germany for repatriation for seven years to be one of the most remarkable of recent developments in the world of money. And it is all the more remarkable in that so few are willing to even ask the most fundamental of questions regarding the custodial integrity of the bankers.

It is truly the dog that did not bark.

Stand and deliver. Either the bullion, or the truth.

Note:  You may click on the label 'German Gold' just below to see the other articles I have written about this subject.  In retrospect it seems rather obvious that this smash in gold price is tied to the request for the repatriation of Germany's gold, and the panic that ensued.  Just how depleted or compromised is the custodial bullion held in NY and London?

Gold Daily and Silver Weekly Charts - Curiouser and Curiouser

As you know I reported last night that there was a huge weekly drain of gold from the Brinks vaults.

This follows on a similar drain from JP Morgan's COMEX registered vaults.

There is no increase reported in any of the other COMEX vaults.

The metal bears have three weeks before the first delivery notice day in the August Gold contract.

I believe gold lease rates were negative for a fourth day, which is quite unusual.

As a point of interest, I have included a snapshot of the Café visitors map this afternoon. I think you can see this for yourself in real time by clicking on the map to the left. The clientele changes with the passing of day into night.

This is pretty much all the information that I can see as well, just some simple headcounts with basic locations. There is no need for any more, and it is certainly not worth the trouble or expense of gathering it. The numbers are not large in comparison to many internet sites, but I like to think of the regulars as being rather special, each in their own way.

The participation from around the world is remarkable, and heartening. Asia and the western Pacific will be coming along in a few hours.

The Café is always open, and we keep a light on for you.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - A Record High Close on the SP 500

Stocks were on a tear since late yesterday afternoon when Fed Chairman Bernanke said that the Fed will have to remain accommodative for the foreseeable future.

I believe that the SP 500 turned in a new closing high today.

Techs are appearing a bit stretched.  I would not get in front of this, since after all, its only money.

NAV Premiums of Certain Precious Metal Trusts and Funds

CME Reports That Brinks Has a Seventy Percent Decline in Registered Gold Bullion Supply

Nick Laird of Sharelynx.com informs me that Brinks is 'now being depleted' of private gold holdings.

I am following up to make sure that there has not been an error in reporting.  The CME reports these figures one day in arrears, on a weekly basis, so the chart below is dated July 9. 

I have extended the calendar axis a bit to show the nearly vertical drop in inventory of registered bullion. 

In referring to the registered supply at Brinks, Nick notes that:

"Brinks is now being depleted.   They have gone from 447,199 on July 3rd to 134,525 on July 9th which is a drop of 312,674 oz."

If this is correct, then this is a decline of 70 percent in the gold held in private accounts at Brinks in just one week.

If this is data is correct, it would not be too much of a stretch to say that this has the appearance of 'a run on the bank.'   Again, I will wait to see if the CME issues a correction for this.  It seems almost incredible.

Where is the gold going?  It was not transferred from the registered to eligible category, and does not seem to have been transferred to any other COMEX vault.  I suspect it is flowing East.  And perhaps it is being taken to replace gold that has been rehypothecated from custodial vaults somewhere.

Someone seems to know something.   Rather odd things are happening.

One looks at this and wonders, what next?  

Registered Gold On the COMEX Breaks the Million Ounce Level

Relative to the amount of contracts open the amount of gold held for delivery at these prices is somewhat 'thin' to say the least.  And relative to the global physical markets the amounts held at COMEX are almost too small to really matter.  And yet this is where prices are set.  At times it appears like a game of 'liars poker.'  How apropos.

If there is any good news for the gold bears it is that the first delivery notice for the next active August contract is three weeks away. The open interest for August is now a little more than 197,000 contracts, representing a potential 19,700,000 ounces of gold that could be called.

That a large number of contract longs would stand for delivery is highly unlikely to say the least, since COMEX is large a paper or virtual market place. But at a 20:1 leverage based on current deliverables, the possibility of a demand for delivery in excess of available supply is certainly a possibility.

That would represent an interesting situation. I don't know what would happen, and won't hazard any guesses.   I would imagine that a declaration of force majeure  and a forced cash settlement is most probable, along with hikes to 100% margins, except for privileged insiders.

Specs who get caught short may find the Big Banks, who are now largely covered,  to be rather unforgiving in their demands for any settlement.  I wonder which side the Exchange would favor. 

I am still chuckling to myself about the smirking pundit this morning who suggested that naked shorting of gold contracts on the COMEX would be a nice approach for the speculator to try and ride gold lower.  This was before gold rocketed higher later in the day.  

He who sells what isn't his'n
Must buy it back, or go to prison.

Daniel Drew

Although if you are particularly well connected politically, charges are entirely out of the question. It's nice to know the king.

The way eligible gold is fleeing the COMEX vaults, it also seems that some private holders of bullion may also be concerned about a 'bail in.'