Is there an Economist in here?

[oldno7]

Is so--maybe they can explain why Germany is taking their gold out of the US's hands.

And maybe the potential detriment to the value of a US dollar.

How will other Countries who also have gold in our system, perceive Germany's move?

What if China demands their gold as well?

http://www.zerohedge.com/news/2013-01-14/it-begins-bundesbank-commence-repatriating-gold-new-york-fed

The investor in me, has concerns.

Buy Gold/Short US dollar?

[oldno7]

As an amateur economist I would guess this, And I say this is only a guess:

The Worlds markets are based off the US dollar. By other countries backing the US dollar with gold, they help to maintain a certain amount of value in that dollar.

When Gold is removed from this system, it immediately devalues the dollar.

America and the US dollar has long been the stability in a global market.

By a Country removing their gold, they are stating that they no longer have faith in the Us and/or it's dollar.


I'm just throwing this out, debunk my myth if it is one.

Personally, I think AR15 30 rd magazines are worth more than gold:haha:

[Scott P]

From what I gather, many banks in Germany spread out their gold reserves after WWII and especially after the cold war in case of attack/war. Now the cold war is over and a war with Russia isn't much of a threat. German banks are gathering it back home because investors especially for Bundesbank are crying foul because they want a real inventory of what gold the bank really has. They are also bringing the gold back to Germany from France and the UK, not just the US.


When Gold is removed from this system, it immediately devalues the dollar.

In this case, gold isn't being removed from any system. The gold is just moving together to ease bank investors fears that it doesn't all exist or isn't inventoried correctly.

Anyway, I used to work for a large gold refinery and used to handle millions of dollars worth in gold a day. Our standard gold bars are worth 1.68 million dollars a piece and weigh 1000 ounces or $672,000 a piece for a 400 ounce bar. One 400 or 1000 ounce bar isn't as big as people might imagine because it is so heavy (lead and iron float on gold). One shopping cart full of gold is a whole lot of money.

Many people think of jewelry and other items when it comes to gold, but most of it actually goes to banks and governments.

I'm guessing that this move won't have much effect on gold prices or the US dollar. It will have an effect on German banks though, especially if the inventory comes up short.

I see what you are getting at though; when the US economy is good, people invest in stocks and dollars and when it is bad, people invest in gold. When I worked for the refinery, every time the DOW went down, we all expected our gold prices to rise, which more or less is generally the case. This particular move by the German banks doesn't seem (unless something fishy is going on, which could be possible) to have much to do with dollar investments or stocks, but has to do with easing investors by gathering together and keeping an inventory on the gold.

If Germany or other foreign investors are (and some are) selling off their US dollars or US bonds to buy gold, that is much more concerning. That's not the same situation as this one with the German banks.

[oldno7]

Great Insite Scott!!


Thank You

[oldno7]

What are the chances that the amount of gold they want to claim and move, is not there.

i.e.--was used for other loans, etc?

[2065toyota]

What are the chances that the amount of gold they want to claim and move, is not there.

i.e.--was used for other loans, etc?

Then we can give them California & New York

[oldno7]

Then we can give them California & New York

Do you remember the Indian in "Dances With Wolves".

"Good Trade":mrgreen:

[Scott P]

What are the chances that the amount of gold they want to claim and move, is not there.

I don't know, but it's bank gold and not gold from the US government or anything.

I would bet that a lot of banks/investment banks don't have as much money as they claim (and on the reverse side, I'd bet that quite a few of them have a lot more money than they claim).

[oldno7]

I don't know, but it's bank gold and not gold from the US government or anything.

I would bet that a lot of banks/investment banks don't have as much money as they claim (and on the reverse side, I'd bet that quite a few of them have a lot more money than they claim).

But is it gold controlled by the US treasury?

[Scott P]

If the gold was stolen or "misplaced" then whoever stole it is going to cause quite a scandal. If it were the German bank that made the "mistake" then bank investors (and probably stock investors) will panic. If the United States (or someone in the United States) stole the gold (and it's a lot easier to ditch dollars than gold), foreign investors could (and probably would) lose confidence in storing gold reserves within the United States. It would have to be a high level conspiracy.

Stealing and getting rid of gold bullion isn't as easy as it sounds (you would have to get refineries involved and melt it down into counterfeit bars, etc. [they do have serial numbers and are traceable by impurities]), but theoretically possible. If the gold came up missing, gold prices would almost surely go down, rather than up. It would be almost impossible for a refinery or other buyer to not know that the gold was stolen so they would have to be in on it too. You would need a high level thief ring, refinery, (probably a mine that can "account" for the gold as well), and a buyer (one huge conspiracy) to all be in on stealing the physical gold itself. If that really did happen, then yes, there would be some serious economic consequences. Big ones.

More likely, if there is gold missing, it didn't exist in the first place except on paper. In that case, then the bank is going to have some serious trouble on its hands (which probably happens more than we would like to admit). It would be interested to find out how much gold (or money) in the world exist on paper only.

[oldno7]

If the gold was stolen or "misplaced" then whoever stole it is going to cause quite a scandal. If it were the German bank that made the "mistake" then bank investors (and probably stock investors) will panic. If the United States (or someone in the United States) stole the gold (and it's a lot easier to ditch dollars than gold), foreign investors could (and probably would) lose confidence in storing gold reserves within the United States. It would have to be a high level conspiracy.

Stealing and getting rid of gold bullion isn't as easy as it sounds (you would have to get refineries involved and melt it down into counterfeit bars, etc. [they do have serial numbers and are traceable by impurities]), but theoretically possible. If the gold came up missing, gold prices would almost surely go down, rather than up. It would be almost impossible for a refinery or other buyer to not know that the gold was stolen so they would have to be in on it too. You would need a high level thief ring, refinery, (probably a mine that can "account" for the gold as well), and a buyer (one huge conspiracy) to all be in on stealing the physical gold itself. If that really did happen, then yes, there would be some serious economic consequences. Big ones.

More likely, if there is gold missing, it didn't exist in the first place except on paper. In that case, then the bank is going to have some serious trouble on its hands (which probably happens more than we would like to admit). It would be interested to find out how much gold (or money) in the world exist on paper only.

I guess I'm not being very clear.

More along the lines that, Germany deposits the Gold in the US treasury, The US transfers(via paperwork) the gold to secure other debt.

This would lay 2 claims on a single amount of Gold, all through paperwork.

One(first claim as a depositor to back a monetary system)
Two(Second claim to funds is through collateral used to secure a loan)

No real movement of product

[Scott P]

More along the lines that, Germany deposits the Gold in the US treasury, The US transfers(via paperwork) the gold to secure other debt.This would lay 2 claims on a single amount of Gold, all through paperwork.

One(first claim as a depositor to back a monetary system)
Two(Second claim to funds is through collateral used to secure a loan)

No real movement of product

The Federal Reserve would lose its credit rating unless the German Bank were paid off. More than likely they would be paid off, but someone is going to be in some hot water and it would hit the world news quickly. The government would likely just print off more money for a big payoff before allowing the default to the German bank.

[Byron]

If the duke is going to hit the fan, I personally think it won't happen "overnight"...I think we'll be able to see it coming. I'd say that it'll start with inflation. People will gripe and complain, and politicians will point fingers...but when the government starts laying off workers large scale because they can't pay the bills, that's when it might be time to stock up, so to speak.

In other words, it'll go down just like Greece. However, I think Europe will have to completely hit the skids first...that will be the warning bell. If Germany starts reporting serious economic issues, then we're next in line.

On the other hand, I have a very smart, long time liberal client that insists that none of it really matters (the debt, the budget)...at least not yet. He says we still have a long way to go before it goes over the top. He does admit though, that inflation is likely and the economy will be worst overall for a long time. He's called it a "ten year hole". He's a smart dude, very wealthy...makes his money in real estate. I respect him and I actually hope he's right...isn't it terrible to set your sights so low? Not even funny, really.

BTW, for all his talk of the zombie apocalypse being unlikely, he owns property in Panama...because he says if the world economy were to crash that would be the place to be. The canal is of vital strategic importance. He's an Obama guy all the way, but hedging his bets. We'll see, I guess...