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Germany's gold reserves are held in America


Breadan O'Connor

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Jun 3, 2007
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1,242
I just came across an interesting article showing that the gold reserves of Germany, Europe's largest economy, are actually held in America. Germany's gold is in U.S. custody, Bundesbank confirms

Now I'm economically not very knowledgeable but I wonder if this might have implications for Euro stability in an extreme economic crisis situation.

Suppose for example the Americans refused to return the gold.

Would that cause a collapse of the Euro and a return of Weimar inflation?
 

Aj1990

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Jul 22, 2009
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Why would Germany store its gold in the United States?
 
Joined
Aug 6, 2007
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Sheesh

You obviously never watched any of the Die Hard movies.

Gold reserves of many nations are held in Reserve in New York and it has been that way for many many years.
 

mryoungdan

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Aug 26, 2009
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Recently the German made noises about moving it. Don't worry about it, there are 10000 nukes guarding it.
 

fergalr

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Oct 4, 2006
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Sheesh

You obviously never watched any of the Die Hard movies.

Gold reserves of many nations are held in Reserve in New York and it has been that way for many many years.
Indeed. In fact Die Hard: With A Vengeance has demonstrated that the greatest risk to the New York Federal Reserve is German terrorists. In vans.
 

fergalr

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I wouldn't say so. The euro is the world's second largest reserve currency after the dollar.
 

mryoungdan

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Aug 26, 2009
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Brendan you are touching on a bigger issue that was discussed at lenght last year. Holders of gold have leased it out and it has been sold short, it is called the "gold carry trade". Bit complicated but google it. This recent article gives you the gist

"Forensic Examination of the Gold Carry Trade" by Rob Kirby, FSU Editorial 05/13/2009

The important question is who bought the gold sold by the central banks. This gold was supposed to be owned by the public but they got jack-shythe and some big guys got bargain gold bought with confeitti. You as a great poster will be cheered up by this news.

A huge theft but sure aren't the public used to it and 99% are oblivious to it.

Maybe they will cop on when the mouthpieces who now deride gold start spouting that a global currency backed by gold is now needed.

Then gold will probably jump to 100000 an ounce
 

cactusflower

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Oct 1, 2008
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1,285
Brendan you are touching on a bigger issue that was discussed at lenght last year. Holders of gold have leased it out and it has been sold short, it is called the "gold carry trade". Bit complicated but google it. This recent article gives you the gist

"Forensic Examination of the Gold Carry Trade" by Rob Kirby, FSU Editorial 05/13/2009

The important question is who bought the gold sold by the central banks. This gold was supposed to be owned by the public but they got jack-shythe and some big guys got bargain gold bought with confeitti. You as a great poster will be cheered up by this news.

A huge theft but sure aren't the public used to it and 99% are oblivious to it.

Maybe they will cop on when the mouthpieces who now deride gold start spouting that a global currency backed by gold is now needed.

Then gold will probably jump to 100000 an ounce
So why are they trying to keep the price of gold down ?

.
 

mryoungdan

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Aug 26, 2009
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245
Who are the "they" you refer to. The people who sold the gold short are not the same people who bought the gold long.

Those who lease gold and sell it short needs the price not to rise. This game has not been profitable for a long time.

Those who are short on the comex futures exchange need the price to stay down. They have sold "contracts" to deliver gold in the future and if the price is higher than the contract price they lose. If it is lower the contract is worthless and they pocket the money they got when they sold the contract.

If the price is higher one of two things happen. They must pay the amount higher to the lucky contract owner. The worse thing that can happen is if the contract owner demands that the contract be "exercised". Then the unlucky seller must deliver the amount of gold specified. Some say there is not enough gold available if enough buyers demanded delivery.


Those buying the central bank gold are a different lot. They want the CBs to sell as much gold as possible as cheaply as possible so they can buy it. Those selling the CB gold are acting greatly to their benefit.

Figure out what is happening yourself.
 

Al.

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Joined
Sep 1, 2008
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1,622
I just came across an interesting article showing that the gold reserves of Germany, Europe's largest economy, are actually held in America. Germany's gold is in U.S. custody, Bundesbank confirms

Now I'm economically not very knowledgeable but I wonder if this might have implications for Euro stability in an extreme economic crisis situation.

Suppose for example the Americans refused to return the gold.

Would that cause a collapse of the Euro and a return of Weimar inflation?
You saying that the Bundesbank's gold is backing the euro...? Germany's got that much control over that currency?

Last I heard, the euro was a fiat currency from day one. Any collapse of the euro would have nothing to do with the Bundesbank's gold, but the faith of investors in the euro. (Besides, the US is in no position to "refuse to return" anything.)
 
Joined
Aug 23, 2009
Messages
11
You saying that the Bundesbank's gold is backing the euro...? Germany's got that much control over that currency?

Last I heard, the euro was a fiat currency from day one. Any collapse of the euro would have nothing to do with the Bundesbank's gold, but the faith of investors in the euro. (Besides, the US is in no position to "refuse to return" anything.)
The euro is backed partly by the dollar
 
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