by Mufti Mubashir
01 May 2013
History says Gold goes to where it is respected.
98 percent of Gold at
Federal Reserve Bank of New York is owned by central bank of
foreign nations and 2 percent is owned by United States of America.
Germany holds more than 3,000 tons of gold
bullion, which represents more than 75 percent of its foreign currency
Germany build its gold reserves as trade surplus after Second World War.
Much of world’s gold is stored in vaults underneath central bank, eighty
feet below street level across the bedrock of Manhattan at New FED, and
ancient vault’s of Bank of England. The vault was built in early 1920 and is
in the basement floor of building.
The total value of the New York Federal
Reserve's gold bullion trove of 6700 tones is a staggering $368.5 billion.
Germany accepted payments in the form of gold for its goods and services it
sold overseas. During the Cold War, Germany moved large amounts of its gold
holdings to the United States, the United Kingdom and France in order to
protect its reserves from the growing Soviet military threat.
Now Germany is in the process of moving that
gold back within its border. Holdings in vault increased when United States
of America suspended convertibility of Dollars into gold for foreign
governments in 1973.
The fact that
Germany is recalling some of its gold back
is a serious blow to the Federal Reserve. Whatever the motives German
central bankers may have, the fact of the matter is that this sends a sign
of no confidence in the FED’s services. This has triggered a wave and other
nations are in a bee line.
Germany's decision to repatriate part of its gold has sent a cold shiver
into the gold and
forex markets. This made people panicky in
forex markets and Gold prices plummet in international market.
The German Federal Court of Auditors has recently called for an
official inspection of German gold reserves stored at the New York Federal
“because they have never been fully
New York FED acts as the guardian and custodian
of the gold riches on behalf of account holders, which include the US
government, foreign governments, other central banks and official
Federal Reserve is not an American 'government' bank but
is an amalgam of twelve private banks.
The FED runs its operation ‘with other people's gold’, using this huge
treasure as ‘collateral’ to back its various financial undertaking. United
States banks on sustaining the US Dollar as a global reserve currency.
America wants to maintain its hegemony as it holds the gold bullion of
almost 100 countries.
China and Russia are dumping their US Dollars and building their Gold
reserves, and have boosted their domestic production. David Marsh,
chairman of think tank
OMFIF, foresaw growing importance of gold
due to rise of China’s Yuan as an alternative to Dollar.
Why is Germany repatriating its gold?
It is believed that FED does not have the gold
to return as gold held for governments is usually not allocated. Central
bank monetary reserves should be held in an allocated format to evidence to
whom they belong.
There have been reports that FED has siphoned out the gold as Gold held for
governments is not “allocated.” Ordinarily, central bank monetary reserves
should be held in an allocated form to identify the country to which it
Conversely speaking, in case the FED fails,
foreign central Bank holding their Gold would be unsecured creditor.
The three central banks,
Bank of England
Banque de France,
...have seven years for maturation of lease, and
after that they have to enter gold market as buyers of gold.
In common parlance, the function of gold reserves is to ensure the flow of
trade in critical times, it is the last remaining asset a nation has which
is acceptable to overseas creditors. It is money in Extremis as
pointed out by Greenspan.
We are all aware of confiscation of gold in
1933, with the stated objective of expanding money supply through
devaluation of dollar. This confirms the move of gold to the monetary
Devaluation of dollar was done in terms of gold.
Dollar was not devalued against foreign currencies. Confiscation of private
Gold has become a possibility in the future also. The result was Gold was
trading outside of US in equivalent of $20.
It is the fear of future crisis behind the move to take back gold to
According to the current situation, Dollar will
weaken and gold will come back with a vengeance.