Maggie's Farm

Re: Why is Germany repatriating its gold?

The more interesting question is why, assuming the gold is sitting their in the Fed's and French vaults collecting dust as it is supposed to be, are they shipping it home gradually over 8 years rather than say, arranging delivery the Tuesday after next of whatever volume they think is better off under their direct control.

I can understand (especially in the no longer relevant cold war context) why the Germans wanted their gold in NY. I can understand them leaving it there. I can understand them wanting it back. I cannot understand them wanting it back gradually over the next 8 years.

I don't want to go all conspiracy, but given that three months ago the Germans were insisting there was no reason to question the US Fed keeping German gold, and now they want their gold back, but gradually, the only case that does make sense is that the Fed leased out the German gold, and the Germans don't have gold, they have a claim on gold from the Fed, and the Fed has a claim on gold from who ever they leased it to, and that entity most likely leased the gold and sold it. Given that the primary reason gold is valuable is that it is the only central bank asset without counterparty risk, there is a huge difference between owning gold you control, owning gold that someone else controls, and owning a claim on gold. The difference being layers of counterparty risk.

Effectively, the Germans trusted the US Fed. Now it doesn't. The only scenario that fits everything is the Germans want their gold back, but the Fed doesn't actually have it to ship back. So they effectively came to an agreement roughly along the lines of, "I can't give you gold back now, but I will get it back to you over time."

This also adds light to the very odd practive of almost all central banks including the US Fed listing 'gold and gold receivables' together. For any accountants, this is the equivalent of a company trying to list 'cash and accounts receivable' together. That would never fly with any accounting standard, or honest accountant.

I don't know this scenario is true, but it is the only case I am aware of which makes sense with all the facts we do know. Which is terrifying.

They are leaving some gold in NY (none in France, some in London). Which I can understand. The gold they are taking back, they are receiving gradually over 8 years...which is what makes no sense to me.

I can see leaving it in NY, I can see taking it back, I cannot understand (other than this theory) I taking it back in 2019. Why would they say, "I want my gold, sitting in your valuts, back...but 8 years from now"?