So many people saw the following article on Zero Hedge and sent it along that I have to blog about it. In fact, I talked about this story in last Thursday's News and Views from the Nefarium (July 27, 2017), and indicated that I regarded this story as so significant that I would probably write my thoughts out in a written blog as well. Here's the story(and brace yourself, it's very long):
Now, what caught my eye were these paragraphs toward the end:
Again, all the Dutch gold is allocated, and yet DNB declared in a newspaper the bar list can't be published because it would cost "hundreds of thousands of euros" - this has appeared to be an embarrassing statement and truly blows DNB's credibility. If DNB doesn't wish to disclose its bar list, for whatever reason, it would have done wise not to comment at all on this issue.
But why all the nonsense? Time to speculate. We'll run through a few scenarios:
Scenario 1) Publishing a bar list might limit DNB's future flexibility to intervene in financial markets. Currently, DNB hasn't got any gold leased out. But if the bar list would be published, my central bank would be obstructed in future covert leasing activities.
Suppose, the gold price spikes in five months from now. DNB, or multiple central banks in concert, decide to lease out monetary gold in order to calm the physical market. When the leases would be undone several years later, surely the bars returned will not be the ones lend out. Following this scenario, when a bar list is published now it would be inaccurate in a few years time; showing bars that are long gone, and can show up on private gold ETF inventory lists.
If readers question wether central bankers are capable of 'not telling the truth', consider what DNB's Governor said in an interview early 2012 when asked if he would repatriate any gold from the FRBNY. His answer was firm: "No". However, shortly after, DNB started to prepare repatriating by reinforcing its headquarters. A new security barrier was constructed around the compound. DNB confirmed to me this was done to prevent any trucks from crashing the building. Likely, the Governor 'did not tell the truth' in the interview for strategic reasons.
Scenario 2) It's possible the BOE claims to provide its clients gold bar lists and auditing rights, but in reality it doesn't. Meaning, DNB doesn't have a bar list from the BOE that complies with LBMA standards, which forces them to come up with excuses whenever confronted. This scenario could mean custodial gold at the BOE (and FRBNY) has been embezzled.
In 2016 economist Guillermo Barba pressured the Banco de México to publish a gold bar list of the Mexican gold stored at the BOE. In February 2017 Banco de México delivered Barba a list, but it didn't satisfy LBMA standards by far. Surely this was done on purpose, because how the list was distributed can never have been how the BOE keeps it. So prior to distribution parts of the list were edited. Barba pressured Banxico once more and received a new list in March 2017 (click here to download the list). But neither did the new list satisfy LBMA standards! The column in the list that reads "serial number", doesn't disclose the serial numbers physically inscribed on the bars, which makes them uniquely identifiable, but shows the BOE's internal numbering. In my opinion Barba was fooled twice by Banxico. Or Banxico was fooled twice by the BOE.
In July 2014 the Australian central bank (RBA) published its bar list of gold stored at the BOE due to intense efforts by gold blogger Bullion Baron. But alas, the RBA gold bar list does not disclose unique serial numbers (click here to download).
Now, note that in addition to Germany making some efforts just a few years ago not only to audit its gold reserves on deposit in foreign central banks, chiefly the Bank of England, and the Federal Reserve Bank of New York (BOE and FRBNY respectively), a move which was quickly followed by Hugo Chaves in Venezuela, we may now add, as much more recent participants, parties in The Netherlands, Australia, Mexico, and(if one reads a little farther), Ireland.
In each case, what results are "lists that are not lists", without serial numbers, and so on. This is not coincidence, folks; it's a pattern. As the above quotation makes clear, there could be sound policy reasons for this, as outlined in "Scenario 1", but it also provides an opportunity for massive fraud and embezzlement as outlined in "Scenario 2", which has always been my suspicion.
After all, if one is dealing with a central banking system where there is no clear accounting mechanism and an apparently evident but unwritten policy to avoid it, the opportunity arises to use gold over and over again - to rehypothecate it - almost endlessly. And that, of course, is fraud.
But then we read the following paragraphs a little further on:
There is proof FRBNY clients have not been able to audit their gold in New York, at least not in 2007. The German Bundes Rechnungshof released a report in 2012 on the safety of the German gold abroad. Although the report is heavily redacted, on page 10 we read German auditors were not allowed entrance in the FRBNY gold vault to inspect their precious metals, nor were any other clients:A possibility for the owners to physically record the holdings of their gold is not provided in the terms and conditions. According to the FRBNY, it's a long-term practice not to allow the owners to inspect their assets in the interest of a safe working and control process. It has confirmed to the Bundesbank that these conditions for gold custody also apply to all other clients that store gold at the FRBNY.In response to repeated requests from the internal auditors of the Bundesbank, their representatives were given the opportunity to enter the vault system in June 2007 to get an impression of the safety precautions. However, the employees were not given access to the vault compartments, but only to an entrance hall. An examination of gold was therefore not possible.[Four redacted paragraphs follow]
Clearly the Germans were blocked from auditing their metal, and for decades all FRBNY clients had suffered the same fate. Not surprisingly, after the developments between the OeNB, BOE, Bundesbank and FRBNY both European central banks decided to repatriate significant shares of their gold stored overseas. And both repatriate over the course of multiple years, which accentuates the friction between the custodians and their clients. (Emphasis added by me.)
As I stated in my News and Views from the Nefarium last Thursday, this practice has apparently been going on for a very long time, for it recalled a curious incident recorded by the inter-war president of the German Reichsbank, Hjalmar Schacht, in his memoirs. There Schacht recounts a personal visit to the New York Federal Reserve in 1928, where his personal friend, Benjamin Strong, was in charge. Asking to see the Reichsbank's gold deposits while on a tour of the vaults, the staff of the bank, embarrassed, reported that they could not locate it! Schacht then records that he smiled at his friend Strong, and said words to the effect that it was "ok" and that he "knew" the bank was "good for it."
As I have argued in Covert Wars and Breakaway Civilizations, the shenanigans in the interwar period with gold included taking a considerable store of gold from Chiang Kai-Shek's Nationalist China. After these curious incidents, decades later, we saw the emergence of the "Morgenthau" Federal Reserve(d) bonds, allegedly made in 1934, and without Henry Morgenthau's - Franklin Roosevelt's Secretary of the Treasury - knowledge. Roosevelt, of course, confiscated everyone's gold. I've always thought that these were the first initial steps in the establishment of a covertsystem of finance, steps that would be greatly augmented after World War Two. (The Morgenthau "bonds", incidentally, and as I'm sure regular readers here are well aware, have always been denounced by official circles as being entirely fraudulent.)
What all of this suggests to me, in today's high octane speculation, is that this system is being defended by every artifice imaginable. But it may not be possible to do so much longer, for as I also suggested in Thursday's News and Views, and as I have remarked in other blogs and News and Views, there now appears to be a covert economic war taking place between the "Anglosphere" and Europe. In this respect, last year's BREXIT vote and more recent US policy decisions and statements may be a part of this economic warfare between the US-Aglosphere and the European Union(read, Germany). If that is the case, the German audits, studies, and recent comments from Merkel's government - even to the point of threatening counter-sanctions against the USA - appear to be a component of the unwinding of this system.
Whether these speculations be true or not, something is happening, and the central banks of the west appear to be involved in a system-wide practice of evasion and obfuscation at a fundamental level.
That should give everyone pause.
See you on the flip side...