Thursday, January 17, 2013

Guy Adami's Take on German Gold Repatriation

You can watch the video her:

Guy Adami is a trader on the CNBC show Fast Money. He's one of the few people besides Santelli who seems to "get it" and understands the world is changing.

because you have to ask yourself, why would germany decide to do this? what do they see that the rest of us don't see that requires them to physically move this gold out of lower manhattan and obviously in paris, as well, back to their borders? and i think that's really the question you have to ask. and the answer is, it can't be anything good. and if you think this is the first time, it's not. because the wacko down in venezuela did it a couple of years ago because people dismissed it -- because he's a wacko. right. if germany is going to be the last, they're not. people will line up and do this. you talk about runs on banks? this could be exactly that.

 when i worked at drexel berner, 1990, and you're going to say, you're a real back job -- i was going to say, you're old. we don't have time. drove the gold of central banks. it was their gold, but we had it. when the bankruptcy hit, everything was frozen. though it was their gold, they had no access to it. beeks can speak to this, as well. so, it's a lot better to have it in your possession than to have it in your possession in somebody else's vaults. the gold market is a little weird.
if you buy a share of stock, it's yours, it's in your account. that's not the way it is with gold. there's not necessarily a serial number on every gold bar that says your name.
is there maybe not enough gold in the bank? yeah, potentially. you sound like a real conspiracy theorist. well, gold is lent out every single day through the london bullion market. it's lent everywhere. so, if you have everybody trying to come after it at onetime, just look at what happened with mf global. a lot of people involved in that, warehouse receipts. took awhile to get that back, so, you need to be concerned. i think the bigger picture is, why is germany doing this now. exactly. they've had it here for 40-some odd years. why today?
the netherlands, actually, have said they want their gold back, too. mystery. for now, it will remain a market mystery. we need to come up with more

He's right about the Netherlands:

 The Dutch gold reserves in the Netherlands must be saved. In favor of the CDA.

Germany suggested recently been a part of his gold bars back. The CDA parliamentary questions to the Minister. Part of the Dutch gold stock is now in the basement of the De Nederlandsche Bank in Amsterdam. Netherlands has 24 billion in gold. Only 11% of it is actually in the Netherlands. The rest is just before the Second World verhuist.Sindsdien is 18% in London, 20% in Ottawa and over half (51%) deep under Manhattan in New York City.

 CDA is a Dutch political party that favors following Germany's lead. I suspect Google translate doesn't do it justice. Perhaps a Dutch reader can comment with more background.

Irregardless, when there's a run on an asset in markets its the first person that makes a move who almost always does best, whether its a run on bonds, stocks or central bank vaults.

Oh, and just to back in history, France once demand all their gold back from the US in 1965. They got it. James Turk comments:

When Charles de Gaulle asked for his gold out of the Federal Reserve, it didn’t take 7 years.  He got it right away.  But back then the gold was in the Federal Reserve because it wasn’t going out in the leasing and lending program that governments have been using in recent years in order to keep the gold price suppressed.

Recently, the Audit Committee of the Bundestag (their parliament),  has been requesting that the Bundesbank actually audit the gold because it has never been audited, and presumably is never going to be audited.  So the Bundesbank is in a tough spot.  The gold is not there, but they have the pressure to audit it and bring it back home. 

The fact that they (Fed) are not sending the gold back right away, to me is just a clear sign the German gold is being held hostage.  It’s potentially a powder keg here in terms of how the gold market is positioned at the moment because there is so much paper (claims on gold) out there, relative to so little physical, that a lot of paper gold is going to be defaulted upon.

It will be interesting to see whether this leads to other central banks also asking for their physical gold.  And more importantly, since there are so many paper (claims on gold) in the various gold ETFs around the world, it will be interesting to see whether the institutional investors are starting to recognize what the central banks are doing, and take some of that GLD and all of the other ETF paper and start saying, ‘Look, I don’t want shares, I actually want ounces.  Deliver me the physical metal.’

There is another point here, Eric, that needs to be considered.  The Bundesbank made this announcement, but I think they were just trying to put it out in the best possible light.  I believe they were trying to stretch for reasons in order to explain why they are still leaving physical gold in New York.

They said, for example, that New York is a trading center for physical gold.  That’s not true.  It’s not been a trading center for physical gold ever since 1933, when the gold was confiscated by Roosevelt and all of the physical gold trading went to Europe.

That’s why in the physical market you talk about London or Zurich.  You never talk about New York because there is no physical gold trading in New York.  It’s just a bogus excuse you see in this announcement.  It’s just more evidence to me the gold isn’t there.  It’s been taken out of the vault and used surreptitiously in order to try to cap the gold price.”

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