If gold is not a worthwhile investment, why is Bank of England and New York Fed asking central banks to store it in their vaults? Why can’t Bank of England or New York Fed take the 200 tons of dematerialized (paper) gold that RBI bought from IMF? International bankers don’t want to deal with their own junk IOUs?
Exactly two years back, there was a coordinated global news blitzkrieg against gold. Such PR campaigns usually use some real-world event and for this one Goldman Sachs’ short position on gold was used. Suddenly every pundit in pink papers around the world started saying that the era of gold was over, gold had lost its lustre, it was a poor investment and blah… blah… blah… Goldman coyly reversed its position but it hardly caused a ripple. (http://www.foxbusiness.com/news/2013/04/23/goldman-tells-clients-to-close-bets-on-lower-gold-prices/)
The blitzkrieg was necessary to prevent a breach of the psychological $2000 an ounce barrier – something that would have caused the US dollar to collapse.
Meanwhile, the Indian Rupee was sliding against the USD and there were newspaper columns and editorials and media interviews about how gold was bad for India. (In the corrupt money system that we have now, US dollar will rise even if American economy is not doing well and sliding into debt and Indian rupee will lose value even if it is doing okay! US debt-to-GDP is now over 100% and its treasure bills are not even rated junk!)
“Money invested in gold just disappears from the economy,” they said. What about money invested in electronic gadgets that we import by the billion and pollute the environment? Don’t they suffer 100% depreciation? There is no import ban or duty on that. People have always known that gold retains its value and could be used to tide over tough times. No, these guys weren’t aware of that. “Gold is BAD!” Like petroleum, which is extremely energy-dense, gold is extremely value-dense. You can hold a small quantity of it and it will still hold a larger value with no risk of depreciation.
Globally, there is a shortage of gold, which is not being acknowledged. Gold stored with Bank of England and New York Fed by central banks from around the world has been surreptitiously sold to make up for the deficit.
BIS asked Central Banks were asked to replace gold with stocks!
To reduce the demand for gold from central banks, Bank of International Settlements quietly amended the Basel 3 liquidity list for banks worldwide eliminating gold and replacing it with stocks! (http://www.forbes.com/sites/greatspeculations/2013/04/17/gold-will-get-the-last-laugh-on-central-banks/)
Central banks shipping gold to Bank of England
When the RBI claimed it bought 300 tonnes of gold from the IMF, it was not real gold but DEMATERIALIZED GOLD, or just IOUs. Hidden in this info box is the only published acknowledgement that I could find that the 200 tons bought by RBI was just dematerialized gold.
Meanwhile, operatives such as former greencard holder and RBI governor Raghuram Rajan had tried to mop up gold by ordinary Indians and ship it to Bank of England, ostensibly to improve the reserves quality! (http://economictimes.indiatimes.com/news/economy/policy/reserve-bank-of-india-seeks-quotes-to-swap-gold-to-improve-reserves-quality/articleshow/37650780.cms).
RBI fooled everyone by claiming it bought over 200 tons of gold from IMF. It bought paper gold or dematerialized gold instead. The news items says “More recently, in 2009, it bought gold from the International Monetary Fund in dematerialized form.”
I read in BusinessWorld or somewhere that RBI interestingly stores (some/all of?) its physical gold reserves in the vaults operated by HSBC in Bombay.
Gold leaving vaults and refineries from the West at an unprecedented rate
As gold seems to be leaving refineries in Switzerland faster than could be replaced, Indian government had tried to offset gold imports by trying to create domestic supplies in the name of government-issued gold bonds. (http://www.thehindu.com/business/Economy/swiss-gold-exports-to-india-cross-rs-12-lakh-crore/article6823458.ece)
New York Fed refuses to keep its promise – won’t deliver gold!
New York Fed told Germany that their gold would take seven years to ship and gave it only 5 tons. Germany obediently agreed to continue keep its reserves in New York. This image is part of a bigger illustration create by www.VisualCapitalist.com.
New York Fed melted Germany’s gold without permission
Central banks hold their gold in New York Fed’s vaults on the promise that the gold would be untouched but New York Fed has acknowledged that it had melted Germany’s gold bars. This proves that gold stored by other countries had been melted to be sold on the open market.
“The organisational preparations were very time-consuming since the required agreements and contracts are voluminous and detailed,” the Bundesbank’s Thiele said in a statement four weeks later. Additionally, some bars in New York had to be melted and recast. To Boehringer, the recasting was the ultimate red flag. It meant any trace of original serial numbers had been wiped out. “Their untouched existence since the 1960s is no longer provable,” Boehringer says.
The Bundesbank explained that it recast the bars because they hadn’t met the “London good delivery” standard. Such gold is at least 99.5 percent pure and comes in bars of roughly 400 troy ounces, or 12.44 kilograms. They must bear certain marks, such as year of manufacture, and have sides that measure within specified dimensions. The gold in American vaults is a mix of London good delivery and lower-quality bars. Boehringer figured maybe the German bars had oddball weights and purities and needed to be recast.
He did some quick math on the Bundesbank’s own numbers, dividing the total weight it had disclosed for New York holdings by the number of bars it listed. It came out to about 12.5 kilograms per bar—same as London good delivery. If the central bank’s published numbers were right, Boehringer says, “There would not be a reason to melt them, but they did.”