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CANARY IN THE COAL MINE GERMANY REPATRIATES GOLD RESERVES
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This is a canary in the coal mine story for the economy. The canary was kept to warn miners of dangerous conditions in the mine. It would die before the miner would be affected giving them time to get out. You need to know. Once the gold is taken home, it can't be too long before the confidence in the paper dollar economy is totally lost. Like the phrase might makes right, possession is 9/10's of the law of ownership. Gold reserves are going to be pulled close to the treasure chest. This is telling you the canary hit the deck. It cannot be resuscitated. You have a little time left to prepare. The fiscal ceiling is struck at the end of February. If America defaults, the economic tsunami starts. I was hoping to record and livestream tonight. The wires got crossed at the studio tonight. I'll be taping in my own studio tomorrow morning and then uploading for you as soon as we can get it up.
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According to Handelsblatt (in German), the German Bundesbank will suspend its gold reserves in Paris and move them to Frankfurt. Gold reserves in New York will also be reduced. And the bank will present a new plan this week describing the future handling of Germany’s gold assets and where they will be stored.
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German plans to repatriate gold have been in the works for a while. Bundesbank board member Carl-Ludwig Thiele said last autumn that the bank will bring back and inspect 150 tonnes (165 US tons) of gold from New York to Germany over the next three years. Last autumn the Bundesrechnungshof, the German court of audit, criticized the Bundesbank because, with the exception of a perfunctory examination in 2011, it has never itself checked the quality and weight of the 1,536 tonnes of gold stored in New York (as it has for other holdings, by melting down some of the gold bars to test their purity).
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While it is freighted with symbolic meaning, gold plays a minor role in the world financial system at the moment. So why do central banks even have it? Well, until 1971 foreign governments or central banks could show up at the “gold window” of the Federal Reserve and convert dollars into gold. Much of the German gold at the Fed was amassed during that era. Today central banks keep it as a kind of insurance policy against currency collapse. If a country’s money all of the sudden becomes worthless, the central bank could sell some of its gold reserves to buy the foreign currency the country needs to pay the nation’s bills.
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Those bills would most likely be owed to a nation’s largest trading partners, which is why gold reserves are often kept abroad. If the euro ever collapsed and Germany wanted to buy a lot of US dollars, it would be easier and faster to use the gold stored in New York to buy it, rather than get a freighter to ship loads of the metal out of Hamburg to lower Manhattan.
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But looking at the map above, you can also see there is an important symbolic value to where a nation keeps its gold. You tend not to entrust billions of dollars worth of precious metals to the care of unfriendly states. For that reason it’s also a symbol of political and military alliances. During the cold war, for example, Germany also took to storing gold in New York as a way of protecting from any potential Soviet invasion.
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From that perspective, Germany’s decision to start toting gold back to Frankfurt speaks volumes about the corrosion of trust between partners in the global financial system. It’s yet another symptom of how the global financial crisis—and the European government debt crisis that followed—has altered the international ties that served as the foundation of the global economy for decades.
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Breaking News: OMFIF Report Advocates the Official Remonetization of Gold
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In a report published today, the Official Monetary and Financial Institutions Forum (OMFIF), a global organization of central banks and sovereign wealth funds, recommends that gold be remonetized for use as international money, alongside major currencies. OMFIF gives a number of reasons for this but they boil down it to gold's historical role in establishing and maintaining confidence and stability in international monetary relations. Such confidence and stability have dramatically declined as a result of the global financial crisis that began in 2008, to the detriment of the global economy. Falling back on the solid foundation of gold is the best available way to eventually move forward with healthy and sustainable growth in global trade, to all countries' mutual benefit, and to bring an end to the escalating 'currency wars' that increasingly threaten the global economy.
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The link to the report, Gold, the Renminbi and the Multi-Currency Reserve System, can be found here.
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This development is one that I have predicted in some detail, for example in THE BUCK STOPS HERE: A BRIC WALL, and also through chapters 6-10 of my book, The Golden Revolution (Wiley, 2012).
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I believe this is of great historical significance. The economic and financial market implications are substantial. The global 'savers', that is, the countries that export more than they import, are finally forcing the world back onto a more stable monetary foundation that will make it far harder to print money to paper over fundamental economic problems and 'kick the can'. Yes, this implies that profligate governments will find it more difficult to finance deficits in future.
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Globally, interest rates may now be on the way up. Dollars, euros, yen, sterling, etc, will now need to compete more directly with gold for use not only as reserves but as actual international money to be used to settle international balance of payments transactions between countries. And as those currencies find it difficult to compete and one country after another expresses a preference to settle transactions in gold primarily or exclusively, well then the world is going to end up on a gold standard. It is just a matter of time.
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Investors should continue to accumulate gold as it is almost certain to rise in value as the re-monetization takes place. But beware: Risk premia for financial assets are also likely to rise as paper assets in general 'de-rate' and gold, silver and other hard, liquid real assets 're-rate'.
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This tells us the balance of payments system could collapse. They have a backup plan as I have always said GOLD! Obama is supposed to make his move for the guns tomorrow Wednesday. It could get hairy really fast. You need to know. We will tell you. The world moves at a lightning pace. If currencies collapse, armies may move for the gold. BEWARE! STAYED TUNED! PRAY HARD! THE BUCK STOPS HERE!
-http://www.conspiracy-cafe.com/apps/blog/entries/show/22421769-canary-in-the-coal-mine-germany-repatriates-gold-reserves
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