Germany Repatriates 120 Tonnes of Gold in 2014

"When all the inspections had been concluded, no irregularities came to light with regard to the authenticity, fineness and weight of the bars."

- Bundesbank

Big news from Bundesbank released only minutes ago... they've repatriated 120 tonnes of Gold in 2014 with 85 tonnes coming from New York and 35 tonnes from Paris. Conspiracy theorists eat your heart out!

Bundesbank confirmed the repatriation is proceeding smoothly, that operations are running to schedule and that there were no irregularities with the Gold delivered. Furthermore, 50 tonnes of the Gold from New York was melted down and recast into London Good Delivery standard bars.

As I've covered this topic so extensively in the past this won't be a long post (and is likely to be covered in more detail by Koos Jansen on his blog in a short while).

Since announcing the repatriation skeptics have been coming up with any and every conspiracy theory they can dream of in relation to Germany's Gold and why they decided to shift it so slowly (674 tonnes over 7 years) and why only 5 tonnes were moved over 2013 from New York. Here is my coverage of the topic to date:

Is Germany's Gold Repatriation Causing Lower Prices?

Dave Kranzler Gets It All Wrong On Germany's Gold

Krieger & ZH Wrong On German Gold Repatriation

After Zero Hedge misinterpreted the Bloomberg article (see last link of above 3) on Germany's Gold repatriation, they implied there was a change to the schedule (i.e. that they'd stopped)... a narrative that they've continued propagandising over several articles:

Zero Hedge on 23/06/2014 - "Germany appears to have given up entirely in its attempt to recover gold which simply is not there..."

Zero Hedge on 16/11/2014 - "Germany was pressured to keep its gold in the US after a "diplomatic" line of communication was opened, most likely the result of the Fed making it all too clear clear to the Bundesbank not only who runs the show, but what the assured failure to repatriate Germany's gold would mean for "price stability." Which has, for now at least, ended Germany's gold repatriation demands."

Zero Hedge on 21/11/2014 - "Well, today we know the answer: it wasn't Germany who was secretly withdrawing gold from the NYFed contrary to what it had publicly disclosed. It was the Netherlands."

Zero Hedge on 29/11/2014 - "...it is now abundantly clear that the "logistical complications" excuse used by Germany to halt its own gold repatriation program was nothing but a lie to cover up what, as Deutsche Bank explained earlier this month, was an escalation of "diplomatic difficulties" between the US and Germany, one in which Germany has folded, if only for now."

After it was finally revealed in late 2014 that Netherlands wasn't responsible for the entirety of Gold withdrawals from the FRBNY, they were finally willing to admit there was some small sliver of hope that Germany's Gold repatriation might be ongoing:

Zero Hedge on 30/12/2014 - "The question is who: is it now the turn of Austria to reveal in a few weeks that it too, secretly, withdrew some 40+ tons of gold from "safe keeping" in the US? Or was it Belgium? Or did the Dutch simply decide to haul back some more. Or did Germany finally get over its "logistical complications" which prevented it from transporting more than just a laughable 5 tons in 2013? And most importantly, did Germany finally grow a pair and decide not to let "diplomatic difficulties" stand between it and its gold?"

While I'm a daily reader of Zero Hedge, they are a great aggregator of various content and are ahead of the curve on some news events and finance themes, their Gold narratives leave something to be desired. How will they admit they were wrong about the German Gold repatriation over the last 6 months? Probably with a heavy dose of spin and cynicism that Bundesbank is being truthful about the large and unexpected tonnage repatriated from New York.

Beware of sensationalist Gold market commentary. Looks like Germany's Gold repatriation is alive and well and will likely be completed by 2020 as I expected it would be.

---

Every post delivered to your inbox (free), enter your email address:

I'm sharing links and opinions daily on Twitter (@BullionBaron).

BB.

 

Reserve Bank of Australia Audits Our Gold Reserves

Gold Bars Stored at the Bank of England

Two years ago the news was publicly broken on this site that 99.9% of Australia's Gold reserves are stored by the Bank of England in the United Kingdom. Attempts by another blogger, interested in the whereabouts of Australia's Gold, had been rejected by the RBA only several months earlier, "The Bank does not publish the location of its gold reserves."

Decisions like this don't happen in a black hole. Something changed the RBA's mind, between August 2012 and December 2012, on making the location of Australia's Gold reserves public.

From my observation, the RBA tends to follow the lead of other Central Banks, so the decision to release information on the location of Australia's Gold may have been a result of Germany's Central Bank (Deutsche Bundesbank) deciding to do so in October 2012 (interview containing the information originally released is no longer published on the site, but available via Web Archive). Only a month later, in November 2012, the Austrian Central Bank released the location of their Gold reserves, revealing that 80% resided in the UK, 3% in Switzerland and 17% in Austria. Cue the RBA feeling comfortable to release the location details of Australia's Gold around 1 month later.

A recent experience of mine with the RBA further highlighted their desire to follow in the footsteps of other Central Banks rather than to think for themselves. An FOI request I made for the Gold bar list was initially rejected, but after lodging an appeal with the OAIC, highlighting that the United States published a list of their Gold bars details (sans the serial number), the RBA decided to follow suit (Reserve Bank of Australia Releases Gold Bar Details).

Earlier this year I spotted a line in the RBA's annual report indicating an audit had been performed (not something I have seen mentioned in previous years):

A question posed by email to the RBA earlier in the year suggested that RBA officials had performed the audit themselves.

I decided to lodge another FOI request.

"I request that a copy of the following documents be provided to me: All documents pertaining to the audit of the RBA's gold holdings performed during the 2013/14 financial year, as was specified in the 'Operations in Financial Markets' section of the Reserve Bank of Australia Annual Report 2014 ("During the year in review, the Bank audited its gold holdings")."

Two months later (decision on the documents was delayed due to consultation with the Bank of England) I received the following list of documents that would be provided (on payment of fees, which were reduced from an original quote due to the small number of documents that could be released):

And today the documents arrived. Here's what we know...

In February 2013, the Assistant Governor (Financial Markets) requested Audit Department include in its audit program a review of the Bank’s gold holdings at the Bank of England (BoE). The Chief Representative in EU approached the BoE to facilitate this review and in late May 2013 initial planning discussions were held with BoE staff with tentative agreement that the review would take place in September 2013.

The audit included:

• An on-site physical verification commencing 23 September 2013, which will take 4-5 days to complete, assuming two RBA auditors are involved given the proposed scope.
• Inspecting a sample of RBA Gold bars (list to be provided in advance), including checking the details of these bars against the Bank’s inventory list and weighing of the bars by BoE staff using their equipment.
• Randomly selecting additional Gold bars from the inventory list and observing these bars being located and retrieved from their vault (plus verifying the details and weighing them).
• Obtain a high level understanding of the BoE gold safe custody service.
• Continuing discussions for a comprehensive safe custody agreement between the RBA and BoE.

As the above document list shows, those relating to final audit results were not provided. I would assume the audit was successful, but no doubt that would be a highly contested opinion in the Gold blogosphere. The following reason was provided for denying access to the report:

Documents 10, 11 and 12 are drafts of the report prepared by the RBA’s Audit Department detailing the findings of the audit and document 13 is the final of that report.

Denial of access to these four documents in terms of s33(a)(iii) is appropriate because release of the information (which relates to procedures for the conduct of the audit with the BoE and the subsequent results) ‘would, or could reasonably be expected to, cause damage to’ the relationship between the RBA and the BoE.  This belief is soundly held by us on the basis that we are aware that the BoE provides safe custody services not only to the RBA, but also to other central banks around the world.  Disclosure of the information in these documents could damage the relationship between the BoE and its other central bank clients, and by extension (as the source of the information), the relationship between the BoE and RBA.  As foreshadowed to you in earlier correspondence, we consulted with the BoE in relation to these documents and they affirmed the views we held regarding the damage that would be done to the relationship between the BoE and RBA if the redacted information were disclosed.

Denial of access to these four documents is also appropriate in terms of s47E(a) (‘disclosure would, or could be reasonably expected to, prejudice the effectiveness of procedures or methods for the conduct of tests, examinations or audits’ by the Bank) and (b) (‘disclosure would, or could be reasonably expected to, prejudice the attainment of the objects of particular tests, examinations or audits conducted, or to be conducted’, by the Bank).  The documents in question concern the ‘procedures and methods’ within both the RBA and the BoE regarding the conduct of the physical check of a sample of gold bars (for the purpose of conducting the audit).  Disclosure of this information would, of course, reveal those procedures and methods, and by logical extension render them less effective. Also, the ability of the Bank to attain the objects of the audit (which is to reveal whether the Bank’s arrangements are robust and secure) would be prejudiced. These considerations apply to both the audit currently the subject of your FOI request and also any other audits undertaken by the RBA. A key requirement for undertaking a successful audit (of any aspect of the RBA’s work) is that there is as little opportunity as possible for individuals to take steps to predict what an auditor may choose to focus on, and/or how they will conduct the audit. It is self-evident that if such procedures and methods are revealed, then the opportunity to circumvent them is greatly increased.  As s47E is a public interest conditional exemption, I must take into account whether the giving of access is in the general public interest (in terms of s11A(5)).  When deciding whether access is in the public interest, I must take into account the following from s11B(3) and have noted my views in each case:

Section 11B(3) factors favouring access to the document in the public interest include whether access to the document would do any of the following:

(a) promote the objects of this Act (including all the matters set out in sections 3 and 3A); release would be contrary to some sections, particularly sections 2(a) and 3(3)

(b) inform debate on a matter of public importance; the Bank’s gold holdings, while important and of interest to some, are not a matter of public importance generating any level of debate

(c) promote effective oversight of public expenditure; release of the information would not do this

(d) allow a person to access his or her own personal information; the request is not seeking personal information.

Taking into account these factors, and the implications release of the information would have on the Bank’s audit processes, I have decided that it is clearly not in the public interest to disclose the information in these four documents (10, 11, 12 and 13).  Disclosure of these documents would manifestly harm the public interest by way of reducing the ability of the RBA to successfully conduct audits and tests of its operations going forward.

The released documents (mostly a chain of various emails) also suggested the RBA have been invited back for another review in 12 months.

One interesting point from the documents, the Bank of England was emailing clients in June 2013 (those for whom they're providing custodial services) inviting them to audit samples of their Gold:

Click Above Text To Enlarge

However discussions on the RBA audit were already well advanced at that time.

Given that the RBA has followed the lead of other countries to release reserve location details, perform audits and release (some) bar list details, it will be interesting to see whether they go further and follow the lead of the many countries now deciding to repatriate some or all of their Gold reserves...

I'm sharing links and opinions daily on Twitter.

BB.

Krieger & ZH Wrong On German Gold Repatriation

Update: Since I posted the below Michael Krieger has updated his blog post to confirm the repatriation schedule is unchanged. Zero Hedge also posted a follow up article. Both point to the Bloomberg article as being misleading, which I agree with (particularly the title), but still think that anyone reading the article in it's entirety (and is familiar with the German repatriation story) should have picked up that there was no plans to change the repatriation of 300 tonnes from the NY Fed.

---------------------------------------------------------
 
Today Zero Hedge is headlining an article by Mike Krieger suggesting that Germany will stop repatriating their Gold: Germany Gives Up On Trying To Repatriate Its Gold, Will Leave It In The Fed's "Safe Hands".

Unfortunately this is misinformation and they have both either misunderstood or are purposefully misreporting what the Bloomberg article they reference is actually saying.

They are not the first to get it wrong on the German repatriation story, it seems to be common as I have covered previously:

Is Germany's Gold Repatriation Causing Lower Prices?

Dave Kranzler Gets It All Wrong On Germany's Gold

Here is an excerpt from the Zero Hedge article which includes part of Krieger's piece:

Several months after it was revealed that Germany was able to only recover a miserable 5 tons of its gold in all of 2013 (under 10% of the 84 tons it was scheduled to repatriate), Germany appears to have given up entirely in its attempt to recover gold which simply is not there, and as Michael Krieger reports, citing Bloomberg, has decided to keep "it" (by "it" we don't mean the gold since that clearly has not been at the Fed for decades, but merely the paper promises of ownership: for more see China's gold rehypothecation scandal and how the unwind works) at the NY Fed after all. That is to say, in the "safe hands" of former Goldmanite Bill Dudley.

Via Mike Krieger's Liberty Blitzkrieg blog,

Just last week, I published a post titled, Video of the Day – “End the Fed” Rallies are Exploding Throughout Germany, which subsequently went viral. Interestingly, only a few days later we find out that Germany’s very own criminal political class has decided it will continue to store the nation’s gold in New York rather than bring it back home as had been the intention. It’s quite ironic that just as protests against the fascist Federal Reserve are spreading throughout the land, the political class officially decides to keep Germany’s treasure across the Atlantic, in care of none other than The Fed itself.

Both Zero Hedge and Krieger imply there has been a change to the repatriation schedule, but the truth of the matter is that the Bloomberg article only refers to stopping earlier attempts to bring home all of Germany's Gold:

Surging mistrust of the euro during Europe’s debt crisis fed a campaign to bring Germany’s entire $141 billion gold reserve home from New York and London. Now, after politics shifted in Chancellor Angela Merkel’s coalition, the government has concluded that stashing half its bullion abroad is prudent after all...

...“Right now, our campaign is on hold,” Peter Boehringer, a Munich-based euro critics who co-founded an initiative to bring home all of Germany’s gold in 2012, said in an interview.

And there has been NO CHANGE to the repatriation schedule of 300 tonnes from New York & 374 from Paris which will ultimately result in 50% of Germany's Gold being stored at home. This is the schedule that was published by Bundesbank last year.

Germany's Gold Repatriation Schedule

It was confirmed in today's article from Bloomberg that there is no intention to change the schedule:

The central bank met the critics halfway. Last year, it began moving the Paris gold to Frankfurt, pointing out that Germany and France now have the same currency, the euro. Enough of the gold in New York and London will be brought home so half the reserves will be in Germany by 2020.

No doubt there will still be plenty of commentators in the precious metals space continuing to twist the story as they see fit, especially so if Bundesbank remains behind schedule when they publish an update later this year or early next, but in my opinion:

- The NY Fed has the physical Gold

- The repatriation will complete on or near schedule by 2020 &

- There is no conspiracy (missing or leased Gold)

Every post delivered to your inbox (free), enter your email address:

I'm sharing links and opinions daily on Twitter (@BullionBaron).

BB.

 

Dave Kranzler Gets It All Wrong On Germany's Gold

Long term readers of this blog or those who follow my comments on other sites are probably aware that I'm skeptical of the conspiracies surrounding Germany's Gold repatriation. I wrote the following post mid last year:

Is Germany's Gold Repatriation Causing Lower Prices?

Since then it's been revealed that only 5 tonnes of Germany's Gold has been delivered and the conspiracies have exploded in number again. When I see misinformation on the Gold blogosphere I will sometimes take time to correct the writer or provide an alternative perspective to their view. A recent occasion was on Koos Jansen's blog where I refuted (in the comments section) some of the conclusions he'd drawn (although on the whole I think his site is well worth reading). This led to an interesting discussion, which may not have changed the mind of any involved in the discussion, but it did provide a range of views for those reading the site.

Another site I've commented on a couple of times is that belonging to Dave Kranzler otherwise known as 'Dave in Denver' who writes at Investment Research Dynamics (previously his blog was 'The Golden Truth'). He's written about German Gold repatriation on previous occasions and clearly has a different view to mine. A post of his a couple of days ago suggested that the German Gold repatriation request from the US Fed had initially been for a higher amount (than 300 tonnes). I questioned this in the comment section, following which he silently edited the post (which you can read here) and proceeded to reply to my comment with profanity and personal insults:

I won't stoop to the use of profanity or insults to get my view across, but will point out that my comment was factual, while Dave's post and follow up comment were riddled with inaccuracies.

The only real claim that I made was that Germany's Gold repatriation request was initially for 150 tonnes and later increased to 300. This FACT was confirmed in an interview with Carl-Ludwig Thiele (Member of the Executive Board of the Deutsche Bundesbank):

"We specified our initial target in October 2012. In January 2013, we then presented a new gold storage plan and specified a new target that is considerably higher than the first. Instead of only 150 tonnes, we are now transferring 300 tonnes of gold from New York to Germany."

Meanwhile Dave claimed that:

1. "They [Germany] initially wanted more than 300 tonnes [from the United States]". As per above this was silently edited from his post, so we shall assume that he changed his mind on this statement? Dave, please do provide the evidence for this claim or otherwise could you explain why you didn't address it's removal in your response to me?

2. Dave claims further that "it should have been nearly effortless to ship 300 tonnes back to Germany via two cargo flights". Now from a logistics perspective that may be so, but you need to take into consideration insurance (for which a Forbes contributor said a maximum 3-5 tonnes per flight would be possible), not to mention that 2013 was a particularly busy year for Gold refiners ("the capacity of smelters are just limited" wrote one German newspaper). So while it may have been technically feasible for Germany to ship the Gold in two cargo flights, it would have incurred unnecessary risk (in that the Gold would not have been insurable), not to mention making it particularly difficult to have the bars recast without a refinery able to safely store and process the Gold in a timely fashion.

3. In the follow up comment to me he suggests that the German Gold stored in the US originated from Germany: "let alone the original bars Germany shipped over here to keep away from the Russians right after WW2". The reality is that Germany's Gold holdings stored in the US have never been in Germany. From Carl-Ludwig Thiele in the interview previously linked:

"It is not a question of “returning”. The gold is being transferred to Germany for the first time. Until 1998, only 2% of our gold, or thereabouts, was stored in Germany. In the first year, we transported five tonnes from New York. This year, we will transfer 30 to 50 tonnes, or perhaps even more, from New York to Frankfurt. And there is still next year to come."

It's no secret that Germany's Gold in the US wasn't all in 'Good Delivery' form, this is the reason the bars are being refined in Europe during their transit to Germany. The United States built up an impressive Gold hoard, more than tripling their reserves between 1930 and 1940, as they hoovered it up from citizens following the 1933 Gold confiscation. It wouldn't be surprising if some of the Gold bars that Germany acquired in the United States over the 1950's and 1960's consisted of some 90% pure bars which were melted from the coin confiscation.

Anyway, the point here was to highlight that you shouldn't believe everything you read about Gold on the internet (I would even encourage you to double check my claims), especially in relation to German Gold repatriation (is this even the right word given the Gold didn't originate physically in Germany?). There is a lot of misinformation, factually inaccurate claims and emotive wording used by commentators in the precious metals space to try and draw readers to their point of view.

Every post delivered to your inbox (free), enter your email address:

I'm sharing links and opinions daily on Twitter (@BullionBaron).

BB.

 

BoE Tells RBA: Don't Release Gold Bar Details (FOI)

Two months ago I wrote a Freedom of Information (FOI) request to the Reserve Bank of Australia (RBA). Here is the crux of my email:

This is a request under the Freedom of Information Act.

I request that a copy of the following documents [or documents containing the following information] be provided to me: An inventory (bar) list forming the 80 tonnes official Gold reserves (stored with the Bank of England), including details which identify the individual bars by refiner, weight, finesse, serial number and any other identification recorded for audit purposes.

In order to help determine my status to assess fees, you should know that I am a representative of online media and this request is made as part of news gathering and not for a commercial use.

While Gold holdings do fall under the operations of the bank, the position held has remained unchanged and published for well over a decade and I see no risk in providing details of the bars which underpin this position.

The RBA does state they are exempt from the FOI Act in relation to banking and market operations:

The Reserve Bank is exempt from the FOI Act in relation to documents in respect of its banking operations (including individual open market operations and foreign exchange dealings) and in respect of exchange control matters.

I assumed that Gold reserves sit within this exempt area given that it is detailed in the 'Operations in Financial Markets (Reserves Management)' section of the annual reports. However, given that their Gold holdings are public knowledge, as is the RBA's activity in the Gold leasing market, I could think of no logical reason that providing the information would be damaging to the institution or their operations.

The two (primary) responses I received are below.

February 28th (in aid of extending their deadline):

This email is intended to provide you with an update in relation to the processing of your request under the Freedom of Information Act 1982 (the Act).  It is also a formal notice as required under s27 (see below).

In terms of s27, (consultation – business documents) of the Act, the Reserve Bank of Australia is required to consult with a ‘person, organisation or undertaking’ in the event that (they) might reasonably wish to make an exemption contention that the document is exempt from release in terms of s47 (business).  Consistent with the terms of the consultation process provided for in s27, we have determined in writing that consultation is required, and therefore an extension of processing time (by a further 30 days) to enable consultation to take place (s15(6)) is provided for by the Act.

April 1st (today, April Fools?!):

Further to earlier correspondence regarding your FOI request, I wish to advise you that we have received a response from the Bank of England regarding information about the Reserve Bank of Australia’s gold inventory (as held by the Bank of England).

The Bank of England has advised us that it regards the information about the gold holdings that has been exchanged with the RBA to have been exchanged in confidence.  This is consistent with the Reserve Bank of Australia’s own view about our interactions with the Bank of England in relation to the gold holdings (i.e. we also regard our exchanges with the Bank of England to have been made in confidence).

Accordingly, I have decided to deny access to the information sought in terms of section 33(b) of the Freedom of Information Act 1982 (the Act) ‘as information or matter communicated in confidence by or on behalf of a foreign government [or] an authority of a foreign government … to an authority of the Commonwealth’ (being the Reserve Bank of Australia). Further, I have decided to deny access to the information sought also in terms of section 33(a)(iii) of the Act, which pertains to documents affecting international relations of the Commonwealth. I have decided that disclosure of the information sought by you would, or could reasonably be expected to, cause damage to the international relations of the Commonwealth.

So basically the situation is as follows:

99.9% of Australia's Gold reserves, 80 tonnes, are stored with the Bank of England (BoE), news of which first came to light on this site in December 2012.

Petitions to repatriate Australian Gold have garnered public support, but not to a critical level needed for it to become a political issue (you can still sign it here).

Supposedly this Gold belongs to Australia (managed by the RBA), yet when a member of the public requests a list of the Gold bar details (of which revealing would pose no risk that I can think of), the RBA says that they are unable to. Why? Because the BoE (who are merely a custodian of the Gold) said that it needs to be kept a secret.

In the final email, along with the advice that they would withhold the information, I was provided a document which detailed some options should I choose to challenge the decision. Included (amongst various options) are requesting an internal review, review by Administrative Appeals Tribunal, Review by Federal Courts or complaining to the Ombudsman. If anyone has any experience with challenging an FOI decision or ideas on what grounds I could do so then I would welcome your thoughts in the comments below (in a timely fashion as I only have around a month for any challenge). Alternatively you are welcome to email me (address at top right of blog under social media buttons).

Any other opinions or comments on the outcome so far are welcome, as are any thoughts on risks or reasoning the Bank of England may have for keeping the Gold bar details a secret.

Every post delivered to your inbox (free), enter your email address:

Follow me on Twitter. I'm sharing links and opinions daily (@BullionBaron).

BB.