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Venezuela has its gold, if not toilet paper, but what about Germany?

By: Chris Powell, Secretary/Treasurer, GATA

 -- Published: Monday, 10 February 2014 | Print  | Disqus 

Dear Friend of GATA and Gold:

Responding to suggestions last week from Germany's Bundesbank that it must repatriate its gold slowly from the Federal Reserve Bank of New York for security reasons, possibly at a rate of no more than 1 tonne per week over six years --

-- GATA's friend and consultant R.M. recalls how fast Venezuela managed to repatriate its gold from the Bank of England and other banks over the same expanse of ocean in 2012.

The Bloomberg News story appended here reports on the arrival in Caracas on January 30, 2012, of the final shipment of Venezuela's gold, 14 tonnes carried on a single flight. Bloomberg quotes the president of Venezuela's central bank, Nelson Merentes, as saying: "In two months we've brought 160 tons of gold valued at around $9 billion back to Venezuela."

By contrast, the Bundesbank first planned to take seven years to recover 300 tonnes from the New York Fed. If Venezuela's pace had been adopted, the Bundesbank could have recovered those 300 tonnes in four months, and, if it has been so inclined, could have recovered its remaining 1,200 tonnes at the New York Fed in another 15 months or so.

R.M. calculates that Venezuela's final 14 tonnes were valued at the time at about $774 million, more eggs than most people would want to put in a single basket. But cargo planes, civilian and military, fly over the oceans every day, and civilian and military ships sail them every day with a safety record even better than that of cargo aircraft.

So one must suspect that security really isn't the reason for the slow pace of the Bundesbank's gold repatriation from the New York Fed -- that the reason is that, as fund manager, geopolitical strategist, and author James G. Rickards has speculated, the Bundesbank really doesn't want its gold back from the New York Fed and that the nominal repatriation is meant only to ease political clamor in Germany. Or one must suspect that, as many supposedly paranoid gold bugs believe, the German gold is no longer available, having been overcommitted in the fractional-reserve gold banking system of the Western central bank gold price suppression scheme.

Of course the latter explanation also could be why the Bundesbank might not really want its gold back any time soon. What an embarrassment, scandal, and financial loss the truth might be.

In any case, when it comes to gold repatriation, Venezuela, whose collapsing command economy lately has forced people to rush over to Colombia in search of basic foodstuffs and consumer items, mocks the famous German efficiency. Venezuela may not have toilet paper but it has its gold -- at least until it tries to raise money for toilet paper by leasing its gold to some agent of Western gold price suppression. Are Germany's gold certificates from the New York Fed worth more than toilet paper?

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Venezuela Receives Last Shipment of Repatriated Gold Bars

By Nathan Crooks
Bloomberg News
Monday, January 30, 2012

CARACAS, Venezuela -- Venezuela today received the last shipment of gold bars in an operation that repatriated 160 tons of the South American country's reserves of the metal held abroad, said Nelson Merentes, president of the country's central bank.

Fourteen tons of gold arrived at the Caracas airport today on a flight from Europe, Merentes said. The gold bars were transported in a caravan, broadcast on state television, to vaults at the central bank, where street banners proclaimed "Mission Complete."

"In two months we've brought 160 tons of gold valued at around $9 billion back to Venezuela," Merentes said on state television from the Caracas airport. "Today marks the last day of the mission."

President Hugo Chavez in August ordered the central bank to repatriate the country's gold reserves as a safeguard against instability in financial markets. The South American country, which has the 15th largest holdings in the world, according to the World Gold Council, held 211 tons of its 365 tons of gold reserves in U.S., European, and Canadian banks as of August.

Venezuela will leave about 15 percent of its reserves, or around 50 tons, outside of Venezuela for financial transactions, Merentes said today. He said on Jan. 3 that the country would leave 15 tons of gold in banks outside the country.

A central bank report released in August showed that Venezuela held gold reserves with the Bank of England, JPMorgan Chase & Co., Barclays Plc, and Standard Chartered Plc among other banks.

"This was the largest type of operation to transport this type of metal in the last 15 years," Merentes said. "The repatriation of our gold was an act of financial prudence and sovereignty."

* * *

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