Germany to the Fed: We Demand to See Our Gold!
As previously report in Wealth Wire, the German federal auditors' office has publicly criticized Bundesbank, its central bank, saying they should be more pro-active when it comes to taking control and responsibility for the county's gold reserves stored in the United States, Britain, and France.
Now they're encountering the same thing domestic politicians and citizens in the USA have faced for decades. The Fed is stonewalling the Germans and refusing to let them even see the gold they own.
Previous and repeated requests were only partially addressed. Bundesbank staff members were allowed to see the facility in 2007, but they reportedly only made it to the anteroom of the German reserves.
Bundesbank auditors made a second visit in May 2011. This time one of the nine compartments used to store Germany's gold was opened. Only a few bars were pulled out and weighed, but that was it.
Even the details of this minuscule inspection were blacked out in a German auditor's report “out of consideration for the Federal Reserve Bank of New York.”
So far, the 1,536 metric tons of gold, worth about $93 billion at spot prices, has only been backed up by personal assurances.
The Fed's secrecy has warranted increasing suspicion and concern. It is understandable to limit access as much as possible for security reasons.
However, these are high-ranking officials with $93 billion in deposits. The Fed is merely holding the reserves for the Germans and is refusing to allow them to inspect what they own.
The Fed's actions only help validate claims that Germany's gold is long gone or been lent out and that promissory notes -- official “IOUs” -- are sitting in the vault. The Fed has vehemently denied the claims but has worked tirelessly to avoid any form of inspection.
The leaked report from the German auditors has caused grave concern in Berlin about the gold reserves entrusted to the Fed.
Bundesbank board member Carl-Ludwig Thiele cautiously stated, "I would like more transparency on the issue."
However, tame assurances and diplomatic understatements will not suffice. Thiele was summoned to Berlin to provide an explanation to a parliamentary budget committee.
Heinz-Peter Haustein, of the pro-business Free Democratic Party, stated during the hearing, "all the gold has to be shipped back."
The Bundesbank has pledged to bring back and inspect 150 tons of gold from abroad over the next several years. There are also plans to count and weigh the gold bars stored in one of its nine chambers at the Fed in New York.
As to what inspecting a mere 11% of Germany's reserves will actually settle, when a direct inspection will occur and how much of the 150 tons shipped back to Berlin will come from the Fed, no details are available.