Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Why Deutsche Bundesbank had to promise to leave 1200 tons of gold in New York

norberthaering.de

Post reply on HN
Print view View original

81–90 of 238 posts

Re: Why Deutsche Bundesbank had to promise to leave 1200 tons of gold in New York

#81

Post by VarFarYonder »

mdekkers wrote: post #43

...the US will allow central banks to repatriate as much gold from New York as is absolutely necessary to allow them to have half of their gold at home.... What the actual fuck? Why do we need permission from the US to have our own gold?

States tend to act like psychopaths. It should come as no surprise that the US doesn't honor the original agreement if it's in their self-interest to not honor that agreement.

I'd be interested to know how the US came to hold the gold for Germany in the first place. Because it seems to me that Germany's mistake was to swap the gold for a promise.

Re: Why Deutsche Bundesbank had to promise to leave 1200 tons of gold in New York

#82

Post by pg314 »

ar0 wrote: post #41
mannykannot wrote: post #26

Earlier quoted context omitted.

That argument is countered in the article. I will leave it as an exercise for the reader to read it.

No, not really. The "nothing is amiss" argument goes like this: a) Until 1971, gold was regularly moved between central banks. The United States exchanged U.S. Dollars against gold and Germany made use of this. Obviously, it was easiest to just leave the gold where it was bought - in the United States. This was also where a lot of other central banks had (and still have) their gold, so it also made exchanges easier.…

> I also find it a bit strange that they seemed to go through a lot of effort in melting these bars to make sure no one can inspect the originals.

You're inferring a motive. The stated reason is that those bars didn't conform to the London Good Delivery specification.

Re: Why Deutsche Bundesbank had to promise to leave 1200 tons of gold in New York

#83

Post by mannykannot »

ar0 wrote: post #41
mannykannot wrote: post #26

Earlier quoted context omitted.

That argument is countered in the article. I will leave it as an exercise for the reader to read it.

No, not really. The "nothing is amiss" argument goes like this: a) Until 1971, gold was regularly moved between central banks. The United States exchanged U.S. Dollars against gold and Germany made use of this. Obviously, it was easiest to just leave the gold where it was bought - in the United States. This was also where a lot of other central banks had (and still have) their gold, so it also made exchanges easier.…

These may be reasonable propositions (or were when they applied, especially in the cases of a) and c)), but if and only if one assumes the deposits are effectively on call, and apparently they are not.

Your last sentence gets close to the key issue: if there is an innocent explanation, why have the parties who could remove the doubt over that explanation stopped talking about the issue?

Re: Why Deutsche Bundesbank had to promise to leave 1200 tons of gold in New York

#84

Post by dualogy »

owenversteeg wrote: post #73
phyalow wrote: post #7

Earlier quoted context omitted.

I'll just leave this here: http://www.zerohedge.com/news/2013-03-02/why-jpmorgans-gold-...

As fascinating as that is, what I find to be even more interesting is that the total wealth in that insane concrete-bubble structure built to withstand atomic attack... is just over a billion USD. That's nothing in the scale of global wealth. And that's the largest gold vault on Earth. Pretty disappointing if you ask me. The entire gold vault (one million ounces of gold) is worth about a third of one percent of JPMor…

Well, that's a telling finding. It's just "telling" different conclusions about "global wealth", "JPMorgan's market capitalization", and gold's "fair" value to different minds ;)

The only thing that's safe to assess about that bullion is that for all human intents and purposes, it'll outlast infinite numbers of generations, and the other stuff --- won't. That alone tells of the impossibility and futility of putting any sort of currency number on it, in fact, any figure will do --- $100 or $100k, whatever the world perceives will be equally valid and equally workable. Doubly so since "you can't eat it", it's in the final consequence not broadly "needed at any price" for industry, and the actual supply for its prime purpose (preserve some proxy of wealth through the generations) need not be increased, and every physical ounce above or below ground is in extremis already owned by someone.

Re: Why Deutsche Bundesbank had to promise to leave 1200 tons of gold in New York

#85

Post by throwanem »

tomohawk wrote: post #34

When we build systems, we run tests to see if they actually work the way we think the should. We verify, as independently as possible, because it is important. What would happen if we went to evidence based banking instead of just taking the word of people with obvious ulterior motives.

Somebody'd figure out how to game a blockchain, or just render it irrelevant. You cannot engineer around human ingenuity. But it's always so much fun to watch people try.

Re: Why Deutsche Bundesbank had to promise to leave 1200 tons of gold in New York

#86

Post by Iv »

21 wrote: post #44
erikb wrote: post #37

Earlier quoted context omitted.

As Russia-Ukraine has shown you can take stuff by force without creating big scale war. And remember how Hitler just went state shopping before there was a war? The thing about war is that most party's don't really want it. So sometimes it's possible to grab some advantage that theoretically should result in war.

So you are saying that Germany would begin military action against Switzerland for $50 billion worth of gold (rough value of 1000 tons of gold). How much damage to the Euro and to the European stock markets would such action cause? Not to mention other costs

I think that if Germany tries again to invade a neighbor, EU is over.

Re: Why Deutsche Bundesbank had to promise to leave 1200 tons of gold in New York

#87

Post by mannykannot »

erikb wrote: post #38
patrickk wrote: post #2

Bloomberg has a very interesting article on this topic also: https://www.bloomberg.com/news/features/2015-02-05/germany-s... Reading in between the lines, it seems as if a good chunk of gold has gone missing and there is an attempt by both sides to save face.

Ah that reminds me so much of Game of Thrones were this one dude builds all his power and businesses based on an empty vault and a promise of what is inside.

There have been some recent analogs in real life. Mostly in the tech. industry, but also in luxury real estate.

Re: Why Deutsche Bundesbank had to promise to leave 1200 tons of gold in New York

#88

Post by pg314 »

joosters wrote: post #60

If there really is a doubt that the US holds less gold than it claims, surely this would be reflected in the pricing of US-held gold? Yet I've never heard that such a price gap exists. What am I missing?

You're not missing anything. It's just another conspiracy theory. They'll claim that the gold price is being kept at an artificial level.

Re: Why Deutsche Bundesbank had to promise to leave 1200 tons of gold in New York

#89

Post by dualogy »

erikb wrote: post #36

> Gold is money, which is based on physical ownership, not on trust in the willingness and ability of another party to honor their promises. If you have gold, but you do not have it under your control, it is almost pointless to have gold. Really digging this one. That's why I proactively not listen to investors/consultants who suggest to buy some gold derivates for savety purposes. In other regards: What's the point…

Well, for one he has some books to sell ;)

Re: Why Deutsche Bundesbank had to promise to leave 1200 tons of gold in New York

#90

Post by dualogy »

rwmj wrote: post #10

Why do countries bother to hold gold? Wouldn't it be sensible to sell as much of it off as possible? (I'm asking like "ELI5" because I'm sure there is a reason)

> Why do countries bother to hold gold?

Nowadays, a chief reason is "because the others do, too" ;) it is also a brilliant instrument to stabilize/tweak currency fluctuations without buying/selling "too much" of another country's currency/debt or more generally, any third party's nominal promises/future obligations. It may prove exceptionally useful in future defence of a given currency's (global) purchasing power. Gold is the only asset that can accept any currency valuation (in both directions) without some broad group or other of real people, producers or consumers, complaining loudly (other than a tiny group of hobbyist speculators) while also showing a multi-millenium track record of durability, also in value, on a planetary scale and immunity to EMP or endless forks or Nixons. It need not perform any specific role 99% of the time, it need not even "perform" nominally at all, on the country scale (CB scale / oil wealth scale / giant old-family-wealth scale) it just needs to sit, tight and guarded, through changing times and the rare geopolitical/monetary transition or other.

Post reply on HN