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

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

#191

Post by ars »

21 wrote: post #35

> Switzerland is a small, neutral country without a serious army. They would hardly refuse to hand the gold back on request. This guy is suggesting that Germany could invade Switzerland if they refuse to give back their gold, so this is a good reason to keep it there. I'm pretty sure such action would be illegal under UN rules, ie: you can't invade a country because they don't give you back your posession. And Switze…

> I'm pretty sure such action would be illegal under UN rules, ie: you can't invade a country because they don't give you back your posession.

So?

Since when would that make a difference to anyone?

The concept of UN "laws" or "illegal" just makes me laugh. The UN has treaties - countries agreeing to limits on their own behavior. The UN is not a government, and does not enforce any law.

So yes, you can just invade a country because they don't give you back your possession. Other countries might get mad at you, but the UN is quite irrelevant.

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

#192

Post by ars »

mamon wrote: post #131
sgt101 wrote: post #129

I think that at 41k per kilo one tonne of gold is worth $41m. 1300 tonnes of gold is therefore worth a bit more than $51bn, which is a lot, but approximately 1 year of the UK's defence budget, so in the scale of things not really all that much. Now, this would mean that (given that Germany is a big economy) there would be what... 20 times that amount of gold available to back a gold currency - so about $1trn. I think…

Gold is valued at only $41k per kilo because central banks managed to convince us that we don't need it to back up our currency. If China really created gold-backed currency then gold price would skyrocket, increasing at lest 6 times (that's how much inflation we had since 1971, when the gold standard was abandoned)

> because central banks managed to convince us that we don't need it to back up our currency.

No, it's because we switched to much more productive things to back up our currency. Our currency is backed by the willingness of our citizens to work and the value of the land and other possessions.

The currency is stabilized by not printing more than what there is to back it up, nor less.

Gold is a terrible thing to use because you can't create more of it as the economy grows.

Don't think fiat money is not backed by something - it most definitely is.

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

#193

Post by sandworm101 »

comicjk wrote: post #132
sandworm101 wrote: post #120

Earlier quoted context omitted.

Gold is no longer tied to power. Real estate now defines who is to be king. Look to the wealth funds of the middle east. They dont trade oil for gold these days. They buy land, the real international currency. The man with the most diversified land across many countries is king.

In the past, diversified land holdings across many countries haven't been a great strategy, because they're too difficult for the foreign owner to hold on to politically and military. Land is expensive to protect.

>> Land is expensive to protect.

So you use your wealth to ensure that local authorities protect your interests. You setup people in power, vassal kings, to protect land interests above all others. Who is in charge now? Who are their friends? Do they own property scattered all over the globe? Do any of them care about a box of gold?

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

#194

Post by mcbits »

BatFastard wrote: post #186
maxander wrote: post #181

Earlier quoted context omitted.

Even if the Fed "lost" some of the gold (which would be a hilarious story), does it really matter? There has to be some liability clause in whatever agreement put the gold in the Fed's hands to begin with- if they lose track of Germany's property (or claim to have, or whatever), they're obligated to pay Germany back for it. Revealing that would be a gigantic embarrassment, sure, but primarily only concerning the Amer…

1200 tons of gold is worth around 44 Billion, a trivial amount of money as far the US government is worth. So the idea that it would be stolen by the government is ludicrous.

$44 billion current US dollars worth of gold can back 10 to 100 times that amount of "money" (depending on how far you stretch the definition of money) in a fractional reserve banking system. It's no trivial amount.

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

#195

Post by wintersFright »

ComradeTaco wrote: post #188
trhway wrote: post #182

Earlier quoted context omitted.

You've never been through a country scale crisis.

In a country scale crisis people would be selling all their valuables for fire sale prices to pay for essentials, including gold. A fiat reserve currency, like the Swiss Franc or the Pound would be easier to use, less likely to be stolen and more valuable then gold shavings.

Gold isn't going to save you from a zombie apocalypse, nor can you eat it. It will however transport your wealth from one side of a currency crisis to the other while retaining value - as opposed to plastic notes with arbitrary numbers of zeros printed on them.

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

#196

Post by ComradeTaco »

School-Cotton wrote: post #189
ComradeTaco wrote: post #172

Earlier quoted context omitted.

If we're in the kind of crisis where all fiat money is useless, gold will be useless too. The only kind of thing that will have value are things that help you survive. A crate full of gauze pads and bandaids would be better than a whole stack of gold bullion in that situation.

There is quite a continuum between fiat currency collapsing and the sort of zombie apocalypse you describe. Fiat currency has become worthless many times in many countries without a total breakdown of civilization to the extent that gold no longer has any value (e.g., Argentina, Yugoslavia, Brazil, Weimar Germany, post-revolution France, ...)

I always imagined that if you were stockpiling large amounts of gold in your home it was more of a survivalist thing than a risk management thing.

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

#197

Post by sandworm101 »

b5u wrote: post #123
sandworm101 wrote: post #120

Earlier quoted context omitted.

Gold is no longer tied to power. Real estate now defines who is to be king. Look to the wealth funds of the middle east. They dont trade oil for gold these days. They buy land, the real international currency. The man with the most diversified land across many countries is king.

Land may be valuable at the moment, but that will likely change in the future when fresh, clean water will be more scarce and climate changes will render parts of Earth uninhabitable. I'd recommend you reading this interview with M. Burry (guy who foresaw the real-estate crises in '08): http://nymag.com/daily/intelligencer/2015/12/big-short-geniu...

>> fresh, clean water will be more scarce and climate changes will render parts of Earth uninhabitable.

If one wants to get all conspiracy-minded: Vancouver, Toronto ... not the warmest of cities. Neither are they in red zones for rising sea levels. And, being in Canada, have more fresh water per person than most anywhere on the planet.

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

#198

Post by thinkloop »

mcbits wrote: post #194
BatFastard wrote: post #186

Earlier quoted context omitted.

1200 tons of gold is worth around 44 Billion, a trivial amount of money as far the US government is worth. So the idea that it would be stolen by the government is ludicrous.

$44 billion current US dollars worth of gold can back 10 to 100 times that amount of "money" (depending on how far you stretch the definition of money) in a fractional reserve banking system. It's no trivial amount.

That's already built into our understanding of what "$44b" is. If not, then all values should be inflated by 10x, which would keep the $44b at the same ratio of the total pie - which is to say nothing.

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

#199

Post by thinkloop »

hueving wrote: post #162
easilyBored wrote: post #158

Earlier quoted context omitted.

The same principal applies to states, and that's why they shipped the gold to USA to begin with...to save it from the Russians. Gold is for when that stuff hits the fan: no one will take your paper money or if they do, you'll need 50lbs of trillion billion dollar bills to buy a loaf of bread. By noon the price will double. If you're net liquid worth is well into millions, why not have a few hundred gold coins laying…

Gold coins so people can steal them from you in this doomsday scenario? Gold is about as useful as monopoly money when facing a gang of people that will just kill you and take whatever they can.

With gold, you will be the gang.

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

#200

Post by slv77 »

mannykannot wrote: post #110
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.

This puts me in mind of the rai stones of Yap, and particularly of one that was lost at sea, but which continued to be used in transactions because of a general agreement that it still existed and so its ownership could be recognized. I have lost track of the clearest version of this story that I have seen, but it is mentioned in the 'Transfers by Clearing' section here: http://www.wondermondo.com/Countries/Au/Micron…

One funny thought down these lines is that after 50+ years the gold in the vaults has been cold welded together. Gold is soft, malleable and heavy and after years maybe it's effectively a solid chunk of metal.

Would explain the logistic challenges and the need to re-melt the bars if they had robbed chiseled apart.

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