Jan 19

Precioussss

- The Germans don’t trust Obama with their gold – and can you blame them? (Telegraph, Jan 18, 2013):

Back in the mid-1920s, the head of the German Central Bank, Herr Hjalmar Schacht, went to New York to see Germany’s gold. However the NY Fed officials were unable to find the palette of Germany’s gold bullion. The Chairman of the Federal Reserve, Benjamin Strong was mortified, but to put him at ease Herr Schacht turned to him and said ‘Never mind, I believe you when you when you say the gold is there. Even if it weren’t you are good for its replacement.’ (H/T The Real Asset Company)

But that was then and this is now. In the eyes of the Germans – and who can blame them? – America has lost its mojo to such a degree that it can no longer be trusted honour its debts, even in the unlikely event that it were financially capable of doing so. Which is why, following in the footsteps of Venezuela’s Hugo Chavez (who may be an idiot but is definitely no fool), Germany is repatriatriating its gold from the US federal reserve. It will now be stored in Frankfurt.

This is an important story. One of the most spectacular con tricks of the last twelve months, pulled off by our political class with the connivance of much of the media, is that we’ve escaped the global economic armageddon which looked till quite recently as if it was going to engulf us. The Euro didn’t collapse; Europe isn’t in flames; QE hasn’t led to Weimar-style hyperinflation; the fiscal cliff has been dodged; Britain hasn’t yet lost its triple A credit rating; the bond markets haven’t gone postal…

Well it may look calm on the surface, but this latest move by the Bundesbank gives us a pretty good indication that beneath the surface that serene-seeming swan is paddling for dear life.

If you want a full analysis I recommend this excellent summary by Jan Skoyles. The scary part is this bit:

Every few months there is a discussion regarding what China are planning on doing with the gold they both mine and import every year, with many believing they are hoarding the metal as an insurance against the billions of US Treasury bonds, notes and bills they hold. Many believe they will issue some kind of gold-backed currency in the short-term and dump its one trillion dollars’ worth of US Treasury securities. Whilst, at the moment the US seem to take their monopoly currency for granted, should the Chinese or anyone else behave in such a manner, the US will need to respond – most likely with gold, which on its own it does not have enough of.

Anyone who thinks this isn’t going to happen eventually should read Peter Schiff’s parable How An Economy Grows And Why It Crashes. If something can’t go on forever, it won’t.

That’s why I’m not embarrassed to admit that what few savings I have are heavily weighted towards gold at the moment. And the Telegraph’s investment experts appear to agree with me.

But if you are going to buy gold it has to be gold you can trust and get your hands on. First, it has to be gold bullion investment (or coins) not “paper” gold (the paper gold market having long since grown detached from the bullion it supposedly represents). Second, it has to be stored somewhere where, if push came to shove, you’d feel confident enough to get it back. At the Real Asset Company, which is where I keep some of my precioussss, they actually offer you a choice of location as to where you’d like to store your gold bullion: Geneva; London; or Singapore.

You could argue, I suppose, that this is a bit over the top. I mean things would have to get pretty bad, wouldn’t they, for any of those safe havens to go tits up. Well, wouldn’t they?

This is one of the tragic dilemmas of being a goldbug. In order for the gold price to go as high as you’d like it to go, things would have to get so bad that life would scarcely be worth living.

Then again, if people as level-headed as the Germans are taking the problem this seriously then so I think should we all.

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4 Responses to “The Germans Don’t Trust Obama With Their Gold – And Can You Blame Them?”

  1. Marilyn Gjerdrum Says:

    First of all, Obama isn’t holding the gold, the FED is. The FED is private, and it is keeping our national debt afloat by printing and paying on the debt nonstop.
    As for the nonsense China is holding billions in US treasuries……this author obviously has not been watching the money as I have. Since 2007, China has been quietly divesting itself of our currency and our debt. At that time, they held close to $5 trillion. No longer. Total foreign investment into US debt and currency (that includes ALL foreign nations) stands at $5.5 trillion. Go to usdebtclock.org for the details.
    Chavez started the beginning of the end of US power with the advent of the Sucre, the first electronic currency that translates the value of each nation’s currency without need to convert to the World Standard Currency, the US dollar. It has been rendered obsolete. Chavez started it with the South American Trade Alliance, China, Russia, Japan, India, Turkey, Brazil and many emerging African nations no longer use the dollar at all.
    We have gone from 100% of all international trade to 60% in the past 18 months. That is when the FED had to start buying up our own debt in huge numbers…..we are quickly losing financial relevance. By this time next year, it will be even worse.
    Obama is the wrong guy to blame. It started with Bill Clinton signing the repeal of Glass Steagle, all the regulations that kept us #1 sterling safe place to put the money are gone. Corruption has taken care of the rest of it.
    The fact it will take the FED 7 years to repay Germany ought to scare everyone. It proves they are lying about the real amount of gold we really have, and where is the money? Answer, gone.
    I love this website, but this author is 3 years behind the times. The days of foreign investment into this country is behind us because there are no safeguards left to protect investors. The Vandals Within (as Lincoln called them) have done their damage.
    There is a currency war going on, and we are going to lose. I don’t understand why people are not paying closer attention to this……it is another huge story being buried by obfuscation issues like gun control. At some point, the virtual reality given Americans by TV and US media will be superceded by the truth……and all hell is going to break loose. If you think things are bad now, wait six months.

  2. Infinite Says:

    @Marilyn Gjerdrum,

    I agree with you and James Delingpole should maybe stick to writing about the global warming scam.

    I found this article worthy to be posted at I. U. because of its first paragraph.

  3. Marilyn Gjerdrum Says:

    There is some trouble afoot. I had a call from a friend who still plays the market, and he told me the Big Boys are selling off like crazy right now. I asked him how he can believe the DOW is truly at 13,600 without strong manipulation by the few fund managers with their High Frequency Trading ( a few individuals buying and selling huge blocks of stocks in less than 8 seconds now makes up over 80% of our volume)………he doesn’t think it makes sense, either.
    It is your website, you get to print whatever you like. Thanks.

  4. “Bits & Pieces” – January 26th, 2013 | jeff-goodall Says:

    […] Germans don’t trust Obama with their […]

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