For the last 2 years or more, “Euro bashing” was all the rave. Every time the Euro would pop its head up above water, a rating agency would conveniently (and I must say in timely fashion) downgrade one of their sovereign states. Don’t get me wrong, there are basket cases throughout Europe but you must ask yourself why the downgrades always seemed so “timely?” I as many others have, pointed to this bashing as a way to turn the spotlight away from the U.S.. It worked and quite well I might add with the exception of the summer 2011 when the U.S. squabbled over the unlimited debt limit.
The Euro is again bumping the 1.33 level at nearly one year highs versus the Dollar and the spot light is pointed squarely in the direction of the U.S.. We still have the so called fiscal cliff, sequestration and debt ceiling issues to address. They haven’t gone away, won’t go away and fundamentally cannot go away because in essence they are part of a bankruptcy proceeding when looked at with “reality glasses” on. Of course, Europe knows full well the “timing” of past downgrades and op ed pieces that knocked them down and then kicked them for good measure. Enter the recent news of Germany repatriating their Gold!
As far as I know, BUBA (The Bundesbank) has not confirmed or elaborated the story released Monday that BUBA would begin repatriating Gold. And yes, if true this has ALL the hallmarks of distrust amongst central banks… with very good reason! Assuming that the story is true and Germany does proceed with recalling their Gold, this action must be seen for what it is. The obvious is the “distrust” issue but on a more subtle note… the timing? As mentioned above, the U.S. has an action packed few months ahead with its fiscal and taxation issues.
With the stage set as it is, can the timing of Gold repatriation be seen as anything other than an “answer” to the previous Euro bashing? Is Germany adding pressure to the “cooker” by taking these actions before rather than after our foolish fiscal debates? Could they have waited until after the smoke cleared? And curiously, why are they only requesting smaller amounts to be shipped annually? Is the total stash just too big, bulky and heavy to transport in one year or are they just being “polite” and not asking for it all at once because they know it isn’t there?
Whatever the answers, it is clear that central banks don’t have 100% trust in other central banks which can only lead to further distrust in central banks by those who use their currencies. Germany has struck a jab back at the U.S. and done it at a very opportune time. Though I’m not so sure that Germany really wants a higher Euro since that will put pressure on their manufacturing sector. Maybe, just maybe they would like to see a higher Gold price? Maybe this is being done and the timing now because “deliveries” are about to dry up and they know it. It could be that large orders are being slowed or whittled down and that is seen as a sign of lack of supply. I’m not sure what to think but action, the timing of the action and country of origin of the action is surprising, curious and should really raise the eyebrows of even the most heavily sleeping sheeple among us!
Hold that thought.
About 5 minutes after pressing the send button on my piece this morning BUBA announced that they will repatriate a WHOPPING 300 tons from NY… over 8 years??? 32 or so tons per year? Uh, why so little and why such a long time frame? Heck, Chavez pulled 211 tons from London about a year ago… and did it all within 4 or 5 months. I guess they didn’t want to roil the markets… or maybe this gives enough time for the metal to actually be mined and shipped? This really raises far more questions than could have been asked before their announcement. None of it makes any sense to me, if I look at it from the “mainstream” standpoint I cannot reckon the logic. Of course, the mainstream never asks logical questions because the answers never add up. There is far more behind this than meets the eye. The simplest explanation is that Germany does want their Gold back, they know that it has been leased out and already sold which means it is not available for delivery …now. They do not want to go down in history as the ones who blew up the Ponzi scheme so they are allowing time; time to dig it up and fabricate it over 8 years. But this still doesn’t account for the rest of the Gold supposedly held by the Fed… like I said it doesn’t add up and making heads or tails of it is not working for me. Any thoughts? Send them please.