A few months ago the German Bundesbank displayed concern about the security of their gold being stored at the New York Federal Reserve. They called for an audit of their holdings, and while that still has not taken place, the intermediate resolution was to have 10% of their gold repatriated over a period of seven years.
There has been no explanation of why it takes seven years to get such a small portion of the gold returned, which leaves a lot of unanswered questions. However, while Germany has chosen not to be more aggressive in demanding its gold, that does not mean the situation has been resolved. In fact it only serves as more impetus for a potential gold run on the Fed – as well as the Bank of England, the second-largest custodian of sovereign gold.
There are few people (if any) who know exactly how much gold is in the Federal Reserve or Fort Knox. Former Congressman Ron Paul called for an audit to no avail. And there is uncertainty about whether the gold that is physically present has been leased out, since the central banks do not distinguish between gold and gold receivables on their balance sheets.
Of course when a request for an audit is refused the public is only left to wonder why that would be. One would like to believe that the accounting is solid and things are in place. But what is a rational person expected to think when an audit is refused and there is never even an explanation of why? The track record of the banking system over the past decade makes it difficult to take a non-response as an indication of security, and returning 10% of Germany’s gold over seven years does little to resolve this concern.
Read the complete article at GoldMoney here.
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