Keith Barron continues:

“He (Gaddafi) just didn’t trust any other government with it.  Of course we all know what happened to him eventually.  His gold has kind of gone missing (appropriated), and nobody knows where it is now.  This is the problem the Germans, Austrians, and various other countries are facing. 

They don’t want their gold to go missing....

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“In the case of Germany, the gold was sent abroad to France, and to the Federal Reserve Bank of New York during the Cold War because of fears the Russians may overrun Germany and seize the gold.

Those kind of fears evaporated a long time ago, and there is no reason for the Germans to have the gold elsewhere.  In the last year, somebody in the ministry was interviewed and they were asked why the gold was still abroad?  They said, ‘To facilitate trading.’  Well, this is exactly why the gold shouldn’t be elsewhere.  It should be sitting there as the patrimony of the country, and it should be inviolate.

The latest round of gold repatriation was started by Hugo Chavez, and in Chavez’ case nobody knows if he is alive or dead right now.  So we have seen a pattern from Saddam Hussein, to Gaddafi, and now Chavez, that anyone who interferes in the gold market or attempts to threaten the US dollar’s dominance ends up dead.

Ecuador decided to take a page out of Chavez’s book and ask for Ecuador’s gold back.  So their gold was repatriated.  The Germans and the Austrians were the latest to have public discussions asking the question, ‘Where is our gold?’

Now the Germans have decided to take back their gold out of France, and apparently small portions of their gold will be sent from the Fed to Germany in coming years.  I do believe a lot of Germany’s gold has been leased out internationally, through the bullion banks.  So the reality is that the German gold hoard, which is supposed to be stored at the Fed, may already be gone.

There was the situation quite a few years ago when Drexel Burnham Lambert went down.  They had borrowed 17 tons of gold from the Bank of Portugal, and when Drexel failed, the Bank of Portugal never got it back.  Its claim evaporated when Drexel evaporated.

If you look at what happened to Portugal, the question becomes, should key bullion banks fail, would Germany and other nations forfeit their gold because the existing leases and claims would simply evaporate, as was the case with Portugal?  This is something to consider.  Countries such as Austria and others were getting paid to participate in gold leasing.  I’m sure in the fine print it states if the bullion bank conducting the lease fails, the gold is lost, again, as was the case with Portugal and their 17 tons of lost gold.

I believe that most of the Western world’s gold, which is supposed to be in central bank vaults, has been leased out.  Much of it is now in private hands in India, and what remains continues going East to China and other Asian vaults.  So most of the Western gold has vanished from the vaults and it’s now just a book entry.

These various Western countries and bullion banks simply roll these leases over when they come due, and the gold never gets returned back to the countries.  So it’s very interesting to see what’s going on.  Obviously the trust is breaking down in the system. 

Maybe we are going to see a bit of a run to the exits when more of this gold has to be repatriated, and the bullion banks are going to have to buy it from somewhere or fail.  I just don’t think there is enough available physical gold out there to cover all of the outstanding loans.  It’s just not out there in the marketplace to be acquired.  For what it’s worth, all of this is very bullish for the gold price going forward.”

© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

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Eric King

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