America's Empty Gold Vaults

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

Stock brokers are confident that there are no precious metals in kind in the United States.

The news about the US President's endorsement of the memorandum, which is aimed "at combating the economic aggression of the People's Republic of China," was quite expected, although in reality few believed that Washington would take such a step. The biggest intrigue right now is how Beijing will react.

Back in December 2016, without even stepping into the White House, Trump was concerned with a huge trade deficit, primarily with China and Germany. He promised his voters to end the trade expansion of these countries. The 45th American president decided to strike the first blow on the Germans, proposing to introduce a 35% duty against BMW cars. But the Yankees immediately received from the Germans a subtle, but very effective "response".

Berlin hastened the withdrawal of its gold reserves from the United States, which led to the expected effect. First, Trump turned sharply to North Korea, promising to pulverize the "rogue nation." And, secondly, gold prices rose - from $ 1130 per ounce (2016-21-12) to $ 1261 (2017-27-02), just at the time when German bullion was leaving Fort Knox, the main US vault.

At first glance, two seemingly independent events coincided. In fact, these are links in one chain, says Egon von Greyrz, founder and managing partner of Matterhorn Asset Management AG. He commented on these circumstances: “Germany stored 70% of its gold abroad, and the lion's share in the United States. … And so they (the Germans) said that about 50% of German gold, or 1,665 tons, is still abroad. Naturally, the question arises as to why not all the ingots were transported to Germany, as Berlin wanted."

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In his opinion, even without conspiracy theories, it is clear that the Germans were refused, most likely because there is no declared amount of gold in Fort Knox. Even what Berlin received, with a high degree of probability, the Americans urgently bought on the world market. Hence the jump in the price of the yellow metal.

And when the situation calmed down a bit, Trump again broke down and exclaimed: "The Germans are bad, the Germans are very bad." Once again, gold jumped nearly $ 80 an ounce as some players expected tough decisions from Merkel. But, apparently, in Berlin they came to the conclusion that further exacerbation between the allies plays into the hands of Russia and is not beneficial to either the United States or Germany.

Note that the jump in gold bullion prices in late 2016 and early 2017 would have been even more dramatic if Wall Street players hadn't been bullish aggressively by dumping so-called e-gold. Professional trading observers recorded powerful counter flows. The fact is that the FRS (and many other Central Banks, albeit less often - the author) lease gold to sellers without physically taking it out of their bins. Basically, they trade in computer records. Moreover, in time it almost always coincides with the moments when the dollar is threatened with a collapse or, as in the case of the Germans, when they demanded their bullion.

On the other hand, the Americans do not hide the fact that they are using market mechanisms in the public interest. In 2003, Canadian company Barrick Gold, one of the world's leaders in gold mining, tried to prove that leasing and electronic trading of the yellow metal caused commercial harm to gold miners. But the US District Court for the Eastern District of Louisiana in New Orleans dismissed the claim, accusing Barrick Gold of market manipulation. In fact, Themis of the USA shifted the blame from a sore head to a healthy one. “Barrick Gold has gone so far as to claim a share of the Fed's sovereign immunity,” the court’s decision said.

In fact, in their national court, the Americans defended the right to trade in gold bearer receipts already on the world market. And when such unsecured securities return to the United States, Americans pay in dollars at the fallen stock exchange quotes.

In fact, Washington's game with world gold has saved the dollar more than once in crisis situations. This approach allowed and today allows America, as supposedly the world's largest holder of gold, to manipulate the price of precious metals and the dollar exchange rate, maintaining its status as a reserve currency.

Recall that 65 years ago, when Eisenhower was President of the United States, 8100 tons of gold were stored in Fort Knox, Denver and New York. However, the last revision, which, according to official information, lasted from 1974 to 2008 - 34 years, turned out to be completely ineffectual. That is, following the results of the audit, which took a third of a century, no government document was published. For bureaucratic America - nonsense.

The last senior official to visit Fort Knox was Steve Mnuchin, the new US Treasury Secretary. This happened in February 2017. He was there for only one day and declared that "it is safe here." But Egon von Greyrz inquired how many bars can be counted in this storage facility in one day. It turns out that the maximum is a couple of percent. Meanwhile, we are talking about a state asset of the United States in the amount of $ 332 billion.

Perhaps someone will exclaim: what a trifle against the background of the US national debt in the amount of $ 21 trillion! But gold in three forms - bullion, electronic records and securities - is an ideal tool for withdrawing excess green cash in the days of financial panics and speculators' attacks.

Against this background, the situation with the remaining 1,665 tons of German gold in the United States looks confusing, since the main buyer of American "electronic" gold, as a rule, was and today is China, against which Trump has declared a trade war. It is one thing if the PRC demands an urgent redemption of US Treasuries, and another thing when the Celestial Empire asks for physical gold in exchange for receipts. If in the first case Washington will most likely issue the dollar, then in the second it will have to give it in bullion, not only to the Chinese, but also to the Germans.

Note that over the past 13 years, three countries - China, Turkey and India, purchased from Western Central Banks, mainly from the Fed, approximately 28 thousand tons of yellow metal. About half of this volume is accounted for by "electronic", that is, unsecured gold.

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Under these conditions, only an insane US president could declare a trade war on the Chinese. Or a great manipulator who hopes that the PRC, like the FRG, will limit itself to half measures, since it is America that is the main buyer of goods from the Middle Kingdom? Looks like Trump is bluffing exactly as he did in business.

However, just in case, he has another trump card - a war with the DPRK or Iran.

Of course, Trump understands that he is taking great risks, relying solely on the prudence of other countries. In essence, this means that America has almost no financial mechanisms left for the previous management of the world. That is why the 45th President of the United States is in a hurry to revive the domestic industry, so that one fine day to throw away all the owners of cash dollars and "electronic" gold. Moreover, the States have such experience. President Nixon in 1971 unilaterally abandoned the pegging of the dollar to gold.

Under these conditions, Russia simply does not have the right to keep $ 100 billion in US Treasuries.