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Why European Central Banks Are Repatriating Their Gold

European Central Banks Repatriating Their Gold

The U.S. Government totally liquidated its massive stocks of silver. In 1940, the U.S. Treasury held 3,135,000,000 oz of silver. That's correct, 3.1 billion ounces. That is nearly four times the current annual world mine supply of 820 million oz.This figure is documented on page 64 in the USGS 1940 Gold-Silver Minerals Yearbook:

The U.S. held nearly $22 billion of the total $30.5 billion in world gold reserves. This was an amazing 72% (approximately 20,000 metric tons) of total world gold reserves. Currently, the United States supposedly has 8,000 metric tons of gold in reserve. Unfortunately, we have no way of knowing how much gold is really there and if so, how many claims are on each ounce. Some analysts such as Harvey Organ, believe the U.S. gold vaults are totally empty.

While it's nearly impossible to know how much public gold remains in the vaults of the U.S. Government, we have a pretty good idea of its silver inventories.
A chart shows the massive decline in U.S. silver stocks from 1940 to present. As you can see, silver stocks at the U.S. Treasury declined from 3.1 billion ounces in 1940 to 7 million ounces currently. This is a staggering 99.99% decline. That explains why owners of gold are wanting to get possession back.The huge increase in U.S. debt. According to the August release, the U.S. debt increased to $17.7 trillion. Compare that to the paltry $43 billion of U.S. debt in 1940.

Interestingly, if we took the $43 billion (1940 U.S. debt) and divided it by 17.7 trillion (present U.S. debt), it would equal 0.24% or a stunning -99.76% difference. Thus we have the following:
Change from 1940 to 2014
U.S. Silver Stocks = -99.99%
U.S. Debt Ratio = 00.24% or -99.75%
Looking at in a different way, the U.S. Treasury had $14 of debt on its balance sheet for each ounce of its silver holdings in 1940, compared to $2.5 million of debt per ounce of silver currently. We can only guess if the U.S. Treasury holds the 7 million ounces it shows on its books as it hasn't updated that figure since 2000. (figures come from About.Ag)

The Netherlands has moved 122 tons of gold worth $5 billion from New York, and similar demands are now being made in France, Switzerland, and Germany.

Certain governments are nervous about this and they are repatriating their gold back to their countries, because there are concerns that in the event of a currency crisis or a monetary crisis or a financial crisis, they would not be able to access their gold reserves,
In several European countries people are calling on politicians to return their gold reserves. This Sunday, November 30, Switzerland will hold the 'Save Our Swiss Gold' referendum, which if it is voted through would force the Swiss National Bank to convert a fifth of its assets into gold and repatriate all of its reserves.
Many of the European gold reserves are kept in America because of historical reasons. Following World War II, Europe thought it was safer to keep gold in the United States.
But today America is the biggest debtor nation in the world, and is in effect quite close to insolvency. Therefore they believe it is more prudent if they keep gold close to home

Russia's gold reserves have soared beyond those of Switzerland and China. Its gold holdings stand at the highest level for more than two decades and are currently the fifth largest reserves in the world.

Its holdings increased to 35.769 million ounces in August, according to International Monetary Fund data. By the same data, that would mean reserves have almost tripled since 2005.

The People's Bank of China has already reduced its holdings of US treasuries below those of Japan and last announced a change in its gold reserves in 2009 when it declared a 76 per cent hike to 1,054 tonnes. Germany, Italy, France and the US keep more than 70 per cent of their reserves in gold, the last bulwark against the devaluation of money printing.

According to the article, China is recasting all of their gold reserves into small one kilo bars in order to issue a new "gold-backed" currency. Many say this will disrupt global trade and will eventually cause a collapse of the US dollar.

There can be no doubt that the US dollar will soon be history. China is recasting all of their gold reserves into small one kilo bars in order to issue a new 'gold backed' global currency. This is surely a strategic part of their recent push to sign new trade agreements with Russia, Japan, Chile, Brazil, India, and Iran. The cat is now out of the bag, the US will be given the 'bums rush' by the largest trading nations in the world and the dollar will go down in flames. GATA now estimates that 80% of the gold that investors believe they have in allocated accounts is long gone, the majority of it probably wound up in China.

While the highly "sophisticated" traders that make up the gold market continue to buy or sell the precious metal based on whether the Fed will or will not do the NEW QE tomorrow (or just because, like Bruno Iskil, they have a massive balance sheet, and can create margin position out of thin air with impunity), China continues to do one thing. Buy. Because while earlier today we were wondering (rhetorically, of course) what China is doing with all that excess trade surplus if it is not recycling it back into Treasury's, now we once again find out that instead of purchasing US paper, Beijing continues to buy non-US gold, in the form of 68 tons in imports from Hong Kong in the month of June. The year to date total (6 months)? 383 tons. In other words, in half a year China, whose official total tally is still a massively underrepresented 1054 tons, has imported more gold than the official gold reserves of Portugal, Venezuela, Saudi Arabia, the UK, and so on, and whose YTD imports alone make it the 14th largest holder of gold in the world. Realistically, by now China, which hasn't provided an honest gold reserve holdings update to the IMF in years, most certainly has more gold than the IMF, and its 2814 tons, itself. Of course, the moment the PROC does announce its official updated gold stash, a gold price in the mid-$1000 range will be a long gone memory

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.