Where Is Germany’s Gold?

Where Is Germany’s Gold?
The Trumpet 07-Feb-14
You may have heard something about this story. So, here’s what we know so far:
 In 2012, the Bundesbank (the central bank of Ger many) asked to visit the vault of the Federal Reserve in New York, to view the 1,536 tons of gold they have stored there
 The Federal Reserve told them no. They were not allowed to see their gold
 In response, Germany said that they wanted 300 tons of their gold back
 The Federal Reserve said that they’d need seven years to get the gold back to Germany. (Something that should take them seven weeks, tops.)
  One year later, the Fed has returned only 5 tons of gold to Germany. At this rate, it will take 60 years for the Germans to get less than one fifth of their gold  back
Though I don’t know precisely what, it is very clear that something strange is going on here. … Shipping 300 tons of metal is hardly a new and difficult technical challenge. Companies involved in metal trading do this all the time. Sure, gold requires extra security, but security is also something that lots of people know how to provide. … The president of Germany’s top financial regulations group said that manipulation of gold and silver “is worse than the Libor-rigging scandal.” (The Libor scandal was and is a big deal, and lots of lawsuits are underway over it.) That’s a big accusation
Then, Deutsche Bank, the biggest German bank, dropped out of the London gold fixing pool; the group of bankers that set the official price of gold. This is also related to the investigations by European regulators into thesuspected manipulation of precious metals prices by banks
Again, this is a very significant event
Germany does not seem happy about what the Fed is doing to them. … In addition to this, the Financial Times ran an article advising investors to demand physical delivery of their gold. Bloomberg published an article on gold price manipulation
So, given what we know, the obvious question becomes, “What’s really going on?” The first answer is that we simply do not know. Most likely, however, is that all of Germany’s gold has been lent out and/or used as loan collateral multiple times and that the Fed is having a very hard time unwinding all those loans. If they just give the gold back, the collateral for hundreds (maybe thousands) of international loans goes away
And when I say “lent out multiple times,” I am not speaking loosely
There is a financial trick called rehypothecation  that allows bankers to use the same stack of gold as the collateral for simultaneous loans over and over and over
So, in order to pull Germany’s gold out of the lending game (and central banks do loan out gold), lots and lots of loans would have to be rehypothecated to other piles of gold, and that requires a lot of office work. Each bar of Germany’s gold could be involved in a dozen loans, each of which must be rearranged
This would account for the slowness of the Fed returning the gold back to where it belongs
Of course, there are other possibilities. Maybe the Fed is just trying to punish Germany for some reason … or that the gold is simply no longer there—that the Fed or its friends sold it. … The one thing we can be sure of is that the Federal Reserve and the Bundesbank are at odds. What will come from that is unknown, but this is a very significant problem between giants, and it is already producing consequences.