Tuesday, June 24, 2014

Krieger & ZH Wrong On German Gold Repatriation

Update: Since I posted the below Michael Krieger has updated his blog post to confirm the repatriation schedule is unchanged. Zero Hedge also posted a follow up article. Both point to the Bloomberg article as being misleading, which I agree with (particularly the title), but still think that anyone reading the article in it's entirety (and is familiar with the German repatriation story) should have picked up that there was no plans to change the repatriation of 300 tonnes from the NY Fed.

Today Zero Hedge is headlining an article by Mike Krieger suggesting that Germany will stop repatriating their Gold: Germany Gives Up On Trying To Repatriate Its Gold, Will Leave It In The Fed's "Safe Hands".

Unfortunately this is misinformation and they have both either misunderstood or are purposefully misreporting what the Bloomberg article they reference is actually saying.

They are not the first to get it wrong on the German repatriation story, it seems to be common as I have covered previously:

Here is an excerpt from the Zero Hedge article which includes part of Krieger's piece:
Several months after it was revealed that Germany was able to only recover a miserable 5 tons of its gold in all of 2013 (under 10% of the 84 tons it was scheduled to repatriate), Germany appears to have given up entirely in its attempt to recover gold which simply is not there, and as Michael Krieger reports, citing Bloomberg, has decided to keep "it" (by "it" we don't mean the gold since that clearly has not been at the Fed for decades, but merely the paper promises of ownership: for more see China's gold rehypothecation scandal and how the unwind works) at the NY Fed after all. That is to say, in the "safe hands" of former Goldmanite Bill Dudley.

Via Mike Krieger's Liberty Blitzkrieg blog,

Just last week, I published a post titled, Video of the Day – “End the Fed” Rallies are Exploding Throughout Germany, which subsequently went viral. Interestingly, only a few days later we find out that Germany’s very own criminal political class has decided it will continue to store the nation’s gold in New York rather than bring it back home as had been the intention. It’s quite ironic that just as protests against the fascist Federal Reserve are spreading throughout the land, the political class officially decides to keep Germany’s treasure across the Atlantic, in care of none other than The Fed itself.
Both Zero Hedge and Krieger imply there has been a change to the repatriation schedule, but the truth of the matter is that the Bloomberg article only refers to stopping earlier attempts to bring home all of Germany's Gold:
Surging mistrust of the euro during Europe’s debt crisis fed a campaign to bring Germany’s entire $141 billion gold reserve home from New York and London. Now, after politics shifted in Chancellor Angela Merkel’s coalition, the government has concluded that stashing half its bullion abroad is prudent after all...

...“Right now, our campaign is on hold,” Peter Boehringer, a Munich-based euro critics who co-founded an initiative to bring home all of Germany’s gold in 2012, said in an interview.
And there has been NO CHANGE to the repatriation schedule of 300 tonnes from New York & 374 from Paris which will ultimately result in 50% of Germany's Gold being stored at home. This is the schedule that was published by Bundesbank last year.

Germany's Gold Repatriation Schedule
It was confirmed in today's article from Bloomberg that there is no intention to change the schedule:
The central bank met the critics halfway. Last year, it began moving the Paris gold to Frankfurt, pointing out that Germany and France now have the same currency, the euro. Enough of the gold in New York and London will be brought home so half the reserves will be in Germany by 2020.
No doubt there will still be plenty of commentators in the precious metals space continuing to twist the story as they see fit, especially so if Bundesbank remains behind schedule when they publish an update later this year or early next, but in my opinion:

- The NY Fed has the physical Gold
- The repatriation will complete on or near schedule by 2020 &
- There is no conspiracy (missing or leased Gold)

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Saturday, June 21, 2014

Gold in Istanbul

Following the theme of a post I wrote a few years back (Gold in Japan, October 2010) I thought I'd write up a short travel blog on some precious metal related highlights from recent overseas travels (Istanbul via Kuala Lumpur).

I flew to Istanbul via Kuala Lumpur (from Adelaide). The flight from Kuala Lumpur to Istanbul was on Qatar Airways so had a stopover at Hamad International Airport (Doha, Qatar). The airport only opened earlier this year and is very impressive. Along with rows of Apple computers setup for use in family areas, giant TV screens and impressive internal architecture, I spotted this Gold jewellery store, simply marked as 'Au'.

'Au' at Doha (Hamad) International Airport
After landing in Istanbul, one of the first things I was keen to checkout was the Grand Bazaar which has some 3,000 shops and hundreds of thousands of visitors each day.

Approaching from the Galata Bridge side of the market, I was not disappointed as I walked up the hill to the markets (through tight city streets covered in stalls)... this path led me through what I could only describe as the 'Gold district' of Istanbul (although there may be others) with dozens of Gold jewellery stores adorning the streets.

The windows were absolutely packed with Gold necklaces, rings, bracelets and more. Some of the pieces were very intricate, others were quite simple, but almost all of it was of a high finesse with a large selection of 22 Karat, along with some 14 - 18 Karat. Very different to Australia where most jewellery store windows are filled with 9 Karat or even 'filled' pieces.

Once under the cover of the Grand Bazaar there were many bullion dealers (some of whom also did currency exchange), much of their inventory was similar between stores with lots of Nadir or Istanbul Gold Refinery bars and coins (mostly Gold, some Silver). Only the occasional foreign coins and bars were seen... I did spot these heavily worn Perth Mint coins in one of the windows...

Perth Mint Coins - Bullion Dealer Window @ The Grand Bazaar
I didn't purchase much as I was wary of being ripped off on any high value purchases (although I'm sure most of the jewellery stores there are reputable). All I picked up were these cheap 5 gram Silver bars as a memento:

Istanbul Gold Refinery - 5 Gram Silver Bars
While in Istanbul I also took a walk to the Turkish State Mint which was around a 5km walk from my accommodation near Galata Tower. From the outside the Mint was fairly nondescript and off the main streets, only a small window with coins and the word 'Darphane' meaning 'Mint' in Turkish were the giveaways.

Turskish State Mint - Retail Shop
Unfortunately I was unable to visit the museum which is onsite as it was closed (website was out of date with opening days and I didn't have time to return). The retail store had a few display cabinets, but was fairly unimpressive (relative to the Perth Mint & others I have visited). Most of their coins appeared culturally significant, the assistant in the shop didn't speak much English so I wasn't able to get much more information than prices on the coins. I purchased a 1 gram Gold coin (generic) and a 1 ounce sterling Silver coin celebrating the XVII Mediterranean Games - Mersin 2013.

On my way back from Istanbul I stayed a couple of nights in Kuala Lumpur and visited Berjaya Times Square Shopping Complex as there were a few coins stores listed. I was disappointed with only two of the stores being open and having very limited content, though the shopping centre itself was pretty impressive with a roller coaster running through some of the upper levels. I only bought a couple of trinkets in Kuala Lumpur, namely a certified (LOL!) Gold foil keyring and some fridge magnets.

It was a great trip and although I haven't covered the general tourist aspects of Istanbul in this post, I think it's a city well worth visiting if you ever have the opportunity (not only to see all the Gold).

View of Istanbul From Galata Tower

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