Germany shipped more of its overseas gold reserves back to Fft last year according to the Bundesbank’s latest report published a short while ago
The Bundesbank successfully continued and further stepped up its transfers of gold last year. In 2014, 120 tonnes of gold were transferred to Frankfurt am Main from storage locations abroad: 35 tonnes from Paris and 85 tonnes from New York. “Implementation of our new gold storage plan is proceeding smoothly. Operations are running very much according to schedule,” said Carl-Ludwig Thiele, Member of the Executive Board of the Deutsche Bundesbank.
The Bundesbank took advantage of the transfer from New York to have roughly 50 tonnes of gold melted down and recast according to the London Good Delivery standard, today’s internationally recognised standard. “We also called on the expertise of the Bank for International Settlements for the spot checks that had to be carried out. As expected, there were no irregularities,” said Mr Thiele.
According to its new gold storage plan, unveiled in January 2013, the Bundesbank will be storing half of Germany’s gold reserves in its own vaults from 2020 onwards. This necessitates a phased transfer to Frankfurt am Main of 300 tonnes of gold from New York and all 374 tonnes of gold from Paris.
Since the transfers began in 2013, the Bank has relocated a total of 157 tonnes of gold to Frankfurt am Main – 67 tonnes from Paris and 90 tonnes from New York. This is equivalent to roughly 23% of the total quantity to be transferred. The following table gives an overview of the gold that has been transferred to date
Exactly one month ago we observed that, as expected in the aftermath of the Netherlands’ shocking and still not fully-explained gold repatriation from the NY Fed, the amount of foreign earmarked gold on deposit with the Fed had just experienced a 42 ton withdrawal: the single largest outflow of gold held at the NY Fed in over a decade, going back all the way to 2001. This had brought the total amount of YTD gold withdrawals from the NY Fed to a whopping 119 tons: the most since the Lehman collapse.
However, because this total was insufficient to cover just the Dutch repatriation of gold from the NY Fed (which amounted to 122 tons), we knew there would be more activity when the November data hit. Sure enough, earlier today the Fed reported the total amount of earmarked gold (or gold “held in foreign and international accounts and valued at $42.22 per fine troy ounce; not included in the gold stock of the United States“) for the month of November: at $8.184 billion, this was a $60 million drop from the previous month (or it would be at the $42.22/ounce “price”; at market prices the value of the withdrawn gold is about $1.7 billion).
In actual tonnage terms, this means that in November some 47.1 tons of gold were withdrawn from the NY Fed, bringing the Fed’s total earmarked gold to just 6,029 tonnes: the biggest single monthly outflow going back to the turn of the century. This is also the lowest amount of gold held at the NY Fed vault located at 33 Liberty street (and just across from the even bigger vault located at 1 Chase Manhattan Plaza) in the 21st century.
Gold prices could drop to $1,000 an ounce in 2015 as a strong US dollar is expected to mount further pressure on the precious metal.
As many as seven out of 10 analysts polled in a Kitco Gold Survey said they expected gold prices to fall to $1,000 an ounce in 2015.
More survey participants said it was possible for gold to drop to $1,000 given that the metal continued to trade below the 200-day moving average of $1,268.
US Global Investor’s CEO Frank Holmes told Kitco that noted economist Nouriel Roubini’s 2013predictionthat gold will drop to $1,000 an ounce before the end of 2015 may be right because the level was “within the normal DNA of volatility of gold”.
The strong greenback will cause “prevailing pressure” on gold prices in 2015, Holmes added. Demand for dollar-denominated commodities such as gold typically weakens on a stronger greenback as it makes the metal more expensive for holders of other currencies, lowering its hedge appeal.
But Axel Merk of Merk Investments said the only scenario where Roubini’s call could be right was if investors see a “very hawkish” US Federal Reserve, adding that he did not think rate hikes will equate to a hawkish Fed.>> Read More
We already know that to at least one, sadly all too prominent, career economist gold is held by central banks simply due to “tradition.” Here is how another professor of economics perceives the value of gold to central banks.
To Joshua Aizenman, a professor of economics and international relations at the University of Southern California, dabbling in gold is mainly an attempt by bankers and officials to send a message to the world — one that signals an appetite for power or that broadcasts a desire to challenge a rival. “I doubt that the Chinese or the Russians actually believe that gold is such a great investment in terms of pure returns,” Professor Aizenman said. “But if they’re trying to suggest that they’re unhappy with the dollar or that they want to become a global player, then gold is very powerful.
“The investment is a symbol,” he explained. “It’s made for political, not financial, gain.”
That explains it: not just tradition, but symbolic tradition. Actually, let’s just combined what all prominent economists have recently said about gold, and we get… a 6000-year-old symbolically traditional bubble.