– Update on Bundesbank Gold Repatriation 2015:
Deutsche Bundesbank has just released a progress report on its gold bar repatriation programme for 2015 – “Frankfurt becomes Bundesbank’s largest gold storage location“.
During the calendar year to December 2015, the Bundesbank claims to
have transported 210 tonnes of gold back to Frankfurt, moving circa 110
tonnes from Paris to Frankfurt, and just under 100 tonnes from New York
to Frankfurt.As a reminder, the Bundesbank is engaged in an unusual multi-year
repatriation programme to transport 300 tonnes of gold back to Frankfurt
from the vaults of the Federal Reserve Bank of New York (FRBNY), and
simultaneously to bring back 374 tonnes of gold back to Frankfurt from
the vaults of the Banque de France in Paris. This programme began in
2013 and is scheduled to complete by 2020. I use the word ‘unusual’
because the Bundesbank could technically transport all 674 tonnes of
this gold back to Frankfurt in a few weeks or less if it really wanted
to, so there are undoubtedly some unpublished limitations as to why the
German central bank has not yet done so.
Given the latest update from the German central bank today, the
geographic distribution of the Bundesbank gold reserves is now as
follows, with the largest share of the German gold now being stored
domestically:
- 1,347.4 tonnes, or 39.9%, stored in New York;
- 196.4 tonnes, or 5.8%, stored in Paris;
- 434.7 tonnes or 12.9% stored at the Bank of England vaults in London;
- 1402.5 tonnes, or 41.5% now stored domestically by the Bundesbank at its storage vaults in Frankfurt, Germany
In January 2013, prior to the commencement of the programme, the
geographical distribution of the Bundesbank gold reserves was 1,536
tonnes or 45% at the FRBNY, 374 tonnes or 11%, at the Banque de France,
445 tonnes or 13% at the Bank of England, and 1036 tonnes or 31% in
Frankfurt.The latest moves now mean that over 3 years from January 2013 to
December 2015, the Bundesbank has retrieved 366 tonnes of gold back to
home soil (189 tonnes from New York (5 tonnes in 2013, 85 tonnes in
2014, and between 99-100 tonnes in 2015), as well as 177 tonnes from
Paris (32 tonnes in 2013, 35 tonnes in 2014, and 110 tonnes in 2015).
The latest transfers still leave 110 tonnes of gold to shift out of New
York in the future and 196.4 tonnes to move the short distance from
Paris to Frankfurt.In the first year of operation of the repatriation scheme during
2013, the Bundesbank transferred a meagre 37 tonnes of gold in total to
Frankfurt, of which a tiny 5 tonnes came from the FRBNY and only 32
tonnes from Paris. Whatever those excessive limitations were in 2013,
they don’t appear to be so constraining now. In 2014, 85 tonnes were let
out of the FRBNY and 35 tonnes made the trip from Paris. See Koos
Jansen’s January 2015 blog titled “Germany Repatriated 120 Tonnes Of Gold In 2014” for more details on the 2014 repatriation.Those who track the “Federal Reserve Board Foreign Official Assets Held at Federal Reserve Banks” foreign earmarked gold table
may notice that between January 2015 and November 2015 , circa 4
million ounces, or 124 tonnes of gold, were withdrawn from FRB gold
vaults. Given that the Bundesbank claims to have moved 110 tonnes from
New York during 2015, this implies that there were also other
non-Bundesbank withdrawals from the FRB during 2015. Unless of course
other gold was withdrawn from the FRB, shipped to Paris, and then became
part of the Paris withdrawals for the account of the Bundesbank. The
FRB will again update its foreign earmarked gold holdings table this
week with December 2015 withdrawals (if any) which may show an even
larger non-Bundesbank gold delta for year-end 2015.Notably, the latest press release today does not mention whether any
of the gold withdrawn from the FRBNY was melted down / recast into Good
Delivery bars. Some readers will recall that the Bundesbank’s updates
for 2013 and 2014 did refer to such remelting/recasting events.Today’s press release does however include some ‘assurances’ from the
Bundesbank about the authenticity and quality of the returned bars:“The Bundesbank assures the identity
and authenticity of German gold reserves throughout the transfer process
– from when they are removed from the storage locations abroad until
they are stored in Frankfurt am Main. Once they arrive in Frankfurt am
Main, all the transferred gold bars are thoroughly and exhaustively
inspected and verified by the Bundesbank. When all the inspections of
transfers to date had been concluded, no irregularities came to light
with regard to the authenticity, fineness and weight of the bars.”But why the need to for such a general comment on the quality of the
bars while not providing any real details of the bars transferred, their
serial numbers, their refiner brands, or their years of manufacture?
Perhaps remelting/recasting of bars was undertaken during 2015 and the
Bundesbank is now opting for the cautious approach after getting some
awkward questions last year about these topics – i.e. the Bundesbank’s
approach may well be “don’t mention recasting / remelting and maybe no
one will ask”.
Source: Bundesbank
Limited Hangout
This bring us to an important point. Beyond the Bundesbank’s
hype, its important to note that the repatriation information in all of
the press releases and updates from the Bundesbank since 2013 has
excluded most of the critical information about the actual gold bars
being moved. So, for example, in this latest update concerning the 2015
transport operations, there is no complete bar list (weight list) of the
bars repatriated, no explanation of the quality of gold transferred and
whether bars of various purities were involved, no comment on whether
any bars had to be re-melted and recast, no indication of which
refineries, if any, were used, and no explanation of why it takes a
projected 7 years to bring back 300 tonnes of gold that could be flown
from New York to Frankfurt in a week using a few C-130 US transporter
carriers.There is also no explanation from the Bundesbank as to why these 100
tonnes of gold were available from New York in 2015 but not available
during 2014 or 2013, nor why 110 tonnes of gold somehow became available
in Paris during 2015 when these bars were not available in 2014 or
2013.The crucial questions to ask in my view are where the repatriated
gold that has so far been supplied to the Bundesbank from New York and
Paris has been sourced from, what were the refiner brands and years of
manufacture for the bars, what was the quality (fineness) of the gold,
and are these bars the same bars that the Bundesbank purchased when it
accumulated its large stock of gold bars during the 1950s and especially
the 1960s.In essence, all of these updates from Frankfurt could be termed
‘limited hangouts’, a term used in the intelligence community, whereby
the real behind the scenes details are left unmentioned, and questions
about the real information is invariably left unasked by the mainstream
media. Overall, it’s important to realise that the Bundesbank’s
repatriation updates, press releases, and interviews since 2013 are
carefully stage-managed, and that the German central bank continually
dodges genuine but simple questions about its gold reserves and the
physical gold that is being transported back to Frankfurt.For example, in October 2015, the Bundesbank released a partial
inventory bar list/weight list of it gold holdings. At that time, on 8
October 2015, I asked the Bundesbank:Hello Bundesbank Press Office,
Regarding the gold bar list published by the Bundesbank yesterday (07 October https://www.bundesbank.de/Redaktion/EN/Topics/2015/2015_10_07_gold.html), could
the Bundesbank clarify why the published bar list does not include,for
each bar, the refiner brand, the bar refinery serial number, and the
year of manufacture, as per the normal convention for gold bar weight
lists, and as per the requirements of London Good Delivery (LGD) gold
bars?Bundesbank bar list:https://www.bundesbank.de/Redaktion/EN/Downloads/Topics/2015_10_07_gold.pdf?__blob=publicationFile
From the London Good Delivery Rules, the following attributes are required on LGD bars http://www.lbma.org.uk/good-delivery-rules
“Marks:
Serial number (see additional comments in section 7 of the GDL Rules)
Assay stamp of refiner
Fineness (to four significant figures)
Year of manufacture (see additional comments in section 7 of the GDL Rules)”
“The marks should include
the stamp of the refiner (which, if necessary for clear identification,
should include its location), the assay mark (where used), the fineness,
the serial number (which must not comprise of more than eleven
digits or characters) and the year of manufacture as a four digit
number unless incorporated as the first four digits in the bar number.
If bar numbers are to be reused each year, then it is strongly
recommended that the year of production is shown as the first four
digits of the bar number although a separate four digit year stamp may
be used in addition. If bar numbers are not to be recycled each year
then the year of production must be shown as a separate four digit number.”http://www.lbma.org.uk/assets/market/gdl/GD_Rules_15_Final.pdfBest Regards, Ronan Manly
The Bundesbank actually sent back two similar replies to the above email:
Answer 1:
“Dear Mr Manly,
Thank you for your query. Information
on the refiner and year of production are not relevant for storage or
accounting purposes, which require the weight data, the fineness and a
unique number identifying each bar or melt. The Bundesbank has all of this information for each of its gold bars. By contrast, particulars relating to the refiner and year of production merely provide supplementary information. They tell us part of the gold bar’s history but do not describe its entire ‘life cycle’.”Yours sincerely,
DEUTSCHE BUNDESBANK Communication
Answer 2:
“Dear Mr Manly,
The crucial data for storage and
accounting purposes are the weight, the fineness and a unique number
identifying each bar or melt. The Bundesbank has all of this information
for each of its gold bars, which it records electronically and also
makes available to the public. In addition to the data on weight and
fineness, the Bundesbank, the Bank of England and the Banque de France
identify gold bars exclusively on the basis of internally assigned
inventory numbers and not using the serial numbers provided by the
refiners. These custodians do not classify the bar numbers stamped onto
the gold bars by the refiner as individual inventory criteria. They do
not use the refiner’s bar numbers as these are not based on a unique
numbering system that can be used for identification purposes. Stating
the refiner and the year of production is not required for storage or
accounting purposes.”
Yours sincerely,
DEUTSCHE BUNDESBANK Communication
Even the large gold ETFs produce detailed weight lists of their bar
holdings, so you can see from the above answers that the Bundesbank is
resorting to flimsy excuses in its inability to explain why it is not
following standard practice across the gold industry.For additional Bundesbank’s prevarications on its gold bars, please see my blog “The Keys to the Gold Vaults at the New York Fed – Part 3: ‘Coin Bars’, ‘Melts’ and the Bundesbank” in a section titled “The Curious Case of the German Bundesbank”.
Finally, see BullionStar guest post from 8 October 2015 by Peter Boehringer, founder of the ‘Repatriate our Gold’ campaign – “Guest Post: 47 years after 1968, Bundesbank STILL fails to deliver a gold bar number list“.
This guest post adeptly takes apart the Deutsche Bundesbank’s
stage-managed communication strategy in and around its gold repatriation
exercise, and asks the serious questions that the mainstream media fear
to ask.