Bundesbank official assures NY Fed that gold issue will go away

... Just like the gold itself?

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5:42p ET Friday, November 2, 2012

Dear Friend of GATA and Gold:

Our friend the German financial journalist Lars Schall calls attention to remarks delivered Thursday by a member of the executive board of the German Bundesbank, Andreas Dombret, at a reception held at the Bundesbank's office in New York in the presence of the president of the Federal Reserve Bank of New York, William Dudley. Dombret's remarks, appended here, confirm that, as GATA often has reported, Germany's gold reserves are held in large part at the New York Fed to facilitate their presumably secret trading, since, as Dombret notes, "Frankfurt is not a gold-trading center."

Dombret's remarks seem meant to pretend that the clamor and controversy over the foreign vaulting and secrecy around the German gold reserves will end quickly, preserving the trust between the Bundesbank and the Federal Reserve.

And yet the Bundesbank continues to refuse to answer whether it has any gold swap arrangements with the Fed or any other agency of the U.S. government:

href="http://www.gata.org/node/11880">http://www.gata.org/node/11880

If the Bundesbank won't answer about that to the Germany people, why should they have any trust in their own central bank or any central bank?

The clamor and controversy probably won't be going away before the Bundesbank and Fed answer that question truthfully. And of course if that ever happens, the clamor and controversy will have only just begun.

The section of Dombret's remarks about the gold issue, copied from the Bundesbank's Internet site, is appended.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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Excerpts from Remarks by Andreas Dombret
Member of the Executive Board
Deutsche Bundesbank
Reception of the Bundesbank Representative Office, New York
Thursday, November 1, 2012

Any current account surplus thus resulted in an increase in Germany's gold reserves. This gold was stored in U.S. vaults for obvious reasons. This was not only the case for the gold held by the Bundesbank -- it was, in fact, common practice. By the way: It was the only practical thing to do, since running a trade account deficit meant a decrease in gold stocks.

Thus, we are now looking back at 60 years not only of fruitful cooperation in many fields and international fora, but also of storing gold and trading via the New York Fed. As a matter of fact, it is sensible for us to do so in New York, as Frankfurt is not a gold-trading venue.

Throughout these 60 years we have never encountered the slightest problem, let alone had any doubts concerning the credibility of the Fed. And for this, Bill [Dudley, president of the Federal Reserve Bank of New York], I would like to thank you personally. I am also grateful for your uncomplicated cooperation in so many matters. The Bundesbank will remain the Fed's trusted partner in future, and we will continue to take advantage of the Fed's services by storing some of our currency reserves as gold in New York.

At the same time, you can be assured that we are confident that our gold is in safe hands with you. The days in which Hollywood Germans such as Gerd Frobe, better known as Goldfinger, and East German terrorist Simon Gruber masterminded gold heists in U.S. vaults are long gone. Nobody can seriously imagine scenarios like these, which are reminiscent of a James Bond movie with Goldfinger playing the role of a U.S. Fed accounting clerk.

While gold is important, we have to combat a crisis of confidence in the euro area. This is the task we need to concentrate on. And we will do so.