Tags: central banks | gold | invest

Scared Central Banks Want Their Gold Back

By    |   Saturday, 29 Nov 2014 11:42 AM

America has held gold reserves for countries since at least World War II. And up until 2011, there have never really been any problems with countries feeling comfortable with America holding their gold.

However, this trend started to change when Hugo Chavez brought back Venezuela’s gold to Caracas in 2011.

Even more recently, Germany asked for its gold back. They were initially told no and they weren’t even allowed access to the vaults that contained their own gold!

Yet, the German central bank continues to state that it trusts Americans as custodians of its gold reserves (even though they have now been granted part of the gold that they requested back in 2013).

Well now, the Netherlands have asked for their gold back. They just repatriated over 120 tonnes of gold, which is almost 4 million ounces of gold worth around $5 billion!

That represented about 20 percent of their gold holdings that they got back. Now, instead of our Federal Reserve holding 51 percent of the Dutch central bank’s gold, it now holds just 31 percent of it.

And they could repatriate more. They’re keeping their shipping route a secret just in case more gold needs to be repatriated.

Now there is a vote that’s about to take place to see if voters thing Switzerland should hold more gold in its reserves.

There’s a referendum that will be voted on, on Nov. 30. It’s not favored to pass, but just the fact that more citizens feel their central banks should have deeper gold reserves tells us something.

Informed citizens know that paper money all over the world is being purposefully devalued by central banks through money printing and through keeping interest rates unusually low.

The Swiss are even doing this with their franc. (Formerly, the franc used to be almost “as good as gold” because they kept such huge reserves in gold. Not so, today!)

Why would the Swiss water down their currency? Well, back in 2011, Europe was in a mess.

It seemed on a daily basis their stocks were dropping and so was the euro. (You’ll remember people burning down places in Greece, etc.)

Well, as the euro dove, goods in other currencies seemed to be so much more expensive, like Swiss watches and Swiss chocolates. Well, Switzerland couldn’t allow a falling euro to kill the exporting of their watches and chocolates to the rest of Europe. So as the euro to Swiss franc exchange rate was dropping like a stone, they came up with an idea.

They decided to “peg” their currency so that it would have a floor on the EUR/CHF exchange rate to 1.20. This meant that if a euro bought any less than 1.20 francs, that the Swiss central bank would go in the market and sell francs and buy euros to uphold this rate.

Well, if the Swiss central bank is made to hold 20 percent of their reserves in gold, it will hamper their ability to make good on this EUR/CHF 1.20 peg. And if that was jeopardized, then so would Swiss exports be jeopardized.

So the Swiss central bank is campaigning hard against this vote. I read one article where they were even going to a church congregation to make their case, etc. So they’re serious about this and they’re holding their breath that this does not pass on Nov. 30.

But either way, this shows that central banks are scared and want their gold back. And I can’t say that I blame them. They don’t even know if all of their reserves held in America are still there.

You see, the Fed’s gold reserves haven’t been audited in over 50 years. The last audit was in 1953 after Eisenhower took office. Even then, no outside experts were allowed in and the audit team only tested about 5 percent of the gold there.

So we don’t really know what’s in Fort Knox for at least the past 60 years. That’s a huge deal. So if I were a foreign central bank, I’d want my gold back too.

But now we also know that citizens are scared and want their central banks to hold even more gold in reserves than they do right now. They’re getting wise to the fact that their currency is getting devalued and making the populous poorer.

Yet the central banks aren’t getting poorer. Why? They hold gold!

Well, will all of this skepticism die down? Not likely. Why? The whole world knows that we don’t live on a budget as a nation and they know that we’re racking up the debts big time.

The fear is that we could try to nationalize international gold reserves in order to keep our dollar from cratering one day. In other words, we could tell the world, “Too bad, so sad…you no longer own your gold." It wouldn’t be right for America to do that…but it could do it.

By the way, it looks like we just got hold of most of Ukraine’s gold reserves for us “helping them out.” And we haven’t even done that good of a job of helping them out. Russian tanks are still there!

And speaking of Russia, they’re beefing up their gold reserves too because their ruble has been in trouble as confidence has been lost in their currency due to the issues with Crimea and Ukraine.

So that puts Russia holding the most gold reserves that they’ve had in the last two decades!

India, China and others have been steadily adding to their gold reserves too. All of this tells us that these countries and their central banks are nervous as a cat in a room full of rocking chairs.

Why are they all so jittery? They all know they’re playing a game no one can win. It’s the currency devaluation game. They’re all racing to the bottom as they all try to out-devalue each other.

Well, when you’re playing this game, you want to know that you’ve got gold (which is why they are repatriating it, just to make sure) and you want to add to your reserves. That way if paper currencies crater, you’ll still have “hard currency” that still holds its value.

My thought to you is: If central banks are scrambling to get hold of their gold and buy even more (and these are the guys that know everything that’s going on behind closed doors that you and I don’t know about)…then you and I should certainly own some gold as well.

You might buy gold coins or bars or at a minimum own the gold exchange traded fund, symbol: GLD.

God bless!

About the Author: Sean Hyman
Sean Hyman is a member of the Moneynews Financial Brain Trust.
Click Here to read more of his articles. He is also the editor of Ultimate Wealth Report. Discover more by Clicking Here Now.


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SeanHyman
America has held gold reserves for countries since at least World War II. And up until 2011, there have never really been any problems with countries feeling comfortable with America holding their gold.
central banks, gold, invest
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2014-42-29
Saturday, 29 Nov 2014 11:42 AM
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