The trend of gold repatriation is likely to pick up in 2015. The latest announcement comes from the German central bank or Bundesbank, which announced today that it increased the repatriation of its gold reserves from overseas storage. Specifically, they announced that 120 tonnes of gold were transferred to Frankfurt from storage locations in Paris (35 tonnes) and the New York Federal Reserve (85 tonnes).
Of course, these transfers are only a small percentage of Germany’s total gold reserves, which are the second-biggest in the world at 3,384.2 tonnes. The only country that claims to have more is the United States, but the FED/government has repeatedly refused a full audit, leading many to believe that the gold is no longer there.
Where would it have gone? Many gold investors believe the gold has been sold or leased out as a means of suppressing the price advance over the past decade.
A breakdown of Germany’s total gold reserves shows that the NY FED has over 42% of Germany’s total gold reserves.
Driving the gold repatriation movement in recent years is surging mistrust of the political leadership in the United States and EU, along with growing concerns that the gold may have been tampered with or is no longer in the vaults. Rising debt levels and reckless central bank policies have also fueled concerns about leaving a nation’s gold in the hands of the Federal Reserve or other Western central banks.
In Germany, the Bundesbank plans to bring back 674 tonnes from abroad by 2020 and store half of its gold in its own vaults. Of course, this is far short of the initial plans and timetable, which was rejected by the Federal Reserve and has led to speculation that the gold is not there. With such a small amount of the total being transferred, it seems that the Bundesbank continues to struggle to get its gold reserves back from the New York Federal Reserve.
The Netherlands has better luck via stealth repatriation in 2014. They secretly repatriated 122 tonnes of their gold reserves from New York to Amsterdam in 2014. And in late 2014 ZeroHedge reported that foreign gold held at the largest central bank gold vault in the world was being withdrawn at record rates. In fact, November represented a near record amount of gold withdrawn from the NY Fed at 42 tonnes, the single biggest monthly outflow at the NY Fed in over a decade!
As one ZH commenter put it: That’s a lot of trouble for a barbarous relic.
Watch for the trend of gold repatriation to accelerate in 2015, as gold prices finally end their long correction and break higher. Already in 2015, gold is up 8% and gold stocks (GDX) are up over 20%! This has been driven partly by the Swiss National Bank decision to remove their peg to the Euro. Is massive QE from the ECB on the way? Will Greece or even Germany exit the EU? There are numerous flash points in 2015 that could send gold rocketing higher.
If the gold bull has finally awaken from its slumber, it is going to be a very profitable year for precious metals investors. The upside potential, simply to return to early 2011 levels, is absolutely enormous.
While we always advocate holding physical gold and silver in your possession, it is hard to ignore the leverage currently being offered from quality mining stocks. In 2015 thus far, it has been roughly 2.5X. Yet, they remain incredibly oversold and undervalued, despite the fact that many of the miners we track have seen their share price double in the past month! Hopefully you haven’t been sitting on the sidelines and missing this latest move. Either way, I believe this is sign of things to come in 2015.