Bundesbank Confirms German Gold Held By FED, BOE and Banque De France [goldcore] $GLD $GOLD

Germany’s Bundesbank confirmed yesterday that the German gold reserves are held overseas by the Federal Reserve, the Bank of England and the Banque de France.

There has been a lack of clarity and transparency regarding the German gold reserves, as there are with many other nations gold reserves, and this had led politicians and journalists seeking transparency.

The Bundesbank has previously resisted calls for a more transparent accounting of the German gold reserves.

Some Germans are concerned about the risk of contagion in the eurozone and the risk that the single currency could fall apart. They wish to know that the German gold reserves are secure and can be relied upon in the event of a currency crisis.

The Bundesbank said it has complete confidence in valuations and the security of its gold holdings at other central banks and said that “there is no doubt about the integrity and the reputation of these foreign central banks where the gold is held.”


Gold in USD – Daily (1 Year)

Germany’s central bank has the world’s second largest holdings of gold after the United States, about 3,400 tonnes of gold valued at nearly 140 billion euros, according to the Bundesbank.

The German parliament, the Bundestag, has been examining the accounting of German gold reserves at the Bundesbank. The parliament’s Budget Committee, one of the most powerful committees in the German parliament, had requested a critical report by the Federal Audit Office.

“The decision has been unanimous,” the paper quoted the Christian Social Union budget expert Herbert Frankenhauser. The newspaper report alleged “account cheating” regarding the German gold reserves.

According to a Bild report, the federal auditing office complained of “inadequate diligence of the accounting of the gold reserves, which are stored in some foreign countries. Repatriation of the gold reserves is encouraged.”

The Bundesbank confirmed that it, like many central banks, keeps part of its reserves in vaults at foreign central banks and said some of its gold is held at the Federal Reserve Bank of New York, the Banque de France and the Bank of England.

It declined to say how much gold in total is held overseas or how much gold is stored with the Federal Reserve, Bank of England and Banque de France.

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Guest Post: Alan Greenspan Asked For Advice, Do People Ever Learn? [Zerohedge]

 

Submitted on Zerohedge by James Miller of the Ludwig von Mises Institute of Canada

Alan Greenspan Asked For Advice, Do People Ever Learn?

Unbelievable.

That is the only way to express this author’s utter bewilderment that former Federal Reserve chairman Alan Greenspan is still given an outlet to speak his mind.  Actually, I am surprised Mr. Greenspan has the audacity to show his face, let alone speak, in public after the economic destruction he is responsible for.

It was because of Greenspan, of course, that the world economy is still muddling its way along with painfully high unemployment.  His decision to prop up the stock market with money printing under any and every threat of a downtick in growth, also known as the Greenspan Put, created an environment of easy credit, reckless spending, and along with the federal government’s initiatives to encourage home ownership, the foundation from which a housing bubble could emerge.

It was moral hazard bolstering on a massive scale.  Wall Street quickly learned (and the lesson sadlycontinues today) that the Federal Reserve stands ready to inflate should the Dow begin to plummet by any significant amount.  Following his departure from the chairmanship and bursting of the housing bubble, Greenspan quickly took to the press and denied any responsibility for financial crisis which was a result in due part to the crash in home prices.  In his infamous 2009 Wall Street Journaleditorial, he had the nerve to blame availability of credit which financed the run-up in home prices to a “savings glut” in Asia.  He writes:

[T]he presumptive cause of the world-wide decline in long-term rates was the tectonic shift in the early 1990s by much of the developing world from heavy emphasis on central planning to increasingly dynamic, export-led market competition. The result was a surge in growth in China and a large number of other emerging market economies that led to an excess of global intended savings relative to intended capital investment. That ex ante excess of savings propelled global long-term interest rates progressively lower between early 2000 and 2005.

Sounds convincing right?

Much of the aura of greatness attributed to Greenspan throughout his term as chairman was due in part to the purposefully overly-technical language he used when talking to reporters.

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JP Morgan Debacle Reveals Fatal Flaw In Federal Reserve Thinking

By Simon Johnson

Experienced Wall Street executives and traders concede, in private, that Bank of America is not well run and that Citigroup has long been a recipe for disaster.  But they always insist that attempts to re-regulate Wall Street are misguided because risk-management has become more sophisticated – everyone, in this view, has become more like Jamie Dimon, head of JP Morgan Chase, with his legendary attention to detail and concern about quantifying the downside.

In the light of JP Morgan’s stunning losses on derivatives, announced yesterday but with the full scope of total potential losses still not yet clear (and not yet determined), Jamie Dimon and his company do not look like any kind of appealing role model.  But the real losers in this turn of events are the Board of Governors of the Federal Reserve System and the New York Fed, whose approach to bank capital is now demonstrated to be deeply flawed.

JP Morgan claimed to have great risk management systems – and these are widely regarded as the best on Wall Street.  But what does the “best on Wall Street” mean when bank executives and key employees have an incentive to make and misrepresent big bets – they are compensated based on return on equity, unadjusted for risk?  Bank executives get the upside and the downside falls on everyone else – this is what it means to be “too big to fail” in modern America.

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J.P. Morgan Malinvests Free Federal Reserve Money: Market Crash, Bailout & Printing Incoming

At this point, evidence is mounting that the illuminist internationalists in the financial sectors and their media-tycoon spokespersons are doing everything they can to abet an across-the-board selloff in financial markets, with attempts made by news media outlets to say markets are falling when they are steady and the most recent announcement at J.P. Morgan that they are sustaining major trading losses.

The casino gulag prison guard bank, JP Morgan, has again mismanaged their free money from the Federal Reserve. Whilst mainstream reports tout trading losses as the reason for the glut, perhaps a continuation of lavish partying or even getting it on with the boys over at Morgan Stanley with under-age prostitutes has led to, at least, some of the losses.

The bank’s shares have slumped 9.1% in the wake of their announcement of $2 billion in trading losses in just the past six weeks. The bank informed the Federal Reserve and the Financial Services Authority of Britain about the trading activities when media reports surfaced in April about a London-based trader with outsized positions, who was referred to as the “London Whale” and “Voldemort.”

J.P. Morgan has sustained battle wounds over the last year as allegations of their role in commodity manipulation have been made public and led to lawsuits.  Nevertheless, the media has made a half-hearted attempt to shield the bank by suggesting that, just like the May 6 Flash Crash, Guantanamo Bay, etc., the bank’s trading losses are the fault of a rogue trader, a bad cookie.

The company said it could face further losses, totaling $3 billion in losses in the second quarter due to market volatility.

Chief Executive Jamie Dimon spoke in a conference call of a “flawed, complex, poorly reviewed, poorly executed and poorly monitored” hedging strategy. He said that the bank remains profitable despite large losses.

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JPMorgan’s $2B Loss: ‘Stupid’ Bet, Big Fallout

By SUZANNE MCGEE, The Fiscal Times

That clanging sound you just heard was Jamie Dimon’s halo falling to the floor.

Dimon and his firm, JPMorgan Chase (JPM), seemingly couldn’t make a wrong step for years, even during the worst of the financial crisis. As other banks blew up, Dimon’s reputation was burnished and JPMorgan became the model for risk management on Wall Street. The firm, once known as the “The House of Morgan,” was dubbed “The House of Dimon” in recognition of that fact.

But that immunity came to a crashing halt yesterday, when Dimon held a conference call to reveal that the bank had taken a $2 billion trading loss in the last six weeks – and that it may end up reporting another $1 billion in losses this month as the volatile markets make closing out some of those positions very costly. The culprit? Derivatives bets using credit default swaps on a portfolio of corporate debt. “They were egregious mistakes; they were self-inflicted,” Dimon admitted during the relatively brief conference call. The trade wasn’t just complex but also “flawed” and “poorly reviewed.”

Dimon apologized profusely, particularly to analysts he had met with in recent days and whom he couldn’t inform of what was going on for legal reasons. He also took responsibility for the losses, and warned against drawing too sweeping a conclusion from it. “Just because we were stupid, doesn’t mean anyone else was.”

The problem is that apologies and humility after the fact aren’t enough. Nor is it good enough for the bank to decide that the “value-at-risk” model it once saw as the ne plus ultra of risk management isn’t adequate and announce it will be reverting to an older strategy for trying to identify excessively risky activities before they blow up in the face of the institution.

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Biderman On The Fed: “They Control The Market, We Play With Their Money” [Zerohedge]

Submitted by Tyler Durden

The pastel-wearing President of TrimTabs proffers an entirely non-perfunctory prose explaining why he believes we are now due for a stock market decline. Echoing our thoughts, Charles notes that “It’s the Federal Reserve that controls the market, it’s their money, they’re the boss, we play with their money that they print or stop printing“. Sadly true (especially for all the highly-paid economists and strategists out there), the pre-2009 drivers of equity performance (specifically new or excess savings) are no longer so; since the initial QE1 this has not been the case and providing us with a thoughtful history of equity market valuations relative to the various QE-efforts over the past few years – especially when compared to income growth and/or macro-economic data – provides just the color required to comprehend this essentially a obvious thread of reality that merely  four years ago would have been denigrated to the tin-foil-hat-wearers of the world. Real-time data says that wages and salaries are barely growing above inflation, Europe is a disaster, and the emerging nations are seeing slowing growth; without the Fed’s new money where will cash come from to drive stock prices higher?

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Krugman, Diocletian & Neofeudalism [http://azizonomics.com]

From azizonomics.com

The entire economics world is abuzz about the intriguing smackdown between Paul Krugman and Ron Paul on Bloomberg. The Guardian summarises:

  • Ron Paul said it’s pretentious for anyone to think they know what inflation should be and what the ideal level for the money supply is.
  • Paul Krugman replied that it’s not pretentious, it’s necessary. He accused Paul of living in a fantasy world, of wanting to turn back the clock 150 years. He said the advent of modern currencies and nation-states made an unmanaged economy an impracticable idea.
  • Paul accused the Fed of perpetrating “fraud,” in part by screwing with the value of the dollar, so people who save get hurt. He stopped short of calling for an immediate end to the Fed, saying that for now, competition of currencies – and banking structures – should be allowed in the US.
  • Krugman brought up Milton Friedman, who traversed the ideological spectrum to criticize the Fed for not doing enough during the Great Depression. It’s the same criticism Krugman is leveling at the Fed now. “It’s really telling that in America right now, Milton Friedman would count as being on the far left in monetary policy,” Krugman said.
  • Paul’s central point, that the Fed hurts Main Street by focusing on the welfare of Wall Street, is well taken. Krugman’s point that the Fed is needed to steer the economy and has done a better job overall than Congress, in any case, is also well taken.

I find it quite disappointing that there has not been more discussion in the media of the idea — something Ron Paul alluded to — that most of the problems we face today are extensions of the market’s failure to liquidate in 2008. Bailouts and interventionism has left the system (and many of the companies within it) a zombified wreck. Why are we talking about residual debt overhang? Most of it would have been razed in 2008 had the market been allowed to liquidate. Worse, when you bail out economic failures — and as far as I’m concerned, everyone who would have been wiped out by the shadow banking collapse is an economic failure — you obliterate the market mechanism. Should it really be any surprise that money isn’t flowing to where it’s needed?

A whole host of previously illiquid zombie banks, corporations and shadow banks are holding ontotrillions of dollars as a liquidity buffer. So instead of being used to finance useful and productive endeavours, the money is just sitting there. This is reflected in the levels of excess reserves banks are holding (presently at an all-time high), as well as the velocity of money, which is at a postwar low:

Krugman’s view that introducing more money into the economy and scaring hoarders into spending more is not guaranteed to achieve any boost in productivity.

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The Gold Megathrust [goldseek.com]

By

Stephan Bogner

 “One historic experience is that human nature never changes…” (Ferdinand Lips in “Gold Wars – The Batlle against Sound Money as seen from a Swiss Perspective”, page 251;Fame 2002)

 

 

Since mid-2010, the gold price consolidates sideways predominately within the boundaries of the blue-green triangle. In January 2012, the resistive blue triangle leg was broken successfully at approx. $1,700 giving the starting signal for the so-called “breakout“ reaching nearly $1,800 a few weeks later. Thereafter, a so-called “classical pullback“ occurred – typically bringing the price to the apex of the triangle, whereafter the final movement of a triangular price formation begins: the so-called “thrust“ – either a strong and longer-termed up- or downward-trend. A few days ago, a correction to the 260-day EMA at $1,620 occurred – as it was breached shortly, it must be taken into (risk-) account that another pullback may occur (currently at $1,623.90). A sell-signal à la thrust to the downside is not generated until falling below the price level of the triangle apex at approx. $1,625 and reinforced when breaching the (extension of the) blue triangle leg currently at approx. $1,590. As the price rose above the level of the apex recently, a strong buy-signal à la thrust to the upside is active. Principally, the goal of a thrust (to the upside) is to transform the resistive high of the breakout ($1,793) and the triangle ($1,923) into new support – in order for a new and longer-termed upward-trend to begin thereafter.

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How the Fed Favors The 1% [WSJ]

By MARK SPITZNAGEL

A major issue in this year’s presidential campaign is the growing disparity between rich and poor, the 1% versus the 99%. While the president’s solutions differ from those of his likely Republican opponent, they both ignore a principal source of this growing disparity.

The source is not runaway entrepreneurial capitalism, which rewards those who best serve the consumer in product and price. (Would we really want it any other way?) There is another force that has turned a natural divide into a chasm: the Federal Reserve. The relentless expansion of credit by the Fed creates artificial disparities based on political privilege and economic power.

David Hume, the 18th-century Scottish philosopher, pointed out that when money is inserted into the economy (from a government printing press or, as in Hume’s time, the importation of gold and silver), it is not distributed evenly but “confined to the coffers of a few persons, who immediately seek to employ it to advantage.”

In the 20th century, the economists of the Austrian school built upon this fact as their central monetary tenet. Ludwig von Mises and his students demonstrated how an increase in money supply is beneficial to those who get it first and is detrimental to those who get it last. Monetary inflation is a process, not a static effect. To think of it only in terms of aggregate price levels (which is all Fed Chairman Ben Bernanke seems capable of) is to ignore this pernicious process and the imbalance and economic dislocation that it creates.

[...]

 

The Fed, having gone on an unprecedented credit expansion spree, has benefited the recipients who were first in line at the trough: banks (imagine borrowing for free and then buying up assets that you know the Fed is aggressively buying with you) and those favored entities and individuals deemed most creditworthy. Flush with capital, these recipients have proceeded to bid up the prices of assets and resources, while everyone else has watched their purchasing power decline.

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