Germany brings her gold home

[el_chavista]

As the Cold War set in, Germany kept its gold reserves put, keeping them out of reach of the Soviet empire. But government officials have grown uneasy about the storage set-up and have called for the Bundesbank to inspect the bars.

The Bundesbank now wants to change the arrangement too, even though it has said it does not see a need to count the bars or check their gold content itself and considers written assurances from the other central banks as sufficient.

With the end of the Cold War it was no longer necessary to keep Germany's gold reserves "as far to the west and as far from the Iron Curtain as possible", Bundesbank board member Carl-Ludwig Thiele told reporters on Wednesday.

The German Federal Court of Auditors, which oversees the government's financial management, called last October for an official inspection of the gold reserves stored at foreign central banks, because they have never been fully checked.

http://www.reuters.com/article/2013/01/16/bundesbank-gold-idUSL6N0AL7T020130116

[Geiseric]

This could get ugly, if the American and British banks did anything with that gold, which I wouldn't be surprised.

[Noa Rodman]

The physical location doesn't matter for the Bundesbank to lease some gold to bullion banks I think. Leasing influences the gold market unfairly for the small people, but the issue is if they can thereby artificially over-value the dollar (or Euro) against the gold price (by suppressing the gold price), which would be beneficial to the central banks, who thus would be in cahoots with bullion banks (actually use the latter as their instrument). But on the topic of currency wars, don't exporters want a weaker currency? So it doesn't make sense to me why a central bank would manipulate its currency's gold-value in order to somehow make their currency stronger against another currency.

[TheRedAnarchist23]

So many centuries have passed and still our economy is based on gold...

[ckaihatsu]

[O]n the topic of currency wars, don't exporters want a weaker currency? So it doesn't make sense to me why a central bank would manipulate its currency's gold-value in order to somehow make their currency stronger against another currency.


This is an excellent point and sheds light on the *conflicting* interests within the bourgeoisie itself, due to its social organization into the nation-state form.

A (national) central bank would have an interest in buttressing the 'castle wall', so to speak, to reinforce national cohesiveness and identity -- this equates to monetarism for a strong, hegemonic national currency (which doesn't actually exist in Germany, of course).

The merchant-bourgeoisie, though, have a *countervailing* interest, for a fluidity of transactions, large volumes, and, of course, profits. They want the price of entry to be as low as possible, thus favoring a weaker local currency, and also so that their resulting products and services will be less expensive for their customers and more competitive versus that of companies located in countries that demand relatively more economic sovereignty through a *stronger* national currency.

These dynamics of ownership are universal at all scales, I'll maintain, and can be imagined from a scenario of owning a single dollar (or whatever) -- if a consumer, should you decide to incur some presumably negligible additional transaction costs in order to buy internationally to enjoy a favorable strong-currency purchasing advantage -- ? (Of course -- no-brainer.)

If you intend to *remain* an owner of that dollar, though, would you have more of an interest in a strong-currency regime (higher interest rates) so that its relative value increases over time, or would you favor a *weakening*, increasingly-debased currency regime so that any investment today -- as into gold or profitable manufactures -- will yield additional face-value gain in the future from sales valued in that domestic currency -- ?

This fork-in-the-road for ownership, and its resulting contradictions -- bubbling all the way up to historical world wars -- is inherently an argument in favor of socialism so that basic material decisions of should-we-stay-or-should-we-go can be ascertained *collectively*, in a consciously-political way, rather than leaving it to redundant separatist individualism through the mindless market and its netherworld of artificial valuations.