I´m worried about governments selling their gold to kick the can down the road for a while

[Bern]

They are going to offer their gold reserves as collateral for loans which they are absolutely not going to be able to repay in the future. They are essentially handing over their real wealth to the global puppet masters.

[swissaustrian]

They are going to offer their gold reserves as collateral for loans which they are absolutely not going to be able to repay in the future. They are essentially handing over their real wealth to the global puppet masters.

+ rep.
This is exactly what this is about. Expropriating old Europe.

[swissaustrian]

European Governments Have a Lot of Gold. But That Won't Be Much Help.
Fact No. 1: European governments are among the biggest holders of gold on the planet.
Fact No. 2: Massive debts owed by some of those governments are fueling a political crisis in Europe and turmoil in markets around the world.
Those two facts lead to an obvious question from a lot of investors: Why don't those governments sell gold to pay off their debts?
If only it were that simple.
For starters, not even the Europeans own that much gold. The borrowing needs, and subsequent debts, of countries like Italy, France, and Spain are so huge, analysts say, that liquidating their gold reserves wouldn't go far toward balancing their books for the long term.
"If they sold their gold, I'm not sure it would do anything to their credit rating," says Kenneth Rogoff, an economics professor at Harvard University who has studied official gold reserves. "This is not exactly a game changer."
Market and political realities too would make it challenging for Europeans to rely on a golden parachute, experts say. For one thing, there's a risk that trying to sell the gold or use it as collateral for a loan could be seen in the market as a sign of desperation -- which could drive up borrowing costs by making lenders even more wary, defeating the purpose.
Nevertheless, some investors still need convincing that gold isn't the cure-all that Europe is seeking. After all, governments, central banks and multilateral financial institutions like the International Monetary Fund hold roughly 18% of the world's gold, according to the World Gold Council, a trade group. Italy has more gold than any nation besides the U.S. and Germany, the council says. France ranks fourth and Portugal 12th. Even Greece, the land of King Midas, is in the top 30, well ahead of wealthy nations such as Australia and emerging powers like Brazil.
And with gold prices near a record in nominal terms -- up 17% this year alone -- the value of those holdings has soared in recent years. Italy's current gold holdings, now valued at $134 billion, would have fetched only $21 billion at the end of 2000.
The other side of the coin, however, is that Italy's gold represents only about 6.7% of its gross domestic product. Portugal's supply is proportionally bigger, at more than 9% of its GDP. But cashing in its gold would barely make a dent in Portugal's government debt, which represents 93% of GDP, according to IMF data.
In addition, European Union members accepted restrictions on using their gold reserves when they launched a common currency. The euro treaty prohibits the countries from financing government operations by selling gold held by central banks -- which is where most European nations have their reserves -- according to Natalie Dempster, the gold council's director of government affairs.
Using gold to finance state operations "is simply not an option," she says. The gold, Ms. Dempster adds, is mainly there to protect the euro.
For euro-zone nations, similar hurdles apply to the idea of using official gold as collateral to borrow at cheaper rates than investors are currently offering. But Europe could in theory transfer some gold held by member states -- or the European Central Bank, which has its own bullion -- out of reserves and use it to partially back a bond issue, according to Ms. Dempster.
A similar notion was recently raised in a paper issued by the European Commission, she says. In the gold council's view, that would require the ECB to determine that the move supported member states' economic policies and didn't interfere with price stability.
An additional hurdle for governments when it comes to gold markets is an accord known as the Central Bank Gold Agreement, which is signed by many European nations and, like the euro treaty, limits gold sales by governments, according to the gold council.
Even if a nation found a way around such obstacles, officials could face a backlash from voters who believe gold prices will keep rising. Before 2010, many European nations were net sellers of gold, which some of them had come to view as an antiquated asset.
"That," says Harvard's Mr. Rogoff, "turned out to be not such a good idea."

http://online.wsj.com/article/SB1000...295941430.html

[swissaustrian]

Seems like I was (kinda) right afterall

Negative Salaries, Negative Bailout And Now Negative Gold - Greece Just Became The Bankster's Paradise
While Iceland is now known as the country that is the closest earthly approximation to banker hell, it is safe to say that Greece is the terrestrial equivalent of banker heaven. Because as explained earlier today, the country's population is about to get a worse deal than your average run of the mill slave - they may get whipped, but at least never have to pay for the privilege, unlike the Greeks. Hence negative salaries. As also explained, the European bailout of Greece, is now formally a Greek bailout of Europe, funded by the country's already negative primary surplus, or better said - deficit (don't try to make mathematical sense of that - a scene out of Scanners is guaranteed). Hence, negative bailout. But the piece de resistance, and the reason why Greece is the in situ version of bankster heaven is the news from the NYT that Greece is also about to have negative gold.

Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal.

Well, they may be broke, and they may be bailing out Europe, but at least they'll have no gold: sounds like a sweet deal - it makes perfect sense that Greeks are taking every incremental humiliation from a syndicate of few fat, bald types who have access to a digital money printer, with the supine determination of an Oliver Twist.

http://www.zerohedge.com/news/negati...sters-paradise

Here's the original article by the NYT:
http://www.nytimes.com/2012/02/22/wo...lout.html?_r=1

[swissaustrian]

Don Coxe continues:
“The big story that’s unfolding is something I’m very interested in because I started writing about the odds of this last summer. As a result of that, I’ve been kept up to date about the discussions that are proceeding to try to find a way to save the euro, by getting at the gold reserves of the PIIGS countries.
Some of them, particularly Italy, have huge gold reserves.
So, there was a paper prepared by what are called, ‘The German wise men,’ last fall. It was immediately rejected by everybody in sight.
They came back a few weeks ago with a revised version, where they came up with this formula where the countries would have the guarantees of all of their debt above 60% of their GDP (the legal limit under the Maastricht Treaty) -- they would be covered by a euro bond. And the countries who were getting this euro bond would pledge their holdings of gold.
This wouldn’t have the situation, where as Jens Wideman of the Bundesbank said, ‘We’re not going to use Germany’s credit card for those who spend too much.’ They would have the security of gold. This is under active discussion. I have reason to know they have been discussing it with people in the industry .”
This European gold bond is huge news. When asked if this was bringing gold back into the financial system, Coxe responded, “Yes, exactly. I did conference calls with people in our organization about this. I said, ‘Something like this could be unfolding because this crisis is developing so fast.’”
When asked if this event would begin to trigger a significant revaluation for gold, Coxe replied, “At this point, how they would do it, and whether there would be any revaluation, what it would be is security for issuing specific bonds. But, of course, once you do that, what you do is you break the virginity of the system.
Then you have to start looking at revaluations, you’re right. All of that will come. My own take is that I think there is a very good chance of this ... that within the next three months we will find that something like this has been done for some of the countries in the eurozone.
That means that gold will have been moving back into the (financial) system.”

http://kingworldnews.com/kingworldne...ked_Bonds.html

[damiengwa]

Why do you want governments to own gold? Gold should be owned by the people. Without gold in the vaults governments have fewer funds to do evil. If they had no gold, could they pull off these bailouts?

I'd like to see gold return to private ownership. That way, the market can bring back a gold standard when the hour is at hand.

[swissaustrian]

Why do you want governments to own gold? Gold should be owned by the people. Without gold in the vaults governments have fewer funds to do evil. If they had no gold, could they pull off these bailouts?

I'd like to see gold return to private ownership. That way, the market can bring back a gold standard when the hour is at hand.

I totally agree with you
I don't want them to own it. I just want to anticipate price trends and government sales would have a huge impact for sure.
See here what I wrote in the op:

...
If selling gold reserves gets fancy, we could have quite massive downside moves in gold. I mean, Euro countries hold more than 10000 tonnes of gold. That´s a lot. Even if creditor nations (and private investors) buy it all, prices could fall significantly for a while. So maybe one needs some patience to see the real endgame for fiat vs. gold.

[DEGuy]

Although governments definitely hold a large supply of gold, from various sources, it's only cited between 10% and 25% of the total mined supply. Certainly, this is enough to dramatically affect the market (combined with shady commodity trading practice), but not so much that an efficient market using gold as money couldn't be successful.

[gerryb]

Can't happen soon enough.

They were proving a good sales price from 2000 to 2008.. Then they stopped selling and look what happened.

Hope they start unloading soon.

[swissaustrian]

I started this thread 18 months ago, now it's beginning:

Here We Go: Cyprus To Sell €400 Million In Gold, About 75% Of Its Total Holdings, To Finance Part Of Its Bailout

Curious why every bank and their grandmother, and most recently Goldman today, has been lining up to push the price of gold as low as possible? Here's why:

CYPRUS TO SELL 400 MLN EUROS WORTH OF GOLD RESERVES TO FINANCE PART OF ITS BAILOUT - TROIKA DOCUMENTS - RTRS

Or about 10 tons of gold. But... the bailout was prefunded and there was no need to provide any additional cash? What happened: was the deposit outflow discovered to have been even greater than the worst case scenario and thus Cyprus needed even more cash? As for the buyers? We will venture a guess: central banks buying at the lows.

Finally: congratulations Cypriots. You are now handing over your gold for the one time, unbeatable opportunity to remain a vassal state to the Eurozone. But at least you have your €.

The good news: Cyprus will have at least another 4 or so tons after selling the 10 demanded now, before the Troika kindly requests that Cypriot citizens sell a kidney or two to pay for the ongoing deposit outflow from its insolvent banks, and indirectly, the endless bailout of the Euro.

http://www.zerohedge.com/news/2013-0...rt-its-bailout