Gold Repatriation Movement Reaches Ecuador

The WealthCycles Staff

For years gold was belittled by government leaders, mainstream economists and traditional media as a derelict relic, of no real value and a risky investment prospect. But something funny happened a few years ago. Central banks worldwide, after decades of selling off their gold reserves, began buying it back. And for many months, even as far back as 2011, countries have quietly and not so quietly been working to repatriate their gold reserves. There is only one reason governments would ramp up efforts to accumulate gold: because those in power know the global fiat currency system is on its last legs. Ecuador’s recent move to bring its gold home is just one more nail in the coffin of the world’s reserve currency, the Federal Reserve's dollar.

In November 2011 Venezuelan President Hugo Chavez received the first shipment of gold from his request that 85% of the country’s gold reserves be returned to Venezuela’s central bank. As reported in a BBC story,

President Chavez has explained the move as an act of sovereignty that will protect Venezuela's reserves from global economic turbulence.

Romania has been trying to repatriate its gold from Russia since it asked Russia to keep it secure and out of the hands of the Germans during the first World War. Sadly, ever since sending its gold and other treasures to Russia, Romania has only received the art and artifacts, while Russia has resisted giving Romania back its gold. See Romania Wants Return of 93.4 Tons of Gold Repatriation Ratchets Up for more. Romania remains adamant:

According to the country's foreign minister Titus Corlatean the return of the Romanian treasure remains a priority for his country.

Could it be the Russians aren’t sure where Romania’s original gold is, or just flat don’t have it?

As we wrote in back in July, one of the 36 foreign central banks and institutions that have metal stored 80 feet underneath the streets of New York is the Swiss National Bank (SNB). Four members of the Swiss parliament launched “Rettet Unser Schweizer Gold: An Initiative to Secure the Swiss National Bank’s Gold Reserves,” which states that the Swiss people should have a right to vote on three simple things:

  1. Keeping the Swiss gold physically in Switzerland
  2. Forbidding the SNB from selling any more of its gold reserves
  3. The SNB has to hold at least 20% of its assets in gold

On the topic, CSLA's Chris Woods wrote that:

The paper gold market is significantly larger than the physical market. Just like a run on a bank in a fractional banking system, [Woods] suspects it will be very hard to settle all the paper claims to gold physically in a real scramble for the metal. This is why in a parabolic spike physical gold is likely to trade at a significant premium to paper claims.

In a related story on GoldSilver.com, Guillermo Barba reported on Bank of Mexico disclosing that the gold they have bought was not physically acquired, but rather a claim against the Bank of England who will (hopefully) buy the physical gold and store it segregated on behalf of the Bank of Mexico. Presumably, Mexico’s central bank purchased the gold with the intent of hedging against the potential collapse of paper money.

On October 22 we reported on Germany’s plan to repatriate their gold slowly, bringing home 50 tons a year for 3 years. This move by Germany represents a bigger issue, however, and that is the push for a full-blown audit of the country’s gold holdings. As reported on CNBC:

There’s no way for Germany to know that the gold it is being shown is Germany’s, as opposed to some other depositor’s. In an extreme case—which I have no reason to believe is true—miscreants at the Fed could just show everyone who came to visit the same pile of gold.

Could it be that Germany, like Venezuela and Ecuador, with a global monetary system increasingly vulnerable to loss of confidence and panic, has started to question the wisdom of storing its gold with the traditional custodians in London and New York? Has the German government simply become more cautious about accepting paper records of its gold holdings at face value without being able to lay eyes on their physical reserves? Most likely it is a combination of these and other factors that have caused the German government to push the central bank, Bundesbank, to take a more proactive role in validating the country’s gold supply. Regardless of the reasons, Germany is definitely on track to audit its gold at the least and, more likely, to ultimately demand further repatriation.

In the Netherlands it is not the government demanding information about the nation’s gold reserves; it is the citizenry. In a story dated October 25, the Gold Anti-Trust Action Committee (GATA.org) reported that:

Almost 300 "concerned Netherlands citizens" have joined the German initiative for insight about the gold reserves.
In a petition the citizens committee demands "full openness on the quantity and storage location of the Netherlands' physical gold, and on the extent and nature of the gold claims.”

What the story from the Netherlands tells us is that the concern about and interest in sovereign gold reserves is an issue that has escaped the walls of government and has reached into communities of concerned and engaged citizens. And, as any politician will tell you, once an issue attracts the attention of the population, it is not a subject that will simply disappear. In other words, when citizens demand action, politicians begin to listen, even if governmental bureaucrats drag their feet.

Finally, this nationalistic fervor for gold repatriation has reached tiny Ecuador, which recently joined the party by demanding that one-third of its foreign holdings be returned to in-country custody. Ecuador’s gold claims amount to only 26.3 tons; nevertheless, its demand for repatriation of its gold, when combined with rumblings from Germany, Switzerland, Romania, and the Netherlands adds further emphasis to the emerging pattern.

With the exception of Germany, none of these countries’ demand for repatriation could have a dramatic impact on the existing stores of gold. But they do signal the growing trend for gold repatriation and a growing consciousness that the global fiat currency and debt-addicted banking systems are reaching a breaking point. By reclaiming their physical gold and storing it securely, nations are securing their wealth and future survival—a strategy that should serve as a model for individuals as well.

Thanks for this informative discussion. I wonder how its in the U.S.

Could the people finally be getting pissed? Only time will tell…

100% on the nail

Thank you for the shout-out and all of your valuable work !!

3 Cheers !!!

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