Could This Cause an Explosion in Gold !

• Could This Cause an Explosion in Gold ! 
  by Chris Hunter, Investment Director, Bonner & Partners, http://www.insideinvestingdaily.com/ 
  It’s a watershed moment…
  Germany plans to repatriate its gold reserves held abroad… much of which is sitting in vaults in Paris and New York.
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  The papers say the move could be as big as France’s bid to swap its dollar reserves for gold, which triggered the so-called “Nixon Shock.” You’ll remember that in the 1960s French president Charles de Gaulle… seeing presidents Nixon and Johnson issue many more dollars than they had gold to back them… began demanding gold in exchange for their dollars at the fixed rate of $35 per ounce (set by the gold standard).
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  In August 1971 – under mounting pressure from the French and in a bid to stop a run on the dollar – Nixon announced the end of dollar-gold convertibility… and ended the dollar’s link to gold for good.
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  The German gold repatriation story is significant. And there are definitely overtones of de Gaulle’s aggressive move over 40 years ago. Germany had total reserves of 3,391 tons of gold – valued at roughly $183 billion. This is the world’s second-largest holding after the U.S. And Germany stored most of its gold hoard abroad for safety reasons during the Cold War.
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  Now, Germany’s central bank says it will repatriate 674 metric tons of that gold from vaults in Paris and New York by 2020. It claims it is doing so to restore public confidence at home. But there are other reasons why this move makes sense…
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  1)  Storage costs are high. A decade ago, Germany withdrew its gold from vaults in London because it was paying out about $670,000 a year in storage costs. Storage costs in France and New York are no doubt also high.
  2)  The Germans are worried that their gold isn’t where U.S. and French officials tell them it is. In short, central banks don’t trust each other. The repatriation announcement follows a confidential report by the German Court of Auditors, which claimed that the gold held abroad had “never been verified physically” and was not under proper control.
  3)  As I wrote to members of our top-tier investment advisory services, Bonner & Partners Private Wealth and Bonner & Partners Family Office, with governments in the U.S. and France increasingly strapped for cash, all that gold lying around might become a temptation.
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  This is all true. But the mainstream press has missed the point completely. Germany is getting twitchy because of central bank promises of “QE to infinity.” So far, the Fed, the European Central Bank and the Bank of Japan are all in on the act.
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  From bitter experience, Germans know gold is an anchor in times of inflation. They perhaps know, too, that the fiat money system President Nixon established in 1971 can’t last forever. The closer to home their gold is… the safer they feel.
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  But I don’t see this moving the gold price too much. (Unless, of course, there’s no German gold in those vaults…) Germany has repatriated gold before when it withdrew reserves from vaults in London – and it didn’t trigger a big move up in the gold price. Besides, Germany still plans to leave large reserves of gold abroad.
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  What’s far more important is a story happening thousands of miles away in the pension funds of the world’s third-largest economy – Japan.
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  A story that has gone almost unnoticed is that Japanese pension funds… in the wake of the election of Prime Minister Shinzo Abe on a platform of more aggressive monetary intervention by the Bank of Japan… will more than double their gold holdings in the next two years.
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  read more!

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