The Goldfinger is probably the most iconic appearance of Sean Conery as James Bond. From the Cold War hero of “From Russia with Love” to the super spy in the next decades, the fame of the playboy who conquers three to four girls per film, proponent of the necessary often atomic bomb turned off seconds before the disaster, the film has a prominent place in the annals of the adventures of the perfect agent for the most challenging element of the plot: Bond’s opponent wants to render the gold reserves of America in Fort Knox radioactive for 58 years and become himself the worldwide Midas thanks to the quantities he has gathered. The truth is that in 1964 the concern over gold was not so great. In the era of sustainable development the precious metal was generally not so popular. Fifty years later, the era of near miss Grexit for us and monetary uncertainty for many others, there is nothing banal about dreaming of gold bars. This is why several central banks around the world seek persistently for some years now to gather again in their basements those that for safety reasons had previously interspersed in other’s chests. First and foremost, expected or not, Germany.
EUROPEAN QUESTIONS: A typical gold bar is approximately as long as two cans of cola. All the difference is in weight: instead of 660 grams, such as soft drinks, it weighs about 13.5 kg. The sensation that someone feels when sees and then lifts a gold bar is not surprising at all. There are not so many people, after all, who will have this chance in their life. Despite its constant presence in human history, the yellow metal is really rare: according to the World Gold Council (the market development organization for the global gold industry), only 175,000 metric tons of gold have been mined in all human history. If someone gathered this quantity, he would form a cube 21 meters of each side. It is not impressive at all for a key cause of war, revolutions and mobilizations of some of the less noble instincts of humanity. It is enough, however, to move for millennia the world economy and for some others, such as the 45-year-old German businessman Peter Boehringer, it is necessary even today in the era of credit cards, electronic transactions and Bitcoin. Boehringer, owner of an asset management firm engaged in precious metals and mining shares, according to Bloomberg Businessweek, belongs to a minority: those who are afraid that today’s economy is built entirely on trust of consenting adults with regard to the return on their capital and that means it is built on shaky foundations. At first sight the bubble of American mortgages and the crisis of 2008 or the Greek liquidity adventure would provide him with arguments but the views of most economists on dematerialized securities which facilitate human transactions would take these arguments away. However, what he was primarily interested in since 2012 when he began his Internet campaign was not a setback in the gold currency, but the precise location of Germany’s reserves. Discussing with, attracting and organizing like-minded people, Boehringer reached in September 2012 the issue of a court order obliging the Bundesbank, the German federal bank, to disclose the extent and location of the country’s gold reserves.
In response to the decision, in October 2012, the bank revealed that only 1,036 out of the then 3,396 tons of reserves worth about 140 billion euros were in Germany. Other 1,536 tons, 45% of the total quantity was stored in the basements of 33 Liberty St. in New York, the Federal Reserve Bank of USA, while the rest was stored in the Bank of England and the Bank of France. Boehringer’s campaign forced the German Central Bank to announce the repatriation plan of 300 tons by 2020. Five tons of those arrived in Frankfurt in 2013 and 85 tons in 2014. But Boehringer was not satisfied. He questions whether the bars are the same ones that were sent to America during the Cold War and calls for the repatriation of the last ounce in the homeland. Peter Boehringer may be an extreme case of hidden gold nationalism, but his concerns are shared by individuals and institutions in various parts of the world. In May 2014, the Bank of Italy, the fourth largest gold holder in the world with 2451.8 tons (according to data of April 2015, the US come first with 8,133 tons, then Germany with 3,384.2 tons and then, surprisingly, the IMF with 2,814 tons) disclosed the location of its gold reserves in Rome and New York. Switzerland did the same in November, while in the same month the Dutch Central Bank announced that it had already transferred 122.5 tons out of 612.5 tons of its reserves from New York to Amsterdam. The reason for that was the most balanced distribution among the storage sites and the potential positive impact on the psychology of the public. The risk of high storage of gold led the Austrian Central Bank to request on May 2015 the transfer of 140 tons form the UK in the next five years, 92.4 out of which were intended for Vienna and 47.6 of which for Switzerland.
The central banks, always prudent in their words, could not speak more straightforwardly about their motives. For a better view of what causes this mobility at that time, however, anyone may refer to individuals’ strategies. According to the World Gold Council, the first quarter of 2015, gold demand in Germany increased by 20% compared to 2014, while it went over 10% in France, Switzerland and Austria. Analyzing the issue in mid-May, the CNN.com attributed the phenomenon to the fear of inflation (a word that is boogeyman in Germany because of the memory of economic collapse and hyperinflation of the interwar period), which revived by the implementation of quantitative easing by Mario Draghi in the form of bond purchase of 1.3 trillion euros from the European Central Bank, but also the endless Greek crisis and the instability of the situation in Russia-Ukrainian border.
AMERICAN CONCERNS: If the European repatriations have to do with the questions of the euro or the national ideology, on the opposite Atlantic shore the concerns are part of the permanent tug of war between federal and state power. On June 16, the American public opinion was informed that Texas had just voted a law according to which the government was to rebuild a vault to house 1 billion dollars worth of gold currently stored by the Federal Reserve Bank in New York. This move, according to American commentators, was twofold: on the one hand, to safeguard against any possibility of confiscation by the federal authorities in case of emergency, on the other hand the creation of an electronic payment system with the precious metal as collateral, in order, as stated by the man who initially drafted the legislation, Rick Cunningham, executive director of the Texas Center for Economics, Law and Policy, not only to guarantee the function of state and local government, but also to guarantee much of the economy of Texas in national financial or currency crisis. Republican State Rep. Giovanni Capriglione who introduced the bill explains the reasoning of the bill in his interview with the Epoch Times: “I have a vision, I would like for Texas to compete with Manhattan or the exchanges in Chicago. Here in Texas we have oil, we have natural gas, we have our own electric grid. To me having a bunch of metal commodities in the mix is something else that helps Texas to be able to become a marketplace for a lot of different items”. However, he also raised the issue of business credit as the core of the 2008 crisis, pointing out the need for support in solid foundations. In other words: the idea behind this is to have something that is stable and that you can touch as opposed to being ephemeral like paper or bank money. However, such an approach renders useless a century of economic history – the connection of gold with the release of currency, that is its convertibility into gold, practically ended in Europe with the outbreak of World War I in the summer of 1914, while its security status based on the reserves of the central banks was abandoned during the interwar period, after the Great Depression. When in 1944 the conference of Bretton Woods established the guidelines of the postwar international monetary system, the old gold standard was circumvented in favor of an interconnection of exchange rates focusing on the dollar and its own stable exchange value to gold ($ 35 an ounce), an option, however that was not offered to individuals or companies. Βut this indirect convertibility was suspended unilaterally by decision of President Nixon in 1971.
For Stephen Flood, analyzer of the website Goldcore.com, this whole succession is seriously contested for geopolitical reasons: Europe and Texas are not the only ones that ask for gold, but Russia and China have proceeded with frantic gold hoarding. If any of these two countries, he writes, chooses to support its currency with gold, having gathered huge amounts of it in recent years, the US would be forced to follow them in order to prevent the drastic drop in the dollar value and keep its status as a reserve currency. Similar scenarios indicate presumably the innermost fears of analysts, despite the realistic reflection of rollover possibilities of the global monetary order. Certainly, one should read proposals such as the days of the notes and electronic currencies based on faith in governments which the public increasingly mistrust. That is because a golden revolution from Russia and China should not be expected soon: in the table showing the gold reserves by country as reported by the World Gold Council they rank sixth and seventh with 1,207.7 and 1054.1 tons respectively, far away from 8,133.5 tons of US, 3,384.2 tons of Germany or 2,814 of the IMF. Why provoke an international unrest with a weapon in which you do not predominate, unless you have the confidence of Chuck Norris, or at least of Yanis Varoufakis.