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This post was edited by laoda1 at 2013-9-25 19:02|
Finland tells the United States:
Give us back our Gold!
Musical chairs for all those whose gold 'sits' precariously or invisibly in the United States!
Finland Latest to Join Gold Repatriation Movement
Sep 23 2013
The WealthCycles Staff
Finland recently became the latest nation to initiate action to pull its physical gold reserves back within its national borders. As WealthCycles has reported over the past year or so, the gold repatriation movement is steadily growing, as country after country moves to retrieve their gold. The announcement by the Finnish repatriation movement states the rationale most succinctly:
Venezuela and Germany recently have made the decision to bring their gold back home and many other countries are seeing initiatives to do the same. This tells us that governments are getting ready for a currency crisis.
Much of the world’s sovereign gold reserves have been stored for safekeeping for many years in the vaults of bullion banks and other international financial institutions, largely in London and the United States. The reasons the world has stored its gold in the bastions of Western democracy vary: in the case of Poland, as we reported last week, gold bullion reserves were spirited out of the country ahead of the invading Nazis during World War II, first to France, then to the U.S. Physical gold is a bit bulky as a medium to use for buying and selling when you’re dealing in millions, billions and trillions, so governments have been content for the most part to leave it in place and merely trade it around on paper or digital 1s and 0s. Because the largest bullion banks are headquartered in the West, and because the U.S. dollar has been the world’s currency for commerce and bank reserves, much of the world’s gold has ended up sitting in Western vaults.
That tradition is changing quickly. Among those nations that have either reclaimed their physical gold reserves or where initiatives to do so are in process, WealthCycles has written about gold repatriation efforts in Romania, Venezuela, Ecuador, Switzerland, Poland and Germany.
As is true of many nations, most of Finland’s 49.1 tons of gold reserves is held outside the country’s borders, the bulk of it in London. But at least some of its citizens see the handwriting on the wall and have persuaded their government leaders to at least take the concept of repatriation seriously. Leaders of the Finnish movement are calling for a national referendum on the matter no later than May 2014.
The people of Finland have never been asked whether Finland should keep and hold its gold on its own. This is relevant now as the gold markets are changing significantly and the performance of currencies is unsure.
The Finnish repatriationists are alert to the unstable condition of the global fiat currency system and also to the fact that there is not enough physical gold in the world to account for the “paper gold” floating around.
The gold markets are leveraged so much that if all people who hold contract claims to gold decided to convert their contracts into physical gold, there would not be enough gold to go around. There are far more claims to gold than there is gold itself. If more governments decide to bring their gold back to home soil, the last ones to do so could end up empty-handed.
The only way for a country to use gold as insurance for its currency is if the gold is actually in its possession. When Finland's gold is kept in Finland there will be no counterparty risk. When the gold is held in another country there will always be the risk of that country seizing the gold in case of an emergency. Gold is needed more than ever in case of an emergency.
Polish government leaders apparently are taking the threat to their national solvency seriously. It remains to be see whether the Finns will succeed in their efforts to bring their gold home. So far in the United States efforts to determine how much physical gold is in U.S. Treasury possession have been largely relegated to kook status. But as the Finnish announcement notes:
Germany is bringing back its gold assets kept in the United States, which will take approximately seven years. Why delivery should take so long has not been explained but it could be a sign of difficulties.
Truth is, no one really knows how many times the physical gold safeguarded in Western vaults has been leased, lent, pledged and repledged as collateral. Nations are lining up so they won’t be the ones left chairless when the music stops; institutional investors had better be next. Those wise enough to hide their own small stashes away may one day be the envy of the world.