Geez, if people only realized little old Miles Franklin of Minneapolis, Minnesota, has perhaps the INDUSTRY'S BEST STORAGE PROGRAM at Brink's Canada in Montreal! By the way, I will personally be attending our quarterly audit next month with Andy Schectman and Joel Kravitz; our first in which independent auditors will be joining us - and writing a detailed RANT about it...

Precious Metal Storage Program | U.S. & Canada | Miles Franklin

Don't forget what Sinclair said about THE BIG PM MOVE he anticipates before his birthday in late March; and thus...

PROTECT YOURSELF, and do it NOW!

- Andy Hoffman, Wednesday Morning Commentary, January 30 2013

* Although Recovery Never Took Place, Official Double-Dip Recession Likely Will Be Clocked from Second- or Third-Quarter 2012
* Reported Contraction in Real GDP Designed to Discourage Fiscal Reform?
* Fourth-Quarter Nominal GDP Growth Collapsed to 0.46% from 5.91%
* Real Durable Goods Orders Contracted Year-to-Year, Despite Temporary Orders Boost from Year-End Defense Spending

-John Williams, No. 498: Fourth-Quarter GDP, December Durable Goods, January 30, 2013

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Many readers of the Miles Franklin Daily Gold and Silver Summary might not read Ranting Andy's daily newsletter in the afternoon. If you do, skip Andy's comments; you read them on Wednesday. But if you don't, check out what he has to say. This information is good stuff for my readers.

__________________________________________

Ranting Andy Hoffman

Tuesday Afternoon Wrap-Up 1/29/2013

There are many ways I take today's commentary; but clearly, the topic I start with will be the most memorable. Given this parameter, there's NO WAY I can upstage the article below - about the U.S. Mint's first day of Silver Eagle sales after being SOLD OUT for 12 days.

U.S. Mint Silver-Coin Sales Surge After Temporary Suspension

Yes, 1.3 million silver Eagles were sold yesterday, bringing the month's total to 7.4 million - per the link below. Before this month, the ALL-TIME RECORD month was January 2011, when 6.4 million were sold - in a full month's time...

2013 American Eagle Bullion Sales Totals

Thus, when you consider the U.S. is blowing the biggest debt bubble of ALL-TIME...

US debt headed toward 200 percent of GDP even after 'fiscal cliff' deal

...across ALL facets of the economy...

Student Loan Bubble Update: "This Situation Is Simply Unsustainable"

...essentially guaranteeing an HISTORIC crisis...

Peter Schiff: Coming debt crisis will make 2008 look like a Sunday school picnic

...with ZERO exit strategy...

***

PMs also rose today; with gold comically stopped by three "CARTEL HERALDs" - ALL at EXACTLY its 200 DMA of $1,664/oz....

And please note the times of the first two "CARTEL HERALDs"; at the KEY ATTACK TIMES of EXACTLY 3:00 AM EST and EXACTLY 10:00 AM EST...

Overdue - LeMetropoleCafe.com

January 29 2013

James McShirley

There was a rare occurrence in the 6:00 PM access trade open last night: it actually went UP, and not down. The access trade open has traded lower on 41 out of the past 48 trading sessions dating all the way back to December 20th. That's 82.1% of the time, right in line with the percentages of most other cartel trading manipulations. It figures too that last night's open would be up since it was the first one after Feb. option expiration. Fitting too that gold rose solidly from the access trade open all the way to, you guessed it, 3:00 AM. That 3:00 AM "plan A" attack you often mention is a bookend to the 9:00 AM attack during Comex trading. Both take place 1/2 hour before their respective stock market opens (London/NY) and are intended to jade perceptions, and discourage funds and speculators looking for a play.

Heck, this is what I wrote at 9:45 AM EST this morning...

What's this, do I sense the day's third "CARTEL HERALD" - just 15 minutes from 10:00 AM EST; i.e., the #1 KEY ATTACK TIME?

...yet again, spotting such an attack in REAL-TIME...

And oh yeah, what occurred at EXACTLY 10:00 to "justify" the Cartel's PM raid; not to mention, a simultaneous Dow surge? You're going to love this one...

Consumer Confidence Crashes To 2011 Levels after Biggest Plunge since August 2011 Debt Ceiling Debacle

***

Wednesday Morning Commentary 1/30/2013

Consequently, just four weeks after QE4 officially commenced, "goldbugs" have been implicitly "warned" that "Helicopter Ben" might make remarks suggesting an "end to QE"; when in fact, anyone with half a brain knows this will NEVER - particularly with interest rates already gaining upside momentum...

In other words, it's become crystal clear TPTB need to do something to get rates down; and given they just goosed the "DOW JONES PROPAGANDA AVERAGE" to multi-year highs with 12 "DEAD RINGER" algorithms in 13 days - they have the "cushion" to get the job done if so desired.

In fact, given the HORRIFIC GDP number reported this morning (more on that in a minute); a "conspiracy theorist" might believe the past two weeks' nonsensical Dow surge was engineered for this reason...

Biderman's Daily Edge: ed Creating $4 Billion in New Money Each Day Helping to Rig Stock Market

***

...once and for all, underscoring the law of "DIMINISHING RETURNS"...

Chart of the Quarter: $312 Billion in Debt "Adds" Negative $5 Billion in GDP

...creating nothing but a legacy of INFLATION...

Inflation unchained: US dollar down 23 percent from 2000, Tuition up 72 percent, and Incomes adjusting for inflation are back to 1990s levels

***

However, the REAL news of the morning is the 10-year Treasury bond; which, despite TPTB's best efforts, is again down; presumably, anticipating MORE QE throughout 2013; and likely, MORE delays of the spending "sequester" scheduled for March 1^st...

In other words, "Helicopter Ben" is between a rock and a hard place; especially with the Chinese breathing down his neck...

China Just Threatened a Currency War if the Fed Doesn't Stop Printing

Continue reading the full Ranting Andy Hoffman Newsletter

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Historic Move By The US Has Just Guaranteed Hyperinflation 

January 28, 2013

"We are seeing just another example of how the central planners intervene in the precious metal markets by selling paper to drive the price down during month-end option expiry.  This maneuver maximizes the profit for their agents - those bullion banks facilitating the gold price suppression scheme - so that the calls they've sold to investors and financial institutions expire out of the money.  It also ensures that as many call buyers as possible lose money, which helps the central planners foster a negative sentiment for the precious metals.

We have seen this time and again, Eric.  Contributing to the manipulation is the FOMC meeting this week, during which the central planners like to put a lid on gold and silver prices while they announce their new money printing schemes.  And then watch out for Friday when the unemployment report is released, usually a time of wide price swings aimed to trigger stops.  None of this is new.  But there is something new and important happening in Washington DC....

Continue reading on KingWorldNews.com

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In The News Today

January 30, 2013, at 1:00 pm
by Jim Sinclair

Jim Sinclair's Commentary

What is this? What major Western nation is not broke? This is not going away because of MOPE, MSM, Financial TV, and any other smoke.

The OTC derivative manufacturers and distributors ended the world as we know it. For their dastardly selfish and greed ridden deed they became millionaires and billionaires, yet humanity has only started to feel the suffering.

I know these guys and they do not give a damn for anybody. Damn them all to hell anyway, and God and gold help us.

France is totally bankrupt': French employment minister Michel Sapin embarrasses President Francois Hollande with shocking statement on state of the country's economy Unexpected news came during a radio interview yesterday and calls into further question Hollande's controversial 'tax and spend' policies

John Hall

Tuesday 29 January 2013

France's employment minister Michel Sapin has admitted the country is "totally bankrupt".

The unexpected news came during a radio interview yesterday and is thought to have sent the country's business leaders into a state of shock.

"There is a state but it is a totally bankrupt state," Mr. Sapin said. "That is why we had to put a deficit reduction plan in place, and nothing should make us turn away from that objective."

Mr. Sapin's "totally bankrupt" statement is likely to cause huge embarrassment for President Francois Hollande, who will be left to undo the potential damage to his socialist government's reputation.

It also calls into further question Hollande's controversial "tax and spend" policies that have seen numerous entrepreneurs and high profile celebrities leave the country.

The comments came as President Hollande attempts to improve the image of the French economy after pledging to reduce the country's deficit by cutting spending by €60bn (�51.5bn) over the next five years and increasing taxes by €20bn (�17bn).

More... 

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Burn the paper gold shorts, Pacific Group's Kaye tells King World News

Submitted by cpowell on Tue, 2013-01-29 20:20. Section: Daily Dispatches

3:17p ET Tuesday, January 29, 2013

Dear Friend of GATA and Gold:

Hong Kong-based fund manager William Kaye of Pacific Group today gives King World News an incendiary interview about liberating the gold market from the stranglehold of imaginary paper gold.

Kaye, who told Bloomberg News a week ago that Pacific Group is taking delivery of $35 million worth of gold bars to be stored in a vault in Hong Kong (http://www.gata.org/node/12150), says today that "if even a small fraction" of gold investors "start doing what we are doing and what others are doing, it will create the biggest short squeeze in any financial instrument in the history of the world."

"It's already happening," Kaye adds. "It's happening quietly for the most part at the moment. I think the potential here is that what is starting as a trickle could become a flood."

An excerpt from the interview, the first of what are to be three parts, is posted at the King World News blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb
/Entries/2013/1/29_Ex...

CHRIS POWELL, Secretary/Treasurer

Gold Anti-Trust Action Committee Inc.

_____________________________________________

Gold price suppression is documented, not 'conspiracy theory,' fund manager Kaye says

Submitted by cpowell on Wed, 2013-01-30 13:34. Section: Daily Dispatches

8:30a ET Wednesday, January 30, 2013

Dear Friend of GATA and Gold:

In the third and final excerpt of his interview with King World News, Pacific Group fund manager William Kaye predicts a short squeeze in silver even bigger than the one he expects in gold:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries
/2013/1/30_Ka...

In the full audio of his interview, Kaye praises GATA's work and says there is much documentation of central bank intervention in the gold market to suppress the price and that such complaints are not mere "conspiracy theory":

http://www.kingworldnews.com/kingworldnews/Broadcast
/Entries/2013/1/30_W...

CHRIS POWELL, Secretary/Treasurer

Gold Anti-Trust Action Committee Inc.

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Stagflation Nations Engulfed in a Paradigm of Paralysis

Monday January 28, 2013 11:02

"...The inability or refusal to see beyond the current models of thinking."

The world financial community and international governments have concocted a fairy tale of monstrous proportions to levitate stock and credit markets, prop-up insolvent global banks, perpetuating a fictional reality consistent with their desires to steal using the bond  and credit markets; prolonging a decades-long paradigm of unreality. - Trader Rog

"Perhaps the greatest barrier to a paradigm shift, in some cases, is the reality of paradigm paralysis: the inability or refusal to see beyond the current models of thinking." - Wikipedia

The elites planned this international platform game of phony news, complete with all details to set up the world for the most massive theft in history. The objective is to create a one-world government with one currency totally managed by the alleged Masters of Finance to corral all monetary matters. This is not new. The excitement began in 1913 with a birth of the Federal Reserve designed to allegedly contain crisis. How well has that worked (especially in the last few years)?  In our view, a stillborn Federal Reserve would have better served the world.

These vultures were not happy enough to just control the USA by using the Federal Reserve as their private piggy bank. No. They want it all and have installed an elaborate plan, many years in the making, to do just that.

Obama is just one of many international puppets dangling on the strings of the elites, running down a crooked road helping them to complete their take over success. We see less control in the White House as the top three Obama aides who could tell the president NO have resigned.

However, we see other trip wires on that road and they are closing in fast. We say this is the Road to Perdition: a path taking them straight into a monetary hell of their own making. The problem with it is they are taking the rest of us along with them.

Among those tripwires traps would be the most important one of the Big Boy Banks holding trillions in fiat bonds and phony paper to finance their objectives. These tricksters are hopeful of continuing their bonds game to the extent they can manage a complete political-monetary take over before bond-land crashes on the rocks of insolvent stupidity.

There are way too many observers and smart analysts who clearly understand the scam and they are going to squeal like stuck pigs pointing fingers at the guilty when the world's most religious financial experience in history ever, happens throughout the world; in many nations simultaneously.

Considering the global banks were handed piles of fiat bonds to replenish their broken, busted insolvent balance sheets in 2008 by then Secretary of the Treasury Paulson, the beauty of this little scam dissolves over them when the bond markets themselves have no more buyers. That scenario is already in escalation play and we begin to see naked fear in the eyes of those perpetrators. Mr. Timothy Geithner is running fast and far. He understands.

When this hits the markets, there is no more credit and cash to fund their scam. Then it's game over as the very mess they produced to pay for it all takes them down. How ironic is that? The global banks are sitting with piles of this paper manure on their balance sheets earning 2-3% keeping them alive, as they cannot make any loans to earn genuine bank profits.

So when it all goes over the cliff, the fiat paper in their hands fails too and it's bye-bye banker capital and: "Adios banksters!"

In our view, the rocks crashing has already begun, as Mr. Bernanke with each scammy little auction offering is seeing less and less in aftermath results in markets. Each new offering has to be larger and has fewer effects. Obviously, it's not working to inflate current financial deflation.

We've not heard the latest report on his $3 billion plus offered just last week, but would suspect more than half of it came back unsold to the FOMC shelf marked as "Sold."  During the past few months, as much as 66% of each offering was bouncing back like rubber checks.

This cannot continue forever. We are unsure when it all caves in but it will, without warning.

Another trip wire was the pushback imposed by the administration regarding the American gun tragedies. Those events have been proven to be 100% caused by mentally disturbed people unbalanced by medical pills and pharmaceuticals ruining their ability to reason.

So instead of going after the root cause of these tragedies, the misguided congress people (an overly kind phase) decided to chase legitimate sportsmen and gun owners to deprive them of their Second Amendment Constitutional Rights.

That was a huge political error. Not only are they looking in the wrong places to solve a big problem, but those wrong places are holding something north of 50,000,000 loaded weapons and they are very unhappy. Now what? A child could give you the answer and the outcome.

In a recent report from a top analyst friend, we learned about reality on the ground in Greece, which has been smashed by central bankers and politicians fighting over fiat bonds and bad credit they wanted re-paid. That paper was a scam in the first place, setting up the Greek government to fail on a loan repayment so the lenders could steal Greek central bank gold collateral. That's the old banker "set 'em to fail" just like S&L's funding builders and developers.

We don't want to repeat that sad tale from Greece but suffice it to say it was reminiscent of life in the streets of Germany at the end of World War II. This is absolutely disgraceful. Now it is reported the old Nazi party has reappeared in Greece and Mr. Berlusconi, the formerly successful premier of Italy was celebrating on an Israeli holocaust anniversary by touting Mussolini's old politics. My word! Are we heading toward the old 1930s pre-war preliminaries? It appears so. This is the result of harsh depressionary economic times. Desperation becomes hard and dangerous as old enemies of the free become challenged.

More Trip Wires on the Path Ahead

Switzerland is straining to keep their Franc currency from rising too fast as it's becoming the go-to safe haven for Europeans, leaving a dissolving Euro-land and Euro currency.

Japan has deliberately knocked back the Yen -14% in just a few days to create inflation to alter 20 years of deflationary economics and it is ruining that nation. Now it all gets wrecked going in the other direction and incites other nations to devalue their currencies in self-defense. Further, Japan is buying valueless bonds and other junky paper from neighboring Asian nations to devalue their own Yen even more. It's called: make good friends with your neighbors while paying their debts and devaluing your own money.

Egypt has erupted into a new "Arab Spring" civil war as the peace loving Mubarak capitalists fight the newest bad boyz of the Middle East for control of their nation, their future and their very lives. This weekend the immediate reaction to this has been a selling Egyptian Pound currency as violence continues to spread.

Israel is installing the Iron Dome of protection (missile defense) as it reported neighboring Syria is coming apart at the seams. Even the Russians are saying the Syrian's dictator days are numbered.

Politics and Political Regression Induced by Crashing Economies

Here is the big picture of current and future trends. Most of these things we have written about before and elaborated on with great detail. We think they bear a reconfirmation and restatement as they are THE MAJOR TRENDS AHEAD FOR THE NEXT TWO TO THREE YEARS AND PERHAPS LONGER.

1. The US Dollar now at Index 80.00 will sell off over time to 46-40 on the charts, effectively cutting its value in half. This could take a few months but more probably a few years. The trend is cast in bronze and remains intact with no alternatives.
2. The USA debt ceiling will be pushed up to infinity. It stops when bonds have no value and crash and burn along with the credit rating of the United States of America.
3. Interest rates will rise dramatically when the bonds cave in as trading markets, not the central planners, realign bond and Treasury bill valuations.
4. Gold will rise to at least our old 2005 long-range technical forecast of $2,960 and most probably much higher.
5. The Canadian Dollar will rise with precious metals and other commodities, until these markets sell off in a global crash selling event. Canada fares better than the USA but it is tightly tied to American trade exports and will diminish Canada somewhat.
6. The three nations in the worst condition for this year in Europe are Greece, Spain and Italy. Others will follow down the Road to Perdition.
7. Inflation ramps up this year, heading for 15% or higher. If and when it touches 50% or more it becomes hyperinflation. Crude oil is beginning to rise on inflation right now.
8. History repeats and we see the cycle of 2013 to 2016-2017 replicating 1934-1938. The 1937-1938 US stock markets fell -45% in the third major selling event from 1929 to 1942. The Dow could touch 4,940-5,600 as a technical lower support. Politics and a markets selling overshoot might even take the Dow to 1,500 with a -90% smash like the 1929-1930 scenario.
9. Then sadly and lastly, comes the World War, the ultimate jobs-maker-machine used by all governments to right the global economic ship.

It's not the end of the world but its mayhem and maelstrom for certain. It ends and we heal and we start all over again. This is history repeating itself over and over.

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Jeff Thomas: The Disappearing Gold

January 29 2013

Yesterday in Gold and Silver

In case you hadn't noticed...the dollar index has done precisely nothing of consequence during this engineered price decline in both gold and silver that began last Wednesday at the Comex open. This has all been a paper affair in the Comex futures market as per usual. Nothing has changed in the real world. Here's the 5-day dollar chart that includes all four days of that event.

The gold stocks broke into positive territory almost the moment that trading began in New York yesterday. But it's obvious from the trading pattern during the first hour that there was a seller of some consequence lurking about, as every time the shares attempted to rally, there was someone in there to sell them off.

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The Disappearing Gold

By Jeff Thomas 

January 28, 2013

During the Cold War, Germany moved much of its gold to New York in case the USSR invaded Germany. It was assumed at that time that the US would be a safer storage location, and of course, they could always ask to have it returned if they wished.

But German citizens have become increasingly worried about the security of the 1,536 tonnes of German gold reputedly held at the Federal Reserve in New York. This has resulted in the Bundesbank pursuing repatriation of the gold, beginning with a request to view it in the basement of the Federal Reserve Building, where it is claimed to reside.

Of course, the German government had received periodic assurances from the Fed that the gold is there; however, the issue began to get a bit sticky recently, when the Fed refused a request for inspection.

The world then raised a collective eyebrow, and, whilst not panicking over this development just yet, closer attention has come to bear, not only on the Fed, but on any institution that is entrusted with the storage of gold for other parties.

Concern spread to Austria, where a question arose in Parliament as to where Austria's gold is stored. The answer provided was that 80% of it (224.4 tonnes) is in the UK. (It was claimed that the reason for this is that, if a crisis of some kind were to occur, it could be more easily traded from London than from Vienna.)

Seems reasonable enough, except that the return of the gold to Austria, if it were requested, may be a bit difficult, as the gold seems to have been leased out by the UK.

To many, a second eyebrow might go up at this point. Lease out the wealth of another nation? Isn't this a bit... irresponsible?

The New Gold Shuffle

Not to worry, it's done all the time. In fact, the practice has been endorsed by none other than Alan Greenspan, former Chairman of the Fed. The gold is leased to a bullion bank, which typically pays one percent interest to the Fed, with a promise to return it on a specified date. The bullion bank then sells the gold on the open market and uses the proceeds to buy Treasury bonds, which will net a three to four percent return.

The nicest thing about such an arrangement is that the lessor continues to claim it on his balance sheet as a line item: "gold and gold receivables." After all, an asset that we have leased out is still an asset, even if it has now been sold by the lessee.

In effect, this means that, if you bought a gold bar today, it is possible that it is a bar that was shipped from the Bundesbank to the Federal Reserve decades ago and is presently listed by the Fed on its balance sheet as "gold and gold receivables."

Both you and the Fed are claiming to possess the same gold bar. The fly in the ointment, of course, is that only one bar can be the actual bar. The other is a receivable and therefore is an asset on paper only. This, of course, means that there is less gold in the world than has been claimed. How much less? That's anyone's guess.

The New Risks

But even if it became generally known that the Fed (and others) are holding paper, rather than physical gold, couldn't we carry on as before? What could go wrong? Here are some immediate possibilities:

• If there were a dramatic rise in the price of gold and the lessor were to call in the return of the gold by the bullion bank, the bullion bank could easily lose far more than the small two to three percent margin it had been enjoying.
• If there were a crash in the bond market and hyperinflation set in, the bonds that the bullion bank had purchased could become worthless.
• If the nations who shipped their gold to London and New York for safekeeping were to request their return, the storage banks could only deliver if they were to purchase gold at the current rate. If that rate were significantly above the rate at which the gold had been leased to the bullion banks, the storage banks would sustain a significant, possibly unsustainable, loss.

That's quite a bit of risk.

In the present market, there are any number of possible triggers that could cause the people of Germany, Austria, or a host of other nations to demand that their gold be returned home. Indeed, pressure is on the increase. The governments who have shipped out their gold for "safekeeping" would have a lot of explaining to do to their constituents, if the storage banks are not forthcoming.

So, is it time for the odiferous effluvium to hit the fan? Not quite yet. Before that occurs, there will still be some dancing around by the Fed and others.

The Fed has already stated, in so many words, "We're sorry, but we can't let you have all your gold at one time, but we'd be prepared to send it to you over a period of years."

For many observers, the present situation should be well beyond the point of the raised eyebrow. It should be glaringly apparent that the amount of gold presently claimed to be in storage in the world's banks is, to a greater or lesser extent, overstated.

Continuing the Charade

The Bundesbank should, of course, now say, "I'm afraid that's not good enough. It's our gold. We've advised you how much of it we want back now, and we must insist that you produce it immediately."

If they were to take this perfectly logical step and the Fed refused, there could be a run on the banks, and, very possibly, within as short a period as twenty-four hours, a worldwide bank holiday might be declared with regard to gold.

However, this is not what will transpire. Neither logic nor sound banking practices are the object here. The object is to maintain the charade that exists within the banking community. The Bundesbank is just as fearful of a run as the Fed and will be only too willing to accept the Fed's terms.

What must be borne in mind is the root cause of the request. It was not the Bundesbank itself that originally wanted the transfer to take place; it was the German people who, quite rightly, have become distrustful of the fact that their gold has been in New York for so long and want to see it repatriated. It is not the banks who wish to correct the situation. Not one bank wishes to expose the inappropriate practices of any other bank. Their loyalty is to each other and not to their depositors.

So, is that it? Have we heard the last of this issue? I think not. The cat is out of the bag at this point, and the depositors' distrust and uncertainty will not be quelled by the counter-offer. Tension will continue to mount amongst depositors, and, at some point, the situation will reach an impasse.

All those who presently have gold in a banking institution would be prudent to keep an eye on the present situation. We might consider taking delivery of any gold we have in a bank, wherever it may be. Regardless of what form it is in, from ETFs to allocated gold, we would do well to assess the degree to which we feel our gold is at risk. In doing so, we may determine that a gold account is more at risk in, say, a New York or London bank than a Swiss bank. (Not all banks will be equal in terms of risk.)

If we do resolve to divest ourselves of bank-related precious metal holdings, it would be prudent to take action soon. (Clearly, those who attempt to remove their wealth the day after a run has occurred tend to do less well than those who attempt to remove their wealth the day before the run.)

We might also consider whether a possible run may become systemic, causing a bank holiday on all the bank's activities, thus freezing any currency that we may have on deposit. We may conclude that it is prudent to only retain in our bank enough money to allow cheques to clear - an amount sufficient to cover a few months' expenses.

In the near future, we may well find that a significant amount of gold that is claimed to exist in the world will "disappear." Whilst we cannot control this eventuality, we may be able to save the gold that is being held in our names from disappearing.

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Two Chess Moves Away from Capital Controls

By Jeff Clark, Senior Precious Metals Analyst

January 28, 2013

The best indicator of a chess player's form is his ability to sense the climax of the game. -Boris Spassky, World Chess Champion, 1969-1972

You've likely heard that the German central bank announced it will begin withdrawing part of its massive gold holdings from the United States as well as all its holdings from France. By 2020, Bundesbank says it wants half its gold reserves stored in its own vault in Germany.

Why would it want to physically move the metal from New York? It's not as if US vaults are not secure, and since Germany already owns the gold, does it really matter where it sits?

You may recall that Hugo Ch�vez did the same thing in late 2011, repatriating much of his country's gold reserves from London. However, this isn't a third-world dictatorship; Germany is a major ally of the US. So what's going on?

Pawn to A3

On the surface, it may seem innocuous for Germany to move some pallets of gold closer to home. Some observers note that since Russia isn't likely to be invading Germany anytime soon - one of the original reasons Germany had for storing its gold outside the country - the move is only natural and no big deal. But Germany's gold stash represents roughly 10% of the world's gold reserves, and the cost of moving it is not trivial, so we see greater import in the move.

The Bundesbank said the purpose of the move was to "build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold-trading centers abroad within a short space of time." It's just satisfying the worries of the commoners, in the mainstream view, as well as giving themselves the ability to complete transactions faster. As evidence that it's nothing more than this, Bundesbank points out that half of Germany's gold will remain in New York and London (the US portion of reserves will only be reduced from 45% to 37%).

Sounds reasonable. But these economists remind me of the analysts who every year claim the price of gold will fall - they can't see the bigger implications and frequently miss the forest for the trees.

Check

What your friendly government economist doesn't reveal and the mainstream journalist doesn't report (or doesn't understand) is that in the event of a US bankruptcy, euro implosion, or similar financial catastrophe, access to gold would almost certainly be limited. If Germany were to actually need its gold, regardless of the reason, any request for transfer or sale would be... difficult. There would be, at the very least, delays. At worst such requests could be denied, depending on the circumstances at the time. That's not just bad - it defeats the purpose of owning gold.

But this still doesn't capture the greater significance of this action. First, it reinforces the growing recognition that gold is money. Physical bullion isn't just a commodity, a day-trading vehicle, or even an investment. It's a store of value, a physical hedge against monetary dislocations. In the ultimate extreme, it's something you can use to pay for goods or services when all other means fail. It is precisely those who don't recognize this historical fact who stand to lose the most in an adverse monetary event. (Hello, government economist.)

Second, here's the quote that reveals the ultimate, backstop reason for the move: Bundesbank stated it is a "pre-emptive" measure "in case of a currency crisis."

Germany's central bank thinks a currency crisis is really possible. That's a very sobering fact.

We agree, of course: history is very clear on this. No fiat currency has lasted forever. Eventually they all fail. Whether the dollar goes to zero or merely becomes a second-class currency in the global arena, the root cause for failure is universal and inevitable: continual and perpetual dilution of the currency.

Some level of currency crisis is inescapable at this point because absolutely nothing has changed with worldwide debt levels, deficit spending, and currency printing, except that they all continue to increase. While many economists and politicians claim these actions are necessary and are leading us to recovery, it's clear we have yet to experience the fallout from spending more than we have and printing the difference. There will be serious and painful consequences, sooner or later of an inflationary nature, and the average person's standard of living will be greatly reduced.

And now there are rumblings that the Netherlands and Azerbaijan may move their gold back home. If this trend gathers steam, we could easily see a "gold run" in the same manner history has seen bank runs. Add in high inflation or a major currency event and a very ugly vicious cycle could ignite.

Checkmate

If other countries follow Germany's path or the mistrust between central bankers grows, the next logical step would be to clamp down on gold exports. It would be the beginning of the kind of stringent capital controls Doug Casey and a few others have warned about for years. Think about it: is it really so far-fetched to think politicians wouldn't somehow restrict the movement of gold if their currencies and/or economies were failing?

Remember, India keeps tinkering with ideas like this already.

What this means for you and me is that moving gold outside your country - especially if you're a US citizen - could be banned. Fuel would be added to the fire by blaming gold for the dollar's ongoing weakness. Don't think you need to store gold outside your country? The metal you attempt to buy, sell, or trade within your borders could be severely regulated, taxed, tracked, or even frozen in such a crisis environment. You'd have easier access to foreign-held bullion, depending on the country and the specific events.

None of this would take place in a vacuum. Transferring dollars internationally would certainly be tightly restricted as well. Moving almost any asset across borders could be declared illegal. Even your movement outside your country could come under increased scrutiny and restriction.

The hint that all this is about to take place would be when politicians publicly declare they would do no such a thing. You could quite literally have 24 hours to make a move. If your resources were not already in place, even the most nimble of us would have a very hard time making arrangements.

Once the door is closed, attempting to move restricted assets across international borders would come with serious penalties, almost certainly including jail time. In such a tense atmosphere, you could easily be labeled an enemy of the state just for trying to remove yourself from harm's way.

The message is clear: storing some gold outside your country of residence is critical at this point, and the window of time for doing so is getting smaller. Don't just hope for the best; do something about it while you still can. The minor effort made now could pay major dividends in the future. Besides, you won't be any worse off for having some precious metals stored elsewhere.

Read the full Casey Daily Dispatch

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