Brexitology has largely focused on the UK’s fish, but has completely ignored the EU’s gigantic gold reserves, supposedly still held in safe custody at the Bank of England. To make matters worse, a no-deal divorce between the UK and the EU went almost unnoticed, not only without the outbreak of the still-delayed “financial equivalence” protocol, but also without a mere whimper from the mainstream media and leftovers. Now, the Ukraine crisis with its new payment requirements for much-needed Russian oil and gas, which overrides the key unfinished business of Brexit, will necessarily evolve into a fierce internal NATO gold war. To paraphrase James Carville, seasoned with a traditional British flavour, “It’s bloody stupid gold” [Refs.1, 2].
By Jorge Vilches. –
As British Prime Minister Boris Johnson would put it, the physical repatriation of EU gold supposedly still stored in London would “powerfully” affect the future of Europe with a very profound and high-tension political impact on both sides of the English Channel. In this scenario, Number 10 Downing Street would readily negotiate the availability of EU bullion only under specific Brexit conditions favourable to the UK. In fact, doing so may become absolutely necessary and should go far beyond the huge intrinsic value of EU gold supposedly still stored at the BoE. Let me explain [Ref. 3 to 13].
NATO gold in London
Russia’s new ruble or gold payment requirements for any of its goods or services will necessarily lead to a major gold war between the UK and the EU, probably resulting in NATO’s first direct internal confrontation. After World War II, the idea was to keep Europe’s gold bullion safely away from the former Soviet Union and Josef Stalin, just in case. So, decades ago, the current EU member states deposited most of their gold in safekeeping at the Bank of England (BoE) in London. Now the UK will dare to instrumentalise the approval of EU gold repatriation requests and other gold-related issues as a very compelling bargaining tool for many as yet unfinished and more important Brexit ventures. Thus
(a) Whitehall can indefinitely delay delivery of EU gold unless the outstanding Brexit issues are agreed in the UK’s favour.
(b) Or, quite simply, the BoE would never return this EU gold supposedly held back over the past decades because it was partially or wholly sold or borrowed or pledged, as explained below, with former UK Prime Minister James Gordon Brown knowing this only too well.
The mother of European conflicts
If history is any guide, hostilities will explode the moment EU member states, individually or collectively, demand a fully independent, never done, fully independent, functionally detailed audit of EU gold supposedly still in “custody” at the Bank of England. This should take a long time and is the perfect excuse to delay the whole process always under the exclusive view of London, not Brussels. Or uncontrollable problems would arise as soon as EU nations require the immediate repatriation of at least some of these “notional” metals, or perhaps all of them simultaneously, given the circumstances. So, either (1) some gold could be slowly returned here and there (albeit with great delay), but only under very vague terms from London and shifting the inconclusive consequences of Brexit to as yet unheard-of levels, or (2) no gold would be returned at all since it was sold or compromised in different ways, as explained below. And the UK had better not decide to pay Russia even with a single gold coin, because the EU would rightly wonder who owns it.
The London gold and silver markets have always been “opaque” with no meaningful reporting of transactions or positions. No data has ever been provided on which commercial banks hold BoE accounts or the precise technical identification of gold custodians, let alone those belonging to EU members. As Venezuela knows only too well – and EU member states may be next – who may or may not be recognised as a valid claimant to anything stored in Threadneedle Street or its whereabouts is an open matter left to the sole discretion of the masters of Canary Wharf, not EU politicians. The same goes for the huge unallocated gold and silver liabilities of the so-called “gold banks” or any other relevant data [Ref. 14 to 16].
A (bad) German experience
Very recently, Germany had to wait 5 long years to repatriate the force and painfully only a part of its BoE gold and never got back any of the originally deposited gold bullion, which clearly explains the delay. [Ref.17 and 18]
So, as the EU freezes to death and its economy stops in its tracks, the many outstanding issues include:
(a) does the Bank of England still hold all the EU’s gold… or was it sold or borrowed as many pundits insist?
(b) Is the Bank of England willing and able to immediately return the EU gold it may still have left to the rightful owners, if any?
(c) Who are the legitimate owners of the BoE’s vaulted gold afterwards decades of European reorganisation of political boundaries?
(d) the ECJ would decide ownership of the gold… or the British judiciary… or the BoE? On what basis, exactly?
(e) the BoE loaned, swapped, re-mortgaged, leased, rented, rented or cost said bullion now pawned with many other supposedly legitimate claims that are also aligned with “unallocated synthetic fractional” custodianships of purposeless bullion by ” Digital Derivative Pricing Schemes ” whereby no one can know who owns what place (if any)?
I am not playing games with you.
Today’s “paper gold” derivative transactions constitute a genuine pure Ponzi scheme that often exceeds the real gold theoretically behind them, probably by a ratio of 100 to 1 or more, as the London Square Mile knows only too well. Of course, the ECB, IMF and BIS also claim it is really “their” gold, don’t they?
British economist Peter Warburton was 100% correct when he described that Western central banks were using derivatives to control commodity prices and protect government currencies against public recognition of currency devaluation. Warburton’s essay “The Debasement of World Currency: It Is Inflation But, Not As We Know It” is published at https://www. nena. org/node/8303.
But whatever the development, the “continental gold” now possibly still held in London will necessarily trigger internal NATO existential conflict in no uncertain terms (and despair) in the absence of much needed audit parameters and still missing registers of gold bar serial numbers affecting ownership and status claimed by more than one (supposedly legitimate) recipient, plus bullion quality and purity data, default custody charges, transportation and insurance, etc.
Incidentally, when push comes to shove (and it will, believe me) for their “special relationship”, the US Federal Reserve would side with the BoE because they are in exactly the same situation regarding physical bullion, they should still theoretically be jumping on third parties, including sovereigns. In tune with Anglo-Saxon exceptionalism, the Fed’s gold custodians have also never been audited, as they should, and expert commentators around the world are convinced that gold is not fully available either. Moreover, the US would welcome any additional new trouble for the EU, as this was the idea behind provoking Russia into this unnecessary war.
Jorge Vilches – proud to have often been presented as “the quintessential independent columnist”.
A former op-ed contributor to The Wall Street Journal – New York and other financial media, he has studied this subject in profundity over the past 20 years. WSJ-NY “The Americas” column, editor David Asman now anchor of Fox Business News.
March 3, 2022 – [Translated by @QuantumBird].
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