You know that Germany recently asked for their gold bullion to be returned from safekeeping locales in New York and France. Germany’s request should have been expected for years since the Germans had originally put their gold there for geographic safekeeping. Recall the fear of the communist East Germany had existed until the Berlin Wall fell? So recently they politely asked for what was their own gold to be returned.

From a US based market newsletter: Quote, “For more than 50 years, Germany has kept a vast portion of its immense gold reserves – some 54,000 bars, worth billions of dollars – in a NY Federal Reserve Bank. (that is 350 tonnes) But when the Germans last month demanded their gold be returned – a decision that rocked global financial markets – the Fed balked.

What’s worse, when Germany requested a full inspection and audit of their reserves, they were strongly denied. And each of their subsequent requests have also been denied. Why? Should the Fed come clean? Tell us what you think…” Unquote.

Last week I posed the question regarding Germany’s gold whereabouts in Montreal and this week I asked the same question to people I knew at the New York Hard Assets Conference. The answer was the same from everyone, they cannot get it back because it is simply not there.

So the Germans have agreed to accept to have 50 tonnes per year delivered back to Germany over the next seven years. I dare say that there was some “arm twisting” involved.

The Germans obviously were lied to for years about the “safe downtown Manhattan location” of their gold bullion in the New York Fed’s vault. Due to world demand, there is a huge shortage of gold bullion. Some of the world’s Central Banks (like the US Fed) will continue to try to keep gold down in price as they try to limit the damage, cover up and attempt to get the gold back that has been lent out or sold or shorted without the permission of the true owners such as the Germans. If the truth came out, it could create huge world wide economic damage.

We believe that the Bundesbank officials (Germans) were told by the US Federal Reserve “powers that be” that if they “work with us” we can straighten out the 350 tonnes failure to deliver problem,…. HOWEVER, it will take over seven years! We feel that if they tell the truth on what has really occurred, gold would move up to over $2000 rapidly. That would limit the central banks ability to continue to mislead such as accept government that inflation is only one to two percent. John Williams’ “Shadow Stats” suggest that it is closer to 8%. We find inflation in the US and Quebec more in line with a 6% level at least.

The world’s central banks must “collude” with each other and MUST keep interest rates artificially down as well. If rates should go up merely 20% from here, let’s say from the 2% range for the 10 year US treasury note to a 2.4% rate, the economy could be devastated. The real estate market could be negatively affected as monthly mortgage payments could increase to reflect the rise in mortgage rates. Everything is related, don’t forget that!