By Liu-Yue (Louie) Lam, Co-Founder, Oxstones Investment Club,
In an important surprise move reported a few weeks ago, Germany’s central bank (the Bundesbank) announced it would repatriate its offshore gold reserves. Bundesbank announced it will completely withdraw its entire gold holdings in France and half of its holdings in the USA.
The critical questions to ask are why would the German government want to bring its gold back home? Does it know something about the future of the euro or the dollar that we don’t? Are central banks starting to lose faith in each other? Maybe Germany sees France as the next victim of the EU Debt Crisis?
The current fiat-based global monetary system rests on a delicate foundation of trust. With continued quantitative easing by central banks around the world that mutual trust appears to be collapsing. Throughout history, money printing eventually leads to high inflation.
Perhaps Bundesbank does not view the Euro as a viable long term currency and is now preparing for the crisis it sees brewing in the Euro? Or maybe it’s preparing for the eventual change in the current global monetary system and for a future monetary system where the gold standard will be reintroduced? That can also explain why other central banks from Russia to China have all been buying gold the past year at the highest level since 1964. This recent event is a rule breaker and we need to closely observe future central bank developments. Central banks are all hoarding gold and looking to add more. From an investors perspective this is just another bullish case for gold.big picture, bundesbank, By Liu-Yue (Louie) Lam, central banks buying gold, China, commodities, eu debt crisis, food for thought, france, future monetary system, Germany, global central banks, global monetary system, gold, gold reserves, gold standard, hard assets, Liu-Yue (Louie) Lam, money printing, next eu crisis in france, Oxstones Food for Thought, Oxstones Investment Commentary, precious metals, QE, russia, USA, Western Europe