Foreign Hostages of the US Federal Reserve
The gold store in Manhattan was built at the beginning of the 1920-s, when America already had a lot of its gold after World War I - several thousand tons. But even with the stock at that time, the New York City Federal Reserve Bank’s storage project looked great. It had a 122 compartment and was designed to store more than 12 thousand tons of metal. Apparently, the "owners of money" even then assumed that they would not only keep their gold there, but also offer their "services" for storing the yellow metal to foreigners.
The general picture of the placement of foreign reserves in the United States today is presented below.
Official reserve assets of foreign countries placed in US Federal Reserve Banks (billion dollars at the end of the year / month) *
* The source indicates that only some positions of official reserve assets of foreign states are presented in the table. Probably, behind the "frame" remained such an important position as treasury and other debt securities issued by other (except for the United States) states.
Source: Board of Governors of the Federal Reserve System. International Summary Statistics. March 2015.
These tables allow us to draw the following conclusions.
First, the lion's share of all foreign reserves placed in the United States is US government debt securities (US Treasury and US government securities). This position accounts for 99,9% of the total amount calculated from the table below. These assets (securities) are placed in depositories of the US Federal Reserve Bank.
Secondly, for the period under review (from the end of 2011 to the end of February 2015), the volumes of foreign reserves placed in the US federal reserve banks did not change significantly. The exception was the position “Funds in deposit accounts”. In 2011, there were almost no such funds in the US Federal Reserve Bank. Beginning with 2012, foreign countries began to place some of their international reserves on deposits of the US Federal Reserve Bank. The presented picture does not confirm the statements of some politicians, journalists and experts who argue that because of the threat of possible sanctions from the US, a number of states have begun to withdraw their reserves from the USA. For example, in the past (2014), an increase in stocks of US treasury securities was recorded in depositories of the US Federal Reserve Bank in the amount of 859,7 billion dollars (an increase of 29,3%).
In the first half of March, 2014, the experts recorded the maximum drop in the volume of US government treasury bonds, which belong to the monetary authorities of other states and are placed in custody in the US Federal Reserve. Then in a week, from 5 to 12 in March of this year, treasury securities were withdrawn from the depository of the Federal Reserve of New York for a total of 104,5 billion dollars. This was a kind of record for the entire period of such statistics.
Specialists of the research company Wrightson ICAP made the assumption that Russia could withdraw treasury bonds from the Fed depository.
A possible reason, according to analysts of Wrightson ICAP, is the constant exaggeration of the topic of Western sanctions against the Russian Federation in connection with events in Ukraine. At the same time, Wrightson ICAP rightly emphasized that changes in treasury stocks at the Fed did not reflect changes in direct investments in US debt securities, but changes in depository agreements with foreign holders of government securities.
Many experts then believed that this was the beginning of a new trend. However, the trend did not work out, the process of increasing stocks of foreign packages of treasury securities in the depositories of the US Federal Reserve Bank was restored. In the first two months of 2015, there was a decrease in the stock of securities, but it was insignificant (about 10 billion dollars). To say that a certain new trend has emerged is still premature.
By the way, according to the latest Fed data, at the end of February 2015, the volume of all US debt securities in international reserves of other countries amounted to 3.784,3 billion. Thus, at that moment, the US Federal Reserve Bank had depositories of 76,7% of all debt securities of other countries. About ¼ of all international reserves in the form of US debt securities are placed in depositories outside the United States. This topic is rather closed, but it is known that the largest non-American depository is located in Belgium. Since this country is under strict control by Washington, the placement of securities in the Belgian depository does not significantly reduce the risks associated with the possible freezing of reserves. A radical measure of protection against sanctions can only be the removal of a country’s international reserves from US treasuries, their transfer to securities and bank deposits of those countries that are outside the influence of Washington. And the best option is the transfer of international reserves to gold.
At first glance, the share of gold in the international reserves of foreign countries located in the US Federal Reserve Bank is extremely small, almost microscopic. However, this is an illusion that Washington supports using crafty statistics. The fact is that the cost volumes of gold placed in the storages of the US Federal Reserve Bank are calculated on the basis of the price of gold 42,22 US dollars for 1 troy ounce of pure metal (31,103 gram). This is the official price of gold at the beginning of the 1970s, when the Bretton Woods system was living its last months. To date, no country in the world except the United States estimates official gold reserves based on prices more than forty years ago. Most countries today calculate their gold reserves based on current prices. Or based on fixed prices, but in relation to the current state of the yellow metal market. There were moments when the price of gold was approaching 2000 dollars per troy ounce. At the beginning of April, 2015, the gold price is at the level of 1200 dollars. The closing of the London gold fixing on 20 in March and the transition to a more liberal pricing method in the yellow metal market will lead to a rapid rise in the price of gold. The undervalued price of gold is not the policy of the last decades, advertised by Washington, which allowed to artificially maintain the authority of the dollar, to artificially overstate its course. Disguising a real place of gold in international reserves is part of this policy.
If we recalculate the value indicators of foreign gold reserves held by the New York Federal Reserve Bank, the picture will be impressive. Until the last moment, they exceeded 6 thousand tons in terms of pure metal. This is only a thousand less on 2 than the official gold reserves owned by the US Treasury (at the beginning of 2015 g. - 8.133,5 t). For comparison, we present data on official gold reserves of the following countries in the USA (in tons, also at the beginning of 2015):
Germany - 3.384,2; Italy - 2.451,8; France - 2.435,4.
If we transfer the gold reserves of foreign countries stored at the US Federal Reserve to today's prices, we will get more than 230 billion dollars. In the near future, a strong increase in prices for the yellow metal may begin. Some experts estimate the growth potential with 2-3 and even 4-5 or more (i.e. possible new equilibrium price in relation to today's price). That is, it is possible that in terms of value, gold reserves of foreign countries stored in the United States may, in some time, be worth a trillion dollars or more.
Today, Germany and a number of other countries are trying to return their gold from the vault of the Federal Reserve Bank of New York, where all foreign gold stored in America is concentrated. However, the United States does not want to part with someone else's gold. For 2013, foreign countries, judging by the statistics of the US Federal Reserve, managed to get out of the American “captivity” only 5 tons, in the 2014 year - 177 tons, and in the first two months 2015 of the year - even 30 tons. Total 212 tons, or 3,4% relative to the total volume of foreign gold in the basements of the New York Fed.
Today we observe how obediently Europe goes in the wake of Washington’s policy, including on the issue of participation in economic sanctions against Russia. In part, this political course of Washington’s allies can be explained by the fact that they have become hostages of the “service” of storing gold and other international reserves in the US Federal Reserve.
- Valentin Katasonov
- http://www.fondsk.ru/news/2015/04/06/inostrannye-zalozhniki-federalnogo-rezerva-ssha-32615.html
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