German Federal Audit Office Calls for Reform of Bundesbank’s International Inventory System; Special Report by Leading Financial e-Letter Investment Contrarians

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In a recent Investment Contrarians article, editor and financial expert Sasha Cekerevac points out that a recent report by the German Federal Audit Office criticized the Bundesbank, the German central bank, for its lack of a better international inventory system. Cekerevac explains that while the Bundesbank has a strong handle on its domestic gold bullion inventory, its knowledge of its holdings in other countries, especially the U.S., is not as thorough as some would like. (Source: “Why Germany Wants to See its US Gold,” Der Spiegel, October 30, 2012.) While some believe that returning gold bullion holdings to the country will stabilize the financial crisis, Cekerevac argues that structural reform is needed for the European continent to regain its growth trajectory.

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German Federal Audit Office Calls for Reform of Bundesbank’s International Inventory System; Special Report by Leading Financial e-Letter Investment Contrarians

With gold prices at very high levels, there is a greater concern to ensure the accuracy of the level of gold bullion actually being held.

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In a recent Investment Contrarians article, editor and financial expert Sasha Cekerevac points out that a recent report by the German Federal Audit Office criticized the Bundesbank, the German central bank, for its lack of a better international inventory system. Cekerevac explains that while the Bundesbank has a strong handle on its domestic gold bullion inventory, its knowledge of its holdings in other countries, especially the U.S., is not as thorough as some would like. (Source: “Why Germany Wants to See its US Gold,” Der Spiegel, October 30, 2012.) While some believe that returning gold bullion holdings to the country will stabilize the financial crisis, Cekerevac argues that structural reform is needed for the European continent to regain its growth trajectory.

What Cekerevac finds interesting is that many voices within Germany are calling for the Bundesbank to check its international holdings, namely in the U.S., where 1,536 of Germany’s 3,600 metric tons of gold bullion are being held. (Source: Der Spiegel.)

“With gold prices at very high levels, there is a greater concern to ensure the accuracy of the level of gold bullion actually being held,” explains the Investment Contrarians expert.

According to Cekerevac, some within the German community argue that a more practical use of the country’s U.S.-stored gold bullion would be to fund other proposed ventures. But, as he points out, the Bundesbank refuses to sell its holdings of gold bullion, instead keeping its holdings in foreign countries for emergency uses. Regardless of gold prices, Cekerevac reasons that if there was a collapse of currency, the foreign holdings of gold bullion can be used for exchange into dollars for payments in extreme circumstances.

“With instability within the E.U. growing, many believe that gold bullion holdings will somehow stabilize the situation,” states Cekerevac. He notes that because of the eurozone crisis, which still is not resolved, there’ll be increased scrutiny over central banks’ holdings of gold bullion.
“That in and of itself won’t do anything to help the eurozone residents,” concludes Cekerevac. “Regardless of where gold prices go, structural reform is needed for the European continent to regain its growth trajectory. This is a far more complex issue than simply counting gold bullion bars.”

To see the full article, and to get a real contrarian perspective on investing and the economy, visit Investment Contrarians at http://www.investmentcontrarians.com.

Investment Contrarians is a daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”

The editors of Investment Contrarians believe the stock market and the economy have been propped up since 2009 by artificially low interest rates, never-ending government borrowing, and an unprecedented expansion of our money supply. The “official” unemployment numbers do not reflect people who have given up looking for work, and are thus skewed. They believe the “official” inflation numbers are also not reflective of today’s reality of rising prices.

After a 25- to 30-year down cycle in interest rates, the Investment Contrarians editors expect rapid inflation caused by huge government debt and money printing will eventually start us on a new cycle of rising interest rates.

Investment Contrarians provides unbiased research. They are independent analysts who love to research and comment on the economy and investing. The e-newsletter’s parent company, Lombardi Publishing Corporation, has been in business since 1986. Combined, their economists and analysts have over 100 years of investment experience.

Find out where Investment Contrarians editors see the risks and opportunities for investors in 2012 at http://www.investmentcontrarians.com.

George Leong, B. Comm., one of the lead editorial contributors at Investment Contrarians, has just released, “A Problem 23 Times Bigger Than Greece,” a breakthrough video where George details the risk of an economy set to implode that is 23 times bigger than Greece’s economy! To see the video, visit http://www.investmentcontrarians.com/press.

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