NATO´s internal gold war
By Jorge Vilches for the Saker Blog
Brexitology focused keenly on UK fish but fully ignored the EU´s gigantic gold reserves supposedly still vaulted in custody at the Bank of England. Adding insult to injury, a UK-EU no-deal financial services crash-out divorce went by almost unnoticed… not only without the bang of the still postponed “financial equivalence” protocol… but also without a mere whimper from specialized media and Remainers. Now, the Ukraine crisis with its new payment requirements for the badly needed Russian oil & gas…overlapping with essential yet unfinished Brexit business…will necessarily evolve into a vicious NATO internal gold war. Paraphrasing James Carville spiced with some traditional British flavour, “It´s the bloody gold, stupid”
Rule Britannia
As UK Prime Minister Boris Johnson would have it, the physical repatriation of the EU gold supposedly still vaulted in London would “mightily” affect the future of Europe with very deep, high-voltage political impact both sides of the English Channel. In this scenario No.10 Downing Street would easily negotiate the EU gold bullion availability only under specific Brexit conditions favourable to the UK. Actually, doing this could turn out to be absolutely necessary and should go far beyond the enormous intrinsic value of the EU gold supposedly still vaulted at the BoE. Let me explain.
NATO gold in London
Russia´s new rubbles or gold payment requirements for any of its goods or services will necessarily prompt a major gold war between the UK and the EU probably resulting in NATO´s first-ever internal head-on gloves-off confrontation. After WW2 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 current EU member states deposited most of their gold in custody at the Bank of England (BoE) in London. Now, the UK will dare to weaponize the approval of EU gold repatriation requests and other gold-related issues as a very convincing bargaining tool for lots of still unfinished yet most important Brexit business. So,
(a) Whitehall could indefinitely delay the EU gold delivery unless Brexit pending issues are agreed in favour of the UK.
(b) Or, quite simply, the BoE would not ever return such EU gold supposedly kept in custody for the past decades because it has been partially or totally sold off or loaned out or compromised as explained below with former UK Prime Minister James Gordon Brown knowing about it all too well.
The Mother of European conflicts
If history is any guide, hostilities will explode the instant the EU member states individually or collectively rightfully demand a yet-non-existent fully independent world-class functionally detailed audit of the EU gold supposedly still in ´custody´ at the BoE. This should take plenty of time and is the perfect excuse for delaying the whole process always under the exclusive preview of London, not Brussels. Or unmanageable problems would arise as soon as EU nations require immediate repatriation of at least some of such ´theoretical´ bullion, most probably all of them at the same time in view of circumstances. Then, either (1) some gold could possibly slowly be returned here and there (albeit with great delay ) but only under very vague London terms and changing the unfinished Brexit aftermath to levels yet unheard of, or (2) no gold would be returned as it has been sold off or compromised in different ways as explained hereinafter. And the UK better not decide to pay Russia even with a single gold coin as the EU would rightly wonder who owns it.
BoE darkness
The London gold and silver markets have always been beyond “opaque” without any significant reporting of transactions or positions. No data has ever been offered either on commercial banks holding accounts at the BoE, or precise technical identification of gold custodies, let alone those belonging to EU members. As Venezuela knows all too well – and EU member states could be next — who may or may not be acknowledged as a valid claimee of anything vaulted in Threadneedle Street or whereabouts is an open subject left to the entire discretion of the Canary Wharf masters, not EU politicians. Same goes for the enormous unallocated gold and silver liabilities of the so-called ´bullion banks´… or any other pertinent data.
The (bad) German experience
Very recently Germany had to wait 5 long years to forcefully and painfully repatriate only a portion of its gold from the BoE and never got back any of the gold bars originally deposited, which clearly explains the delay. So while the EU freezes to death and its economy stops dead in its tracks, the many pending questions include
(a) does the BoE still have all of the EU´s gold bullion… or has it been sold off or loaned out as many experts insist ?
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