It will be interesting to see who blinks first.
In hindsight, Hugo Chavez comes off smelling like a genius. He repatriated his countries gold.
Asked for it back from the Europeans and received it.
What does it say about the world economy when Hugo Chavez is looking like the biggest financial genius on the planet?
Now, the Germans ask for their gold back from us, the U.S. and like a degenerate gambler exposed, we tell them we'll give it back to them, in seven years. Which begs the question(s) "Where is the gold these guys gave to us to hold for for safekeeping?" Did we lose it at the track? If we have the world's largest holdings of gold on record, why should it take seven years to return Germany it's gold, which presumably is not even a part of the record amount of gold that we "hold" according to the records?
It appears as if Germany many years back, made the mistake of thinking "Hey Uncle Sam, you're reliable and safe and honest, and you live in a fairly safe neighborhood / location, but my neighborhood if rife with plunderers and thieves, how about you hold my gold until things calm down around here? Just for safekeeping? I'll come back for it when things calm down around here or I need it to pay the rent or something"
So now, Germany wants or needs it's gold back, asks us for it, and we start giving them the stiff-arm, the cold shoulder. What do you suppose they must be thinking of us over in Deutschland? What does it say about us over here?
Now the Republic of Texas wants their gold back.
The comments from the Bloomberg article are really rich. "Poor sportsmanship", "anarchistic". Really?!?
It seems to be more an issue of poor stewardship and lack of trust. I'll leave it to others to figure out who is on what side of those lines and who is not. But it seems like we are seeing a real-life, high stakes poker game being played out over the Golden Rule:
from Bloomberg:
Contracts Exceed Supply
Open interest in gold futures and options traded on the Comex typically exceeds supplies held in its warehouses. If the holders of just 5 percent of those contracts opted to take delivery of the metal, there wouldn't be enough to cover the demand, Bass said.
"If you own a paper contract where they can only deliver you 10 cents on the dollar or less, you should probably convert it to physical," said Bass, who isn't related to Fort Worth's billionaire Bass family. He said holding cash wasn't a better choice because the rate of inflation exceeds money-market rates by 2.5 percent to 3 percent, eroding the value of cash.
"The call to take delivery is more of a challenge to the system and it borders on the anarchistic," said Ralph Preston, a principal at Heritage West Financial Inc., a San Diego company that specializes in futures trading. "It's like the Republicans trying to overturn President Obama over the birth certificate issue. It's poor sportsmanship."
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