Dutch No Longer Trust U.S. Government With Their Gold

The city of Amsterdam is, tonight, a touch more golden than it has been for many years.

In a sign of growing worries about the actual status of gold reserves entrusted, for safe-keeping, to the American government, it has been revealed that the Dutch government secretly arranged for 31% of their national gold reserves to be shipped back to Amsterdam and for the rest to be transferred to countries they consider more trustworthy than the United States.

Although modern currencies are no longer tied to a notional amount of gold, it is still important for them to hold some gold in reserve in case there is some sort of financial crash that prevents them from being able to create more imaginary money through the sale of government bonds. Actual, physical gold is considered to be the value store of last resort, of vital importance at times when trust in and between governments plumments, such as during wars.

In the case of The Netherlands, the national gold reserve amounts to 612 tonnes and is worth around 19 billion Euros at current prices – not much in national terms but, certainly, a useful amount to have on hand at times of extreme difficulty.

Until recent years, it had been considered wise for most countries to entrust their gold to the United States, where it was assumed that military strength, stable governance and healthy finances would mean the money was safer than if it was stored in its individual home countries, and this is why The Netherlands was happy to keep all of its gold in a secure depot in New York. The idea was that, in the case of gold, the United States would act not as a bank into which you deposit money but as a sort of big safety deposit box in which each individual bar of gold could be put and, upon demand, exactly the same bar of gold could be withdrawn.

This assumption, that the United States could be trusted to keep the gold of other nations safe, was blown out of the water a few years ago when the Germans began to notice that an unusually high amount of gold seemed to be entering the market to satisfy growing demand in Asia. They began to wonder if their gold was still sitting in a storage facility or if the U.S. Government might, in fact, have “borrowed” it.

The Germans did not think that the U.S. Government has stolen their gold, not exactly, but they were aware that the actual gold bars they had deposited, and expected to get back, were of extremely high purity and, therefore, of more value than just any gold bar. They were alarmed that, if the Americans were now treating the gold reserves as a resource they could dip into – by melting down, leasing or even selling it – they would end up getting back gold of far lower purity.

The Germans were also aware that, if the actual gold was no longer there, it might not even be possible for them to ask for the immediate return of all their gold, they might have no choice but to allow the Americans to drip-feed their gold back to them over a number of years, possibly decades, entirely defeating the purpose of even having emergency gold reserves.

Finally, some German politicians became worried that physical possession of the gold gave the Americans too powerful a bargaining chip which could be used to blackmail the Germans if they decided to do something the Americans were against, such as exiting the Euro.

The issue is extremely sensitive because, of course, the United States is by far the most powerful country in the world and tends to get touchy when any questions are raised as to the probity of the U.S. financial system or the actual number of dollars floating around the world, especially after the recent years of Quantitive Easing (also known as “printing money as fast as you can to avoid a complete financial meltdown”).

Treading carefully, most countries have now asked for at least some of their gold reserves to be returned as soon as possible and the United States is slowly doing so. No country wants to make an official fuss about this mess because, of course, introducing any doubt into the world financial systems could lead to yet another crash that affects them all.

The Dutch were, therefore, no doubt relieved when their first top-secret shipment of 120 tonnes, worth 4 billion Euros, finally arrived back in Amsterdam, and they have arranged for the rest to be held in Ottawa (Canada) and in London, both of which they apparently believe are safer bets than leaving their gold in American hands.

We reached out to the Dutch government for comment on the rumour that those 120 tonnes of gold have been divided up and stored in a series of bunkers hidden deep below branches of Febo throughout the city. At the time of publication, we have yet to receive a confirmation of that.