One has heard of the German experience in gold repatriation from the US anticipated to take a massive seven years. What of the additional gold repatriation requests hovering about the world these days, such as by Switzerland, Finland, Poland, and various other countries where a referendum for such is utilized? Would this cause additional problems for the already heavily burdened gold fractional reserve banking system?
Fractional reserve banking in gold comes about by leasing gold. The leasing of gold is unfortunately another way of saying leasing one's gold to a lessee who then places it on the market for sale to cover leasing, storage, and insurance costs by making substantial investments in government bonds from the proceeds of the sale and reaping interest payments from such bonds. Such gold then changes hands never to be returned to the lessor and the paper trail is cut after the lessee takes delivery and sells the gold on to buyers usually in the Far East. The general direction of movement of gold these days tends to be from west to east, to countries such as India and China.
As the massive house of cards begins to tumble about the ears of the bullion banks and central banks, the ever more frequent demands for gold repatriation will be sure to cause a massive run on gold as countries realize that their gold is simply not where it was initially deposited for safe-keeping. That this surge in demand will be sure to contribute to the anticipated parabolic spike in the price of gold is without question. Alarm bells are likely imminently to go off throughout many of the countries attempting to repatriate their gold.