Yesterday I blogged about the Pentagram's...er... the Pentagon's recent failed audit. Well, seriously folks, who expected any other result? The whole affair was papered over with prose worthy of Hjalmar Schacht, interwar President of Germany's Reichsbank and mastermind behind such dubious monsters as the Bank of International Settlements, and spider at the center of a web touching Aristotle Onassis, the overthrow of King Farouk, and Indonesian President Sukarno.

And speaking of Hjalmar Schacht, Venezuela wants its gold back from the Bank of England, and the Bank of England, according to this article shared by Mr. B., is saying they can't have it:

Bank of England's refusal to return Venezuela's gold sets a worrying precedent

Get this:

On 5 November, the London headquartered Reuters news agency reported that the Venezuelan state, fearing sanctions, is attempting to repatriate 14 tonnes of gold from the Bank of England in London, but that this gold withdrawal and transport operation has not yet been actioned despite the withdrawal request being made by Venezuela nearly two months ago. According to Reuters' sources which were two unnamed "public officials with direct knowledge of the operation", Venezuela's gold bar withdrawal delay is being caused by the difficulty and cost in obtaining insurance for the gold shipment, and also because the Bank of England wants to know what Venezuela plans to do with its gold once it receives it. On 7 November, the establishment 'The Times' of London newspaper picked up on the same story, running a report that "British officials" want clarification on what the Venezuelan government intends to do with its gold after it receives it, and that these "officials" are also throwing up hurdles by insisting that for this gold shipment "standard measures to prevent money-laundering be taken". Interestingly, in the above reports, both the Bank of England and Venezuela's central bank, the Banco Centrale de Venezuela (BCV), declined to comment. This means that the entire 'story' about Venezuela's gold that is now in the public domain is based on snippets of information that 'public officials', possibly from HM Treasury, fed to both Reuters and The Times.

Now, I've as little use for the "government" of Venezuela as I do for the "government" of Cuba; but that said, what Venezuela intends to do with its own gold is Venezuela's business. So I suspect there's more going on here than meets the eye, and perhaps a clue is afforded by that little phrase that the Old Lady of Threadneedle Street wants to insist on "standard measures to prevent money laundering be taken." And herewith we get into our trademark high octane speculation territory once again. There's much about this story that reminds me of good old Hjalmar, and specifically, his 1928 visit to the New York Federal Reserve, when he asked Benjamin Strong, then governor of said bank, to see the Reichsbank's gold. The nervous staff of the bank, you might recall, reported to Strong that they were unable to locate the Reichsbank's gold. "Not to worry," Schacht said with a smile (which in his case we can only assume to have been oily and unctuous), "I know you're good for it."

Let that one sink in for a moment: the head of one of the world's largest central banks was saying to the head of another large central bank (and international bullion depository), that he knew that the gold was gone, and thus the implication is that the NY Fed had used the Reichsbank's gold for other purposes, and that this was the reason it could not be located, i.e., it simply wasn't there. Why else would Schacht have said "I know you're good for it"? Nod nod, wink wink, elbow jab. There's nothing like good old-fashioned re-hypothecation to warm the crooked cockles of a central banker's cold heart. Just exactly what did happen to that German gold Schacht never said, but there's no doubt in my mind he had a good idea, and wasn't talking. After all, that (probable) knowledge gave him a bit of "leverage," and funny thing too, Schacht received a relatively light sentence at Nuremberg, only to re-emerge after the Second World War as a real behind-the-scenes wheeler-dealer (see above references to King Farouk, Sukarno, &c).

Which brings us back to Venezuela, for I suspect that the bit about being concerned about "money laundering" might be a bit of projection, i.e., of accusing others of doing, or intending to do, what one has already done oneself. In the meantime, come up with excuses for delays (insurance, money laundering concerns &c) until you can cobble enough gold together, and doctor the books so that the re-hypothecation doesn't show up.

See you on the flip side...