Deutsche Bank defaults on gold delivery.

There are three banks now that have defaulted on gold delivery requested of them: ABN Ambo.  Rabobank and just this week Xetra/Deutschebank. This is becoming a pattern.

Some of us have suspected based on the evidence that Western banks were keeping the price of gold suppressed in order to keep inflation down. In order to do that, these banks had to pledge their gold holdings via paper options. We have also suspected that certain governments (China, Russia and Arab countries) were taking deliveries of all the gold they could suck out of the banks. It was obvious that this scam would come to an end when the banks run out of gold. Some have. The Federal Reserve, for example, refuses an audit of its gold holdings.

The default at Deutschbank has created some misgivings. So, people at Deutschbank tried to "explain." Here is a response to the explanation from DB.

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by Tyler Durden

Sep 2, 2016 6:27 PM

            

The unprecedented escalation involving Deutsche Bank's failure to deliver physical gold on demand continues.

As we first reported two days ago, a client of Xetra-Gold, a German Exchange-Traded Commodity fund, tried to get access to the gold he had been promised under the Xetra-Gold prospectus, leading to much confusion about just where the failure to deliver had taken place, at Xetra or at the fund's designated sponsor, and the client's principal bank: Deutsche Bank.

Then, overnight, we presented the just as odd response provided by Deutsche Boerse where the ETC is traded, which sounded as if it was trying to pass the buck onto Deutsche Bank. This is what it said:

Deutsche Börse Commodities GmbH stresses that owners of Xetra Gold units can exercise their right to delivery of securitised gold at any time. The gold is delivered by the bank branch on which the investor has its securities account – on the condition that the branch offers this service, as the gold can only be delivered through the investor's custodian bank.

As we said at the time, the response led to even more questions, and even more public outcry in Germany, which may explain why moments ago none other than the custodian bank, Deutsche Bank, joined the fray, by doing something it has never done before: provide a rationalization for why it failed to deliver gold on demand. Or at least try.

Its response:

As one of the sponsoring financial institutions, Deutsche Bank fulfils the obligations specified in the Xetra-Gold sales prospectus as a matter of course. This includes fulfilling claims to the delivery of physical gold certified by Xetra-Gold. This must take place through the investor’s principal bank where the investor’s securities account is maintained.

 

Deutsche Bank accepts such orders for delivery from its clients. The investor incurs the costs described in the sales prospectus, for example, for the forming, packaging and the insured transport to the place of delivery.

 

For this reason, we recommend in each specific case an individual review of the economic efficiency of a physical delivery. Should an investor’s request for the handover of physical gold not have been complied with immediately in individual cases, this will be reviewed and an individual solution will be found with the client.

And so another non-response, because in the same press release Deutsche Bank both admits that it has an obligation to deliver the gold "as a matter of course", and then tacitly confirms that it failed to do so, by first saying that it evaluates the "economic efficiency of physical delivery", something it should have no right to do since the Xetra prospectus explicitly mandates that it should release gold on demand, and then adds that "should an investor’s request for the handover of physical gold not have been complied with immediately in individual cases, this will be reviewed and an individual solution will be found with the client."

As we already know, this handover of physical gold failed on at least one occasion, and while we are comforted that Deutche Bank is reviewing the situation and a "solution will be found with the client", it certainly does not even remotely explain why the situation should have arisen in the first place.

However, what is most notable is how quickly every entity involved in this failure to deliver, from Xetra-Gold, to Deutsche Börse, and ultimately to Deutsche Bank, responded with an attempt to placate public concerns about the availability of physical gold with statements that may have, paradoxically, only raised concerns whether the gold is in fact still there.