(Mike Maharrey, Money Metals News Service) With the U.S. weaponizing the dollar and trade, some people in Germany are calling on the Bundesbank to move at least some of its gold out of New York and bring it home to minimize the risk of U.S. meddling.
Germany owns the second-largest gold reserves in the world at 3,352 tonnes. About 1,200 tonnes valued at around $130 billion are stored at the Federal Reserve Bank of New York.
The German central bank opted to store significant amounts of gold in New York to keep it far away from the Soviet Union during the Cold War. As an article in Fortune pointed out, “The country’s close ties with the U.S., which has historically held up the Western World order, made the Fed an obvious resting place for the commodity.”
With the U.S. aggressively using economic pressure as a foreign policy tool, the wisdom of strong German gold in New York no longer seems quite so obvious. What’s to stop the U.S. from holding Germany’s gold reserves hostage to further its own aims?
EU Parliament member Markus Ferber recently called for an audit of German gold.
“I demand regular checks of Germany’s gold reserves. Official representatives of the Bundesbank must personally count the bars and document their results.”
He later explained his position, saying, “Trump is erratic and one cannot rule out that someday he will come up with creative ideas how to treat foreign gold reserves. The Bundesbank’s policy for gold reserves has to reflect the new geopolitical realities.”
There have been similar calls to audit U.S. gold reserves stored at Fort Knox. Four members of Congress recently introduced comprehensive gold audit legislation.
Meanwhile, the German Taxpayer Federation recently sent a letter to the central bank, urging it to bring Germany’s gold home.
“Trump wants to control the Fed, which would also mean controlling the German gold reserves in the U.S. It’s our money; it should be brought back.”
The Bundesbank has not made any official statements related to gold repatriation, and continues to publicly back the Fed as the protector of its assets. However, that doesn’t mean the German central bankers are privately comfortable with the situation.
Germany isn’t alone in thinking its gold might be safer at home.
According to a World Gold Council survey in 2023, a “substantial share” of central banks expressed concern about potential sanctions after the U.S. and other Western countries froze almost half of Russia’s $650 billion gold and forex reserves in the wake of its invasion of Ukraine. According to the WGC, 68 percent of the banks surveyed said they plan to keep their gold reserve within their country’s borders. This was up from 50 percent in 2020.
One anonymously quoted central bank official told Reuters, “We did have it [gold] held in London… but now we’ve transferred it back to our country to hold as a safe haven asset and to keep it safe.”
Last year, India repatriated 100 tonnes of its gold.
There has been speculation that other countries have been moving gold and other assets out of the U.S. in the wake of economic sanctions on Russia, but it’s been difficult to confirm because the Federal Reserve will not release information on the amount of gold in its vaults.
The gold repatriation trend started long before the West slapped sanctions on Russia. In 2019, Poland brought home 100 tons of gold. Hungary and Romania also repatriated some of their gold reserves around that same time. In the summer of 2017, Germany completed a project returning roughly half of its gold reserves back inside its borders. In 2015, Australia launched efforts to bring half of its reserves home. The Netherlands and Belgium have also initiated repatriation programs.
This gold repatriation trend underscores the importance of holding physical gold free from counterparty risk.
If you store your gold and silver with a third party, you could lose your metal through theft, fraud, or an act of God. Of course, you could lose silver and gold stored in your home the same way (except for fraud), so you have to weigh the risk of using third-party storage and keeping large amounts of silver and gold at home.
If you opt for third-party vaulting, it is important to choose a trusted company.
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Mike Maharrey is a journalist and market analyst for Money Metals with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.
