Desperate in Deutschland

Germany has the second-largest gold reserves in the world (on paper, at least). The country’s official holdings clock in at 3,352 tons, behind only the United States’ 8,133 tons.

About 37% of Germany’s gold, 1,236 tons, is held by the New York Federal Reserve. The gold was moved to the U.S. for safekeeping in the aftermath of WW2, when the threat of Soviet tanks charging through the Fulda Gap loomed large.

Back in 2013, German politicians first raised a stink about bringing their gold back home. By 2017 a decent chunk the nation’s gold had been returned to Germany’s central bank, mostly from France and England.

Only about 300 tons of that came from the NY Fed, which brings us to today, when more than a third of German gold still sits in NY Fed vaults beneath Manhattan.

Today German conservatives are once again lobbying to at least be able to inspect their reserves at the NY Fed, which they still haven’t been able to do.

Here’s a recent quote by Michael Jager, of the European Taxpayers Association. From the German tabloid Bild:

The Bundesbank and the German government must demonstrate foresight in this phase of global power shifts and immediately retrieve German gold from the USA. Especially at a time when Berlin and Brussels are discussing immense new debt, we need immediate access to all gold reserves in an emergency.

That quote is from a Bild article dramatically titled Bring our gold back from the USA immediately!:

Unsurprisingly, President Trump’s desire to audit Fort Knox’s gold reserves has not inspired confidence in foreign governments who store their gold in the States. Here’s another quote from Michael Jager, via Bild:

If even Trump wants to inspect the US gold in Fort Knox to be sure, then that should also be the new federal government’s minimum requirement for German gold in the US.

German MP Markus Ferber added:

I demand regular checks of Germany’s gold reserves. Official representatives of the Bundesbank must personally count the bars and document their results.

It’s becoming clear that the old system of “trust, don’t verify” is breaking down.

Fears About Leased Gold

I suspect the fears driving Germany’s desire to repatriate its gold largely stem from the same story we’ve been covering throughout this year: the gold leasing conspiracy.

For decades, rumors have swirled that central banks lease out gold reserves, including those of foreign governments. The gold could, hypothetically, then be sold on the open market. In theory this would contribute to keeping a “cap” on the price of gold, while simultaneously propping up fiat money.

For now, the leasing conspiracy is largely hypothetical. The world of gold reserves is incredibly secretive and opaque (which, of course, only adds to the intrigue).

But it’s indisputable that something has changed over the past decade. Governments are no longer as trusting when it comes to gold reserves held by foreign central banks.

This is yet another signal that we are nearing the end of this period of fiat currency dominance.

Gold has begun to make its inevitable return to the international monetary system.

Gold as the Canary

It’s no coincidence that this scramble for physical gold is happening as the global debt spiral reaches an inflection point.

Governments around the world, particularly here in the U.S., are approaching what some call the debt event horizon. The point where interest costs on debt become a substantial part of overall government spending, and it begins to spiral out of control.

In 2024 the United States government spent approximately $1.1 trillion on paying the interest on its debt. Total tax receipts for the year were about $4.9 trillion. So nearly a quarter of tax money was spent on interest expenses.

Debt and deficit will compound rapidly from here. Even if DOGE is successful in slashing government spending, that will only delay the inevitable.

This is why gold is constantly reaching new all-time highs. It is why governments around the world, possibly including the U.S., are scrambling to get their hands on physical gold.

As I wrote in The Gold Bull Cycle Has Just Begun, I believe we are still early in this bull market. The global monetary system is ill, and the ultimate remedy is a return to hard money. That means a lot more inflation, and much higher precious metals prices.

In other words, gold and silver are just getting started.