Germany Wants Its Gold Back (Again)

Germany has the second-largest gold reserves in the world at 3,350 tons.

The U.S. is first with 8,133 tons.

China says they hold 2,300 tons, but it’s widely known they’ve been secretly buying for decades. The country’s true holdings may even surpass America’s.

But let’s get back to Germany. The country holds 37% of its hoard in Manhattan at the New York Federal Reserve vault. That gold is valued at about $170 billion today.

Why would Germany store so much gold in NYC? Because back in the 1970s, there was fear that the USSR would send 20,000 tanks through the Fulda gap into West Germany.

So the gold was stored in the U.S. for safekeeping.

But ever since, Germans have occasionally demanded their bullion back. With limited success.

In 2012, German news site Der Spiegel reported on Germany’s central bank’s attempts to at least view their gold holdings.

Finally, in 2007, “following numerous enquiries,” Bundesbank staff members were allowed to see the facility, but they reportedly only made it to the anteroom of the German reserves.

In fact, auditors from the Bundesbank made a second visit in May 2011. This time one of the nine compartments was also opened, in which the German gold bars are densely stacked. A few were pulled out and weighed. But this part of the report has been blacked out — out of consideration for the Federal Reserve Bank of New York.

“I would like more transparency on the issue,” says Bundesbank board member Thiele. The Americans are very sensitive, though, when it comes to security procedures in their gold storage facilities. In their second major depository, the legendary Fort Knox, practically no one in recent decades has been allowed to view the gold reserves.

So in 2007, they weren’t allowed to see any gold at all. And after years of back and forth, they were only allowed to see one of nine compartments.

And parts of the report were blacked out? It doesn’t exactly inspire confidence.

The 2012 Spiegel report goes on to say:

Such intense secrecy fuels legends. Many conspiracy theorists have suspected for decades that the German gold has long since disappeared. Others believe that it has been lent out. They contend that there are only promissory notes of little worth stored in the bank’s vaults.

Following this controversy, Germany did manage to bring a portion of its gold back home. They withdrew 300 tons from the U.S. by 2016.

But the NY Federal Reserve still holds 37% of Germany’s bullion today. And now, some are calling for it all to come home.

Germany’s Latest Attempt

Over recent months, German voices have once again been calling to bring the gold home. From The Guardian:

Emanuel Mönch, a leading economist and former head of research at Germany’s federal bank, the Bundesbank, called for the gold to be brought home, saying it was too “risky” for it to be kept in the US under the current administration.

“Given the current geopolitical situation, it seems risky to store so much gold in the US,” he told the financial newspaper Handelsblatt. “In the interest of greater strategic independence from the US, the Bundesbank would therefore be well advised to consider repatriating the gold.”

Naturally, some are attempting to frame this as a Trump issue. It’s not. This has been going on for many decades.

Others are calling for regular audits:

Markus Ferber, a member of the European Parliament for the CDU, told Bild that he also insists on German officials being allowed to personally inspect the country’s U.S.-based bullion.

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

However, Germany’s central bank chief, Joachim Nagel, isn’t budging (yet), stating “We have a trustworthy and reliable partner in the Fed in New York for the storage of our gold holdings.”

The fact that many are calling for a return of the gold (or at least an audit) again is noteworthy.

Last time the Germans demanded to see their gold, they succeeded in bringing back a portion from New York vaults.

Conspiracy Theories

Remember last year, when President Trump and Elon Musk were going to audit America’s gold reserves?

Whatever happened to that? I suppose more pressing issues took precedent.

For decades, a dedicated group of gold bugs have suspected that governments around the world have secretly sold or leased their bullion out. That government vaults are essentially filled with paper IOUs.

Is it possible some nefarious groups have secretly sold off global gold reserves? Sure.

The intense secrecy and lack of audits fuels these suspicions. Refusing to let a sovereign nation see its own gold reserves seems a bit… odd.

But the evidence is circumstantial. So for now, there are far more questions than answers.

Growing Mistrust

With deteriorating relations between the U.S. and Europe, it’s possible these issues will come to a head.

President Trump’s desire to seize parts of Greenland has lit a fire under some Germans.

Will this be the moment that Germany’s political leadership and central bank demand all its gold back? Probably not. But if the relationship between key NATO allies continues to erode, anything is possible.

What would happen if it were discovered that someone had sold off national gold? Chaos.

It would be one of the biggest stories of the century. A heist of unimaginable scale.

Our own Jim Rickards has written about this topic extensively, and says that America’s gold, at least, is still there. Which is reassuring.

But it’s not beyond the realm of possibility that at some point over the past 50 years, a portion of foreign gold reserves could have disappeared.

The temptation to at least “lease” some of that gold, and put the capital to use, would be substantial.

Then again, you’d think that much gold hitting the market would make a splash big enough to be visible from space. So who knows?

We’ll keep an eye on this story for further developments.