German Central Bank Retrieves Gold

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by Björn Schöpe
translated by Annika Backe

February 19, 2015 – Since the economic crisis, the Germans are getting more and more interested in their country’s gold reserves. After all, Germany with its more than 3,300 tons owns the second-biggest reserves after the U.S. At present, about 40 per cent are stored in New York, at the Federal Reserve Bank, as well as in Paris and London where likewise greater quantities are kept. That, however, is changing – Germany repatriates a part of its gold.

The large gold reserves mainly date back to the era before the Wirtschaftswunder in the 1950s and 1960s. Germany’s export was booming, and gold was acquired for dollars. During the Cold War, possessing strong gold reserves overseas, far afield from the Iron Curtain, was considered good reinsurance. Besides, gold could have been exchanged for foreign currency at any time.

Until then, the circumstances have changed: there is no imminent danger of a Russian invasion, and since the introduction of the euro it has become impossible to buy foreign currency in Paris. That is why the storage location of Paris, where nearly 300 tons of gold are currently held, is planned to be closed down in the next few years. It is said that the 438 tons of gold that are kept in London will not be touched. As for the 1,500 tons of gold in New York: roughly 300 tons will be shipped to Germany. Operations are running according to schedule, according to the German Central Bank. The transfer should be complete in 2020. No further details are released, for reasons of safety.

Yet it is precisely this way of dealing with information that had led to public pressure. The Federal Audit Office demands a regularly updated inventory likewise of the physical gold reserves that are held abroad. Since 1998, the German Central Bank only lists the so-called “Goldforderung” in its balance, hence a virtual unit, the claim for gold Germany is entitled to make. Interestingly enough, the media turned these facts into reports saying that the Federal Audit Office had labelled the storage of gold in foreign countries unsafe which was why the gold would now be retrieved. There were parliamentary questions about the gold’s whereabouts which were never answered satisfactorily. A petition was handed in, demanding the repatriation of the gold – providing that it was still there, as some remarked, including financial expert Peter Boehringer.

After this “bad press”, the German Central Bank most likely initiated the gold repatriation as a kind of statement: our gold is still there, and it belongs to us. As proof, we call back a part of it. It is a small demonstration of Germany’s power. The storage location of the German gold reserves has no influence on the current economic crisis, and the gold reserves are not playing an active role in Germany’s economic policy right now. Only 5 to 6 tons of gold are being sold by the German Central Bank every year. The metal is melted down for minting commemorative coins.

The German Central Bank provides exact figures in a press release.

On Bloomberg, a detailed article on Peter Boehringer is available.