FRANKFURT - Nearly half of Germany's gold reserves are held in a vault at the Federal Reserve Bank of New York - billions of dollars worth of postwar geopolitical history squirreled away for safe keeping below the streets of Lower Manhattan.
Now the German central bank wants to make a big withdrawal - 300 tons in all.
On Wednesday, the Bundesbank said that it would begin moving some of the reserves, the second-largest stock in the world after that of the United States. The goal is to house more than 50 percent of German gold in Bundesbank vaults in Frankfurt by 2020, up from a little less than a third today, the bank said.
And from Reuters:
For historic reasons, most of Germany's gold is stored on foreign soil. In recent years, conspiracy theories have flourished. Self-proclaimed experts have raised the idea that the gold officially stored in New York, London and Paris might in fact have been sold by malign foreign powers.
The bank's inventory documents were deemed worthless: they can easily be forged, can't they? And the physical bullion shown to visitors just had to be hollow. Last year, even the Federal Audit Office fueled the paranoia by criticizing the Bundesbank for not checking whether its gold was really genuine.
All of this is absurd, and in the past the Bundesbank itself has pointed that out to the German public. Now it has announced that it will bring home 674 tons of gold from New York and Paris.
The move is nothing but irrational. The trustworthiness of the U.S. Federal Reserve, Bank of England and the Banque de France is beyond any doubt.
David Fuller's view I hope you smiled on reading this because I certainly did. And on the subject of central bank "trustworthiness" mentioned above, surely I am not the only person to think: Yes, but we can't trust central banks to preserve the value of money, can we?
Of course sensible German citizens want Germany's gold back on home soil, now that the 'cold war' is largely over. Record amounts of QE have made many of us a little more wary about the security of hard money.