German officials renew calls to bring Gold home

German officials are once again calling for the country’s central bank to bring its gold home.

Germany owns the second-largest gold reserves in the world at 3,352 tonnes. About 1,200 tonnes valued at around €164 billion ($194 billion) are stored at the Federal Reserve Bank of New York.

Germany also holds some of its gold reserves in London.

A leading German economist and former head of research at the Bundesbank says the central bank should move the gold stored in the U.S. back to Germany. Emanuel Mönch said it’s “too risky” to keep Germany's gold reserves in the United States.

“Given the current geopolitical situation, it seems risky to store so much gold in the U.S. In the interest of greater strategic independence from the U.S., the Bundesbank would therefore be well-advised to consider repatriating the gold.”

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. weaponizing the dollar and aggressively using economic pressure as a foreign policy tool, the wisdom of storing German gold in New York no longer seems quite so obvious to many Germans.

European Taxpayers Association (TAE) head Michael Jäger said U.S. demands to control Greenland should "concentrate minds."

“Trump is unpredictable and he does everything to generate revenue. That’s why our gold is no longer safe in the Fed’s vaults. What happens if the Greenland provocation continues? … The risk is increasing that the German Bundesbank will no longer be able to access its gold. Therefore, it should repatriate its reserves.”

Other notable figures in German economic and political circles have echoed the warning. Last summer, EU Parliament member Markus Ferber 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 on how to treat foreign gold reserves. The Bundesbank’s policy for gold reserves has to reflect the new geopolitical realities."

There is also a drive to audit U.S. gold reserves stored at Fort Knox. Last year, four members of Congress introduced comprehensive legislation to audit gold.

Calls for German gold repatriation have primarily come from politically conservative figures. However, the idea is crossing the political divide. Green Party finance spokesperson Katharina Beck also expressed support for gold repatriation, calling the country’s gold reserves an “important anchor of stability and trust”, which “must not become pawns in geopolitical disputes.”

A spokesperson for Friedrich Merz’s coalition government recently said that moving gold out of the U.S. was not currently under consideration.

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. 

However, there are some prominent people who oppose moving German gold. Institute for Economic Research (Ifo) President Clemens Fuest advised against moving the gold out of the U.S., warning that it could lead to unintended consequences and would “only pour oil on the fire of the current situation.”

Social Democrats parliamentary group spokesperson on financial policy, Frauke Heiligenstadt, said that while concerns were justified, the Bundesbank shouldn't make any hasty moves because “Germany’s gold reserves are well diversified." She argued that since about half of the country's gold is already located in Frankfurt, “our ability to act is guaranteed.” She added that keeping some gold in New York still makes sense because “Germany, Europe, and the U.S. are closely linked in terms of financial policy.”

Talk of gold repatriation is part of a broader de-dollarization trend. A Danish pension fund recently announced plans to divest U.S. Treasuries, citing concerns about the U.S. government's fiscal malfeasance.

“The decision is rooted in the poor U.S. government finances.”

While you might disagree with foreign concerns relating to U.S. foreign and economic policy, you can’t simply ignore the blowback potential from U.S. policy decisions. Right or wrong, you have to be aware of how people might respond. It's easy to say, "Who cares what they think or what they do!" However, de-dollarization could create significant problems for the U.S. economy, given that it depends on foreign demand for dollars to absorb the incessant money creation necessary to support the federal government's borrow and spend habit.

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.” 

In 2024, 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.