We hear that the German Bundesbank has plans to repatriate a large chunk of its overseas gold holdings (post 1945) back to Berlin in a decision ratified by the German Government last September; currently 69% is held outside Germany and only the US holds more gold reserves than Germany

This in turn, raises the interesting historic issue of the gold reserves of the Third Reich which is an entire subject matter on its own, although it has no bearing on the current situation, because Germany's current gold reserves do not relate to gold from the pre-1945 era

The mechanics of the arrangement are that 300 tonnes of gold from the Federal Reserve in New York and all of Germany's gold stored at the Banque de France in Paris, 374 tonnes, will be returned to Frankfurt

This move suggests that Germany does not trust other central banks to hold it's gold and more importantly, questions whether Germany has underlying doubts about the value of the Euro. Therefore repatriating the gold brings control directly back under Germany's sphere of influence

However, the interesting aspect of the whole arrangement is that ALL Germany's gold held by France is being removed, whilst some of their gold remains in the US and the Bank of England

According to the FT:

'.. we don’t think it’s too much of a wild speculation to suggest that in the event of a euro break-up, Germans would feel much more jumpy about France holding a chunk of their gold hostage, than the US or the UK ..'

Interesting in these times where the UK is being pilloried by the rest of Europe over their membership of the EU, that Germany does not seem to trust their major partner in Europe to hold their gold

Tags: | Categories: European Union
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