German Bundesbank Achieves Gold Repatriation Goal Ahead of Schedule.
Gold Repatriation from NY Fed Completed.
More Than Half of Germany’s Gold to Be in Germany by Year End.
Gold Represents about 2/3 of Germany’s Reserves.
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Why Germany Has Much of its Gold Abroad
According to the World Gold Council Germany has 3,381 tons of gold, the second largest central bank gold holdings.
Until recently, Germany stored 69% of its gold abroad in London, Paris and New York. The German Bundesbank set a goal that by 2020 they would have half of their gold in Germany, 37% at the New York Federal Reserve and 13% in London at the Bank of England. (and none in Paris)
Jens Weidman, President of the Deutsche Bundesbank explains in this video from the Deutsche Bundesbank the historic reasons (Cold War concerns) for storing Germany’s gold abroad and the changed circumstances. He notes there is no need to have gold in France since Germany and France share the same currency, the Euro. London and New York provide geographic diversity and dollar and pound exchange capabilities.
Germany’s First Gold Repatriation Request
In January 2013, Germany made a gold repatriation request to United States Federal Reserve in New York and Banque de France in Paris regarding a portion of the gold they held on deposit at those entities. At the time, Germany cited the potential of a currency crisis and the need to have its gold close by.
Germany requested repatriation of a total of 674 tons of gold from the New York Fed and the Banque de France. The Fed notified Germany their gold would be delivered over a period of eight years, raising eyebrows as to why it would take so long to make the requested repatriation.
A Slow Start
In January 2014, it was reported that just 37 tons of gold had been returned to Germany, with 32 tons coming from Paris and just five tons from New York.
The Pace Picks Up
In January 2015, however, the German central bank the Bundesbank announced that it had received 120 tons of gold in 2014; 35 tons from Paris and 85 tons from New York.
In March of 2015, Henner Asche, deputy head of markets for the Bundesbank noted that 67 tons of gold had been transferred from Paris to Frankfurt and 90 tons from New York to Frankfort, reflecting an increase in the amounts reported at year end 2014 and bringing the total received to 157 tons.
Herr Asche also reported that 1,447 tons of the Bundesbank’s gold were held in New York, 438 tons in London and 307 tons in Paris.
On January 27, 2016, the Bundesbank announced that in 2015, 210 tonnes of gold were transferred to Frankfurt from Paris (110 tonnes) and New York (about 100 tonnes).
“With approximately 1,403 tonnes of gold, Frankfurt has been our largest storage location, ahead of New York, since the end of last year,” said Carl-Ludwig Thiele, Member of the Executive Board of the Deutsche Bundesbank. Germany reported that its gold reserves held in Frankfurt were 1,402 tons, or 41.5% of Germany’s 3,381 tons of gold, with 1,347 tons or 39.9% of Germany’s gold remaining at the NY Fed.
In February 2017, it was reported that Germany had met its goal of repatriating its gold from the New York Fed ahead of schedule. As of January, 2017 the German Bundesbank reported:
The transfer of gold from New York was completed successfully last year,” said Carl-Ludwig Thiele, Member of the Bundesbank’s Executive Board. “The transfers were carried out without any disruptions or irregularities. The gold storage plan for New York, which envisaged the transfer of 300 tonnes of gold from New York to Frankfurt, was fully realised in 2016,” Mr Thiele stated.
Mr Thiele also noted “We will be able to complete the transfer of gold from Paris this year too,” Mr Thiele added. Consequently, there will no longer be any German gold reserves in Paris. The realisation of the gold storage plan is therefore considerably ahead of the original schedule.”
Here is a chart from the Bundesbank showing the current state of Germany’s gold reserves. Once they retrieve the rest of their gold from Paris they will have more than 50% of their gold in Germany.
The Bundesbank has promised to “publish an updated list of its gold bars on its website [on February 23, 2017]. This list contains the bar, melt or inventory numbers, the gross and fine weight as well as the fineness of the gold.”
The Real Question about Germany’s Gold Reserves – Why don’t they add more?
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