Taking Back Germany's Gold Stored Overseas Under Trump's Reign
U.S. Gold Storage of German Treasure Sparks Anxiety
Since 25 meters below ground in the heart of Manhattan, behind fortified vault doors and nestled in long rows, German gold bars gleam—a testament to the nation's wealth and history. But the location that safeguards these reserves, the Federal Reserve Bank in New York, has become a source of unease, especially with Donald Trump in office.
As geopolitical tensions rise and Trump reframes the American political landscape, concerns buzz that the allure of foreign gold might prove irresistible to the unpredictable US President. And indeed, calls for repatriation of German gold are escalating, as uncertainty regarding the safety of these reserves gathers momentum.
A seemingly reliable partner, the US government, now bottled with unpredictability, propels the Bundesbank into responding to the new geopolitical realities. "Diversification is key," stated CSU MEP Markus Ferber, as quoted by Reuters. "It's never wise to put all your eggs in too few baskets."
Recalling Our Gold: European Taxpayers' Association's Demand
By the end of March this year, Michael Jäger, president of the European Taxpayers' Association, called for immediate repatriation of Germany's gold, sending letters to the Bundesbank and Federal Ministry of Finance, citing "Bring back our gold" as their mantra.
Germany boasts one of the largest gold reserves in the world, with the Bundesbank owning an abundant 3,352 tons. Nearly half of this gold lies in the secure vaults of the German central bank in Frankfurt, while 37% resides in the cellars of the New York Federal Reserve Bank. The remaining 405 tons is stored at the Bank of England in London.
The decision to store German gold abroad emanates from the Cold War era. Post-World War II, Germany lacked gold reserves altogether. Only as the young Federal Republic's trade surplus grew, did gold become the payment method, with the gold bars not delivered to Germany but instead directly exchanged from the American central bank's vault to that of the Bundesbank.
A Trump-controlled Fed: Nightmare Scenario?
This demand for repatriation ski-jumps from Trump's attacks on Federal Reserve Chairman Jerome Powell, fomenting doubts about whether the Fed can maintain its independence. Some fear that if Trump takes control of the Fed, he could gain control over the German gold reserves as well.
Though the Bundesbank dismisses such rumors, maintaining that its storage location concept remains unaltered, the uneasiness persists. Bundesbank President Joachim Nagel, during his annual press conference in February, commented nonchalantly that he found the speculation merely a buzz. "I have full confidence in our colleagues at the American central bank,” he declared.
High-Rollers Hide and Seek Gold for Safety
While central bankers wrestle with concerns, private investors view gold as a safe haven in uncertain times, and their interest has propelled gold prices to record heights. Unusually, physical gold trading has shifted from London to the New York Mercantile Exchange (COMEX), possibly to steer clear of import duties. This trend, however, seems to be reversing, with ultra-wealthy Americans moving their gold bars abroad to Singapore, viewing it as a politically stable and strategically advantageous destination for hiding precious metals during uncertain times.
In light of the escalating calls for repatriation and the potential impact of Donald Trump's unpredictable Presidency on foreign reserves, the European Taxpayers' Association has demanded the immediate return of Germany's gold, with Michael Jäger, its president, sending letters to the Bundesbank and Federal Ministry of Finance. Meanwhile, private investors, seeking safety in uncertain times, are shifting physical gold trading to the New York Mercantile Exchange (COMEX), resulting in a trend of ultra-wealthy Americans moving their gold bars abroad to politically stable destinations, such as Singapore.
