Germany wants its gold back!

On January 16, 2013 Germany’s central bank, the Deutsche Bundesbank, announced it would bring its 374 tons of gold reserves stored with the Banque de France in Paris and its 300 tons stored with the U.S. Federal Reserve in New York back to Germany by 2020. By the end of 2013, the Bundesbank had only brought home a measly total of 37 tons, with the Fed giving back just 5 tons.

The plan fared better in 2014, as the Bundesbank has announced in a press release that it “successfully continued and further stepped up its transfers of gold last year.” The release states that 120 tons of gold were transferred to Frankfurt, Germany in 2014: 35 tons from Paris and 85 tons from New York. Since the transfers began in 2013, 157 tons in total have been transferred: 67 tons from Paris and 90 tons from New York. This is about 23% of the total 674 tons to be transferred.

Germany is not alone in this desire to bring its gold reserves back home: Venezuela, The Netherlands, France, Belgium, Switzerland, and Austria have also carried out or proposed efforts to repatriate their gold. You may be wondering…why?

Why bring the gold home? And why now?

The initial press release from January 2013 announcing Germany’s plan to repatriate its gold reserves stated the following:

“With this new storage plan, the Bundesbank is focusing on the two primary functions of the gold reserves: to build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centres abroad within a short space of time.” [emphasis added]

Bundesbank officials added that the plan is “preemptive”, with one spokesman saying “[the relocation] is in case of a currency crisis.”

The Bundesbank storing more of its gold on German soil would obviously ensure easier access to it should such a currency crisis arise. Gold is often turned to as a hedge against currency crises, as it tends to maintain its value during times when fiat currencies are in trouble. It is also highly liquid, as the press release points out, making it well suited for emergency situations when cash is needed quickly.

Forbes writes that “repatriating gold is a clear indication of public loss of confidence on foreign central banks and the integrity of the monetary union.” MarketWatch adds:

“The fact that so many countries seem to want that insurance tells you something important about the euro — and it is hardly comforting. They still think there is a real possibility of collapse.”

With the current situation in Europe, these fears are not so far-fetched. The euro is weak, oil prices are plummeting, Greece is undergoing another political and economic crisis, growth is slow, deflation is high, and the European Central Bank is expected to announce a quantitative easing (QE) plan this Thursday. It is no wonder that many central banks are seeking a safe haven from all of this, and that safe haven is in the form of gold – preferably stored on their own soil.

Conclusion

Clearly many central banks understand the importance of owning gold for diversification and protection from economic and geopolitical crises. Why shouldn’t you too own physical gold for the sake of your own finances? It is as crucial for individuals like yourself as it is for central banks, and it’s incredibly easy to do. Call American Bullion, the trusted leader in the industry, at 1-800-326-9598 to speak with a precious metals broker. We can securely deliver gold and silver coins or bars to your address, or even help you add gold to your existing IRA or former 401(k). American Bullion makes the entire process fast, secure, and hassle-free, handling all of the details for you. Contact us today to start protecting your wealth with physical gold or other precious metals. Piece of gold, peace of mind.