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Germany and Italy are facing calls to move their gold out of New York following President Donald Trump’s repeated attacks on the US Federal Reserve and increasing geopolitical turbulence. https://on.ft.com/45Bw6KW
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Germany and Italy are facing calls to move their gold out of New York following President Donald Trump’s repeated attacks on the US Federal Reserve and increasing geopolitical turbulence. Fabio De Masi, a former Die Linke MEP who joined the leftwing populist BSW party, told the Financial Times that there were “strong arguments” for relocating more gold to Europe or Germany “in turbulent times”.Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.comT&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found here.
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Germany and Italy hold the world’s second- and third-largest national gold reserves after the US, with reserves of 3,352 tonnes and 2,452 tonnes, respectively, according to World Gold Council data. Both rely heavily on the New York Federal Reserve in Manhattan as a custodian, each storing more than a third of their bullion in the US. Between them, the gold stored in the US has a market value of more than $245bn, according to FT calculations. This is largely down to historic reasons but also reflects New York’s status as one of the world’s most important trading hubs for gold, along with London. Yet Trump’s erratic policymaking and wider geopolitical unrest are fuelling a public debate about the issue in parts of Europe. The US president said earlier this month he may have to “force something” if the US central bank did not lower borrowing costs. In Germany, the idea of repatriating gold is attracting support from both ends of the political spectrum.Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.comT&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found here.
https://www.ft.com/content/e39390cc-ea02-4197-843a-1e4c242422cc
Up to 1971, the dollar was converted into gold by the US central bank under the Bretton Woods system of fixed exchange rates. Storing the precious metal across the Atlantic was also seen as a hedge against a potential war with the Soviet Union. France in the mid-1960s nonetheless moved most of its overseas gold reserves to Paris, after President Charles De Gaulle lost faith in the Bretton Woods system. In Germany, a grassroots campaign to “repatriate our gold” from 2010 changed Bundesbank policy. In 2013, Germany’s central bank decided to store half of its reserves at home, moving 674 tonnes of bullion from Paris and New York to its Frankfurt headquarters in a high-security operation that cost €7mn. Currently, 37 per cent of the Bundesbank’s gold reserves are stored in New York. Bar chart of Metric tonnes showing German gold reserves by storage location “When we started . . . we were accused of peddling conspiracy theories,” said Peter Boehringer, a precious metal expert who launched the original campaign and today is an MP for Germany’s far-right Alternative für Deutschland party. For Boehringer, the principal argument to bring home the gold is not linked to the current US administration. “Gold is an asset of last resort for central banks, and hence it needs to be stored without any third-party risk,” he said, adding that at times of serious distress, “it is not just legal ownership but physical control over the gold that really matters”. In 2019 in Italy, Meloni’s far-right Brothers of Italy party, when still in opposition, lobbied for the repatriation of the country’s gold reserves. Meloni vowed to bring Italian gold home if her party came to power. However, since taking the premiership in late 2022, Meloni has been silent on the subject. She wants to maintain a friendly relationship with Trump while averting the threat of a deepening trade war. Fabio Rampelli, a Brothers of Italy parliament member, said the party’s current stance was that the “geographical location” of Italy’s gold was of only “relative importance” given that it was in the custody of “a historic friend and ally”. Recommended Precious metals Silver and platinum prices soar as investors seek ‘gold alternatives’ Molten silver being poured into a furnace German investment veteran Bert Flossbach, co-founder of the country’s largest independent asset manager Flossbach von Storch, made a similar argument: “Bringing the gold back now with great fanfare would send a signal that relations with the US are deteriorating.” The Bundesbank told the FT in a statement that it “regularly evaluates the storage locations for its gold holdings” based on its 2013 guidelines, which focus not only on security but also on liquidity to “ensure that gold can be sold or exchanged into foreign currencies if needed”. It stressed that the New York Fed remained “an important storage site” for German gold, adding: “We have no doubt that the New York Fed is a trustworthy and reliable partner for the safekeeping of our gold reserves.” The Bank of Italy, Meloni’s office and the finance ministry in Berlin declined to comment.
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