Germany Releases Detailed Gold Stocktake

Scepticism aimed towards official claims of national gold holdings is now a common theme so in an attempt to bolster an image of stability, Bundesbank has released a complete list of Germany’s near 3,400t gold reserves. The report, which is to be updated on an annual basis, specifies the location, status and identity of the entirety of the holdings which are worth a little over 166.8 billion Australian dollars. Germany’s reserves amount to the second highest in the world next to the US which has incidentally also suffered scepticism regarding the legitimacy and accuracy of reserve accounting.

Historically, Germany has held a large percentage (nearly 70%) of its holdings abroad. Half of the reserves are vaulted in the US with the remainder of the overseas allocation stored in London and Paris. This is a policy born of the fear of invasion during the cold war period and has in recent years been changing. By 2020, more than 50% of German reserves are to be stored in Frankfurt. All French stores are to be repatriated entirely and the US vaulted metal will be reduced. We’ve reported a number of times on the difficulties involved with the latter, but ultimately Germany’s current policy means that over the next few years, 700 metric tons will be in transit under highly secretive arrangements. Interestingly, the 1966 French repatriation of US vaulted gold involved taking physical possession in Manhattan by submarine. 

Difficulties with the US extraction remain. Germany first asked the US for about 350 tonnes of its gold held in New York back in early 2013 at which point they were apparently told that it would take 7 years to achieve that. That year saw just 10% of the requested amount returned and 2014 saw an additional 20%.

The Bundesbank release represents rare transparency in an area that is typically shrouded in a veil of assumption and speculation. A good example of this is China where evidence of underreporting is substantial. Some argue that such clarity places increasing pressure on the US to act similarly with respect to the auditing of gold holdings and it will be interesting to observe the financial power dynamic if public auditing becomes more widely adopted.