Why some Germans want to repatriate their gold from the UShttps://en.majalla.com/node/326310/business-economy/why-some-germans-want-repatriate-their-gold-us
Why some Germans want to repatriate their gold from the US
Where one’s gold sits is not just a matter of security, prestige, or practicality; it is a matter of trust and confidence, both of which seem to be in short supply as a result of Donald Trump’s policies.
Ewan White
Why some Germans want to repatriate their gold from the US
Based on statistics from 2024, Germany is now the United States’ largest trading partner, with goods worth more than $300bn flowing back and forth between the two, and Germany recording an unprecedented trade surplus of $83bn. Given their blossoming economic relationship, therefore, US President Donald Trump’s decision to increase tariffs on German imports triggered understandably sharp reactions in Germany.
Among the more noteworthy responses came from several influential figures who called for the repatriation of Germany’s gold reserves from the United States to German soil. Since 1951, in the aftermath of the Second World War, Germany has accumulated vast wealth from exports and substantial trade surpluses with other nations. These surpluses were converted into gold to support the currency in accordance with the Bretton Woods system, and that gold was stored in the central banks of allies, in places like New York, London, and Paris.
Italy and several other countries adopted a similar strategy, distributing their gold reserves among trusted allies for protection. It facilitated the easier conversion of gold into dollars and vice versa, while repatriating the gold involved millions of dollars in transport, insurance, and storage costs. After the Cold War, several countries fully or partially repatriated their gold reserves from overseas storage facilities, but many others left theirs in New York, London, and Paris.
It has sat there safe and sound ever since, but Trump’s recent economic and security policies have given the Europeans—and Germans in particular—a sense that the US is no longer a reliable partner, and that Trump might assert control over foreign gold stored in US vaults. Trump’s ongoing effort to bring the US Federal Reserve under direct presidential control simply makes the threat more credible.
Trump's recent policies have given the Europeans—and Germans in particular—a sense that the US is no longer a reliable partner
Reasons to fear
There is suspicion on both sides. Some German media outlets are now questioning whether Germany's gold reserves in Manhattan still exist, citing an incident from 2012 when US investment bank Goldman Sachs sold gold certificates claiming they were backed by physical gold in its vaults, only to later discover that no such gold was held. The bank had been operating on a "fractional reserve banking" model, assuming that only a small number of clients would ever demand their gold.
President of the Bundesbank Joachim Nagel was more reassuring, saying he had "no doubt whatsoever that the Federal Reserve in New York is a trustworthy and reliable partner in storing Germany's gold reserves". But there is seldom smoke without fire. Does it suggest that the dollar's status as the global reserve currency is in jeopardy?
This debate has intensified of late, with the US increasingly weaponising its currency to impose sanctions on adversaries, as an unprecedented use of financial leverage that has fuelled distrust, leading many to consider retrieving their gold reserves from American vaults for fear that they may be frozen or confiscated on a future political whim.
Federal Reserve Chairman Jerome Powell speaks during a news conference following the September meeting of the Federal Open Market Committee on September 18, 2024, in Washington, DC.
Of growing concern to many is the independence of the Federal Reserve, with Trump's comments about both the Fed and its chairman having unnerved the markets. But is it deeper than a temporary annoyance? Is it ideological?
The US president appears to be influenced by libertarian banker John Allison, who was once a candidate to be Trump's Treasury Secretary. During his tenure at the Cato Institute, Allison authored a policy paper titled "Market Discipline Beats Regulatory Discipline," which advocated for the Fed's abolition and a return to market self-regulation, arguing that this would prevent financial bubbles fuelled by central bank interventions.
Allison has also called for the US to adopt a gold-backed banking system, raise capital reserve requirements to 20% of bank assets, and scrap major regulatory frameworks, including the Dodd-Frank Act. His views appear to align with those of Trump, who sees Allison's proposals as essential tools for preserving American economic, financial, and monetary dominance.
Europe-bound
Gold prices are surging, recently hitting a record $3,500 per ounce, and the US currently holds around 6,300 tonnes of gold from over 30 foreign central banks, in addition to its own reserves, making a total of 8,133 tonnes as of last year. This makes the US by far the world's largest gold depository. Germany is second with 3,352 tonnes, half of which is stored in Frankfurt, 37% in Manhattan, 12% in London, and the remaining 374 tonnes repatriated from France due to the shared euro currency. Italy is third with 2,452 tonnes (43% of it in Manhattan), followed by France with 2,437 tonnes.
France began retrieving its gold from the US during the presidency of Charles de Gaulle (1959-69), completing it by 2013. Today, French gold is stored 27 metres below ground in the vaults of the Banque de France. If Germany and Italy were to follow in France's footsteps, the total gold held by eurozone central banks would exceed America's reserve of the precious metal. This would better position the euro as the currency of the future, especially once the eurozone completes its tax and fiscal consolidation.
The US currently holds around 6,300 tonnes of gold from over 30 foreign central banks, plus its own reserves, making a total of 8,133 tonnes
Given today's financial uncertainty, some think having gold equates to having control, raising questions about whether gold held abroad (such as Germany's) remains fully safeguarded under all circumstances. If gold reserves are a symbol of national strength, then when they are stored abroad, do they represent a strategic vulnerability, granting leverage to the host country and undermining monetary sovereignty?
Playing safe
Gold is often seen as a nation's ultimate fallback during times of crisis and conflict; therefore, if crises and conflicts are predicted, repatriating it may reflect a protective instinct to avoid scenarios where access to national assets might be compromised. A similar rationale underpinned the Dutch central bank's 2014 decision to repatriate its gold from the US to Amsterdam, stating that it was better to have the gold close by in times of financial crisis.
India followed suit, moving its gold from London. Last year, Nigeria repatriated its gold from the US, citing a desire to reduce the risks of storing assets abroad. Other African nations—including South Africa, Ghana, Algeria, and Egypt—have taken similar steps, making gold repatriation a global trend.
The BRICS bloc (comprising Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE) is now actively boosting its gold reserves, currently estimated at around 6,500 tonnes combined. This is part of a broader strategy to abandon the US dollar in trade settlements. In response, Trump has threatened BRICS nations with 100% tariffs should they replace the dollar with a different currency.
The presidents of Egypt, South Africa, China, Russia, UAE, and Iran, the prime ministers of Ethiopia and India and Brazil's foreign minister pose for a family photo during the BRICS summit in Kazan on October 23, 2024.
A matter of trust
In 2013, Simon Johnson (who won the 2024 Nobel Prize in Economics) wrote an article expressing fears over where gold is stored and how it is often "misplaced". He said, "The world in which financial trust breaks down completely… is one in which we have much bigger problems than where a country's gold is located". He added that Germany is a cornerstone of the democratic world, unlike countries such as Iran or Venezuela, whose assets may be vulnerable to seizure.
The debate over gold reserve repatriation highlights humanity's chequered relationship with the yellow metal. Despite its centuries-long role in supporting monetary stability, gold has long been criticised by prominent voices. In his play Timon of Athens, William Shakespeare referred to it as "the common whore of mankind," lamenting its power to corrupt.
In 1930, British economist John Maynard Keynes famously declared that "the gold standard is already a barbarous relic," urging a focus on economic stability rather than adherence to outdated monetary systems. While US President Franklin D. Roosevelt did not publicly denounce gold, his 1933 Executive Order 6102, which prohibited the hoarding of gold, marked a decisive policy shift away from the gold standard.
For all the noise, however, gold's recent price surge in global markets confirms its enduring status as a safe haven in the face of trade volatility. It remains a core pillar of national wealth and financial security, a hedge against inflation and currency fluctuations, and a driver of shifts in global currency power.
The calls by German elites to retrieve their gold are therefore not just veiled appeals for a return to the gold standard (abandoned in 1971) but part of a broader strategic reordering of German financial priorities and a repositioning of the euro in light of Trump's aggressive trade and security agenda. For three-quarters of a century, German gold has been stored in American vaults. For how much longer?
