Germany, Italy face pressure to repatriate $245B worth of gold held in US

[Ben Graham]

Germany and Italy are facing mounting pressure to repatriate a combined $245 billion worth of gold stored in the Federal Reserve vaults of New York, the Financial Times reported this week.

According to FT, politicians and taxpayer advocacy groups in Europe have voiced deep concerns over the safety of their gold following verbal attacks by US President Donald Trump on the Federal Reserve. Storing bullion abroad can expose Europe’s financial sovereignty to unnecessary risk, they said.

Germany and Italy currently hold the world’s second- and third-largest gold reserves respectively, at 3,352 tonnes and 2,452 tonnes. The US, meanwhile, is by far the largest holder at 8,133 tonnes.

Germany may look to withdraw its gold from US

Leading the push is Fabio De Masi, a former member of the European Parliament and now affiliated with Germany’s new left-wing populist BSW party. Speaking to FT, De Masi said there are “strong arguments” to bring more of Germany’s bullion back home.

Germany began storing a significant portion of its gold reserves in the US during the post-WW2 economic boom. As of today, about a third of its gold (1,200 tonnes) remain with the New York Federal Reserve in Manhattan.

Earlier this year, German newspaper Bild reported that a number of senior figures within the center-right Christian Democratic Union (CDU) party have discussed the possibility of pulling its gold stockpile out of the US under the current political climate.

Fed independence concerns

The Taxpayers Association of Europe (TAE) shared similar concerns, with its president Michael Jäger urging Germany’s finance ministry and central bank (and those of Italy) to reduce their dependency on the Federal Reserve.

“Trump wants to control the Fed, which would also mean controlling the German gold reserves in the US,” Jäger said in a Reuters interview. “It’s our money, it should be brought back.”

in Italy, economic commentator Enrico Grazzini recently warned in the newspaper Il Fatto Quotidiano that “leaving 43% of Italy’s gold reserves in America under the unreliable Trump administration is very dangerous for the national interest.”

US lawmakers push for comprehensive audit of Fort Knox gold

Since returning to office, Trump has repeatedly voiced strong — and sometimes aggressive — criticism of Federal Reserve Chair Jerome Powell. This, according to the TAE, undermines its confidence in the US central bank’s independence, and the status of Europe’s gold going forward.