Germany faces renewed pressure to bring back gold held in US

[Ben Graham]

Germany is facing renewed pressure to bring back some of its gold held in the United States due to geopolitical uncertainties stemming from the shift in transatlantic relations.

The European nation currently has the world’s second-largest gold reserves, and keeps a large portion (about a third) in the New York Federal Reserve’s vaults in Manhattan. For decades, those gold — estimated at about 1,200 tonnes — had been stored there to ensure easy access in case of global conflict.

Germany’s gold reserve strategy dates to the Cold War era, when storing bullion abroad was seen as a safeguard against potential Soviet aggression. In addition to New York, it also has gold in London and Paris.

However, with US President Donald Trump returning to office and his aggressive trade policies, many within Germany are concerned that America is now no longer safe to store its assets. Since last April, at the height of global trade tensions ignited by Trump, politicians and fiscal experts in Germany have been calling for a repatriation of its US-held gold.

Germany, Italy pressured to repatriate $245B worth of gold from US

Emanuel Mönch, a former head of research at the Bundesbank, recently told German media that it was time to rethink the longstanding practice of storing so much gold abroad. “In the interest of greater strategic independence from the US, the Bundesbank would therefore be well advised to consider repatriating the gold,” he said in an interview with the financial newspaper Handelsblatt.

Support for repatriation has also come from other quarters, including Michael Jäger, head of the European Taxpayers Association, who since last year has called for Germany to move the gold as quickly as possible in case its relations with the US deteriorate.

This month, Jäger once again reiterated his plea after the US ramped up the pressure to seize Greenland. “Trump is unpredictable and he does everything to generate revenue. That’s why our gold is no longer safe in the Fed’s vaults,” he told the Rheinische Post.

The calls come at a time when gold prices are soaring to record highs. This week, the metal surpassed $5,100 an ounce for the first time, extending a rally that saw prices rise by 80% over the past year. At today’s prices, Germany’s gold held in New York would amount to about $128 billion.

However, not all experts back the proposal. Clemens Fuest, president of the Ifo Institute for Economic Research, warned that repatriation could inflame diplomatic tensions and have unintended consequences

In addition to Germany, Italy, as the third-largest gold reserve holder, has been pressured to return its gold stored in New York.