It was about three days ago when Germany’s central bank moved $13 billion worth of gold bars from New York to Frankfurt. This is part of Germany’s plant to return around half of the gold reserves it keeps abroad. This plan was started on 2013.
Germany’s gold route was from New York to Paris, and finally back at Germany. At this time, around 642 tons of gold have been successfully transferred back to Germany. The latest transfer that occurred had transferred about 330 tons of gold. All this was kept in the New York Federal Reserve, a deep subterranean vault which lies on the bedrock of Manhattan Island. Naturally, the bank will not say how it moves the gold.
The current transfer will be completed once the final 100 tons of gold is returned to Germany through Paris. Germany’s central bank has declared that it has been bringing home its gold to help build public “trust and confidence”.
Historically speaking, this is a big indicator of the climate and confidence of the German government. They once moved their gold reserves out of their home territory and into the New York vault out of fear that the Soviets would gain control of the gold. This fear was most flagrant during the Cold war. The central bank also used to keep gold in Paris as a protective measure that would enable them swiftly exchange international currency in states of emergency.
It was shortly after World War II that Germany was actively rebuilding its gold reserves. It was primarily the fear of Soviet invasion that had them keep their reserves abroad even after the price of the dollar was decoupled from the cost of gold.
In the years in which the gold was kept overseas, there were rumors and theories that run amok. It was said that Germany had lost the gold or wherever it was, it was compromised. This issue eventually made its mark upon mainstream politics and the German Federal Court of Auditors demanded for an inspection of foreign gold reserves in 2012.
In light of this, the central bank issued a statement that they were receiving annual updates from foreign central banks where the gold was being stored. It was the year after this that the central bank had announced that they would bring half of their gold reserves home to Frankfurt. In 2015, the Bundesbank released a 2,300-page list of gold bars–an attempt to soothe the publish and ease any other speculation that some of the gold may not even be there. The bank further promised increased transparency.
Germany will store its remaining reserves in London and New York–these are places where they could be swiftly exchanged for pounds or dollars in the event of economic emergency. The repatriation of its gold reserves will continue until half of its gold is stored–it is projected that this will occur by the end of 2017. The original projected completion was 2020.
Once complete, the Bundesbank will keep 1,236 tonnes in New York, 432 tons in London, and the rest in Frankfurt.