Gold Action: German Politicians Clamor to Repatriate Nation's Gold from New York

Well, we're getting more fireworks in the gold and silver markets this month, with the biggest news being Israel's pre-emptive strike on Iran. Gold has risen nearly $100 over the past day and a half thanks to its safe-haven appeal.

An escalation by both sides could result in an all-out war in the Middle East, which, in turn, should fuel even more gains in the price of gold.

Looking at the weekly market action, gold is up 3.6% now to check in at $3,441. We’ll see if the yellow metal can finally break through the key $3,500 mark, if it does in fact keep climbing from here and makes another run at that level.

As for silver, it currently trades at $36.44, up just 0.7% since last Friday’s close.

The PGMs are mixed, with platinum up a cool 5% to trade at $1,239 an ounce. Palladium is lagging a bit though. The industrial metal is off slightly by 1.1% to come in at $1,062 as of this Friday morning recording.

Meanwhile, with the U.S. weaponizing the dollar and trade, some people in Germany are calling on the Bundesbank to move at least some of its gold out of New York and bring it home.

Germany owns the second-largest gold reserves in the world at 3,352 tonnes, with over 1/3 of that valued at around $130 billion and stored at the Federal Reserve Bank of New York.

The German central bank opted to store significant amounts of gold in New York to keep it far away from the Soviet Union during the Cold War. 

But with the U.S. aggressively using economic pressure as a foreign policy tool, the wisdom of storing German gold in New York no longer seems quite so obvious. What's to stop the U.S. from holding Germany's gold reserves hostage to further its own objectives?

EU Parliament member Markus Ferber recently called for an audit of German gold, saying, “Trump is erratic, and one cannot rule out that someday he will come up with creative ideas on how to treat foreign gold reserves.” 

There have been similar calls to audit U.S. gold reserves stored at Fort Knox. Four members of Congress recently introduced comprehensive gold audit legislation with the full backing of Money Metals and its grassroots lobbying team.

Meanwhile, the German Taxpayer Federation recently sent a letter to the central bank, urging it to bring Germany's gold home.

Germans aren't alone in thinking its gold might be safer within its own borders.

According to a World Gold Council survey in 2023, a “substantial share” of central banks expressed concern about potential sanctions after the U.S. and other Western countries froze almost half of Russia’s $650 billion gold and forex reserves in the wake of its invasion of Ukraine. According to the WGC, 68 percent of the banks surveyed said they plan to keep their gold reserves within their country’s borders. This was up from 50 percent in 2020.

The gold repatriation trend started long before the West slapped sanctions on Russia. In 2019, Poland brought home 100 tons of gold. Hungary and Romania also repatriated some of their gold reserves around that same time. In the summer of 2017, Germany completed a project returning roughly half of its gold reserves back inside its borders. In 2015, Australia launched efforts to bring half of its reserves home. The Netherlands and Belgium have also initiated repatriation programs.

This gold repatriation trend underscores the importance of holding physical gold free from counterparty risk.  

If you store your gold and silver with a third party, you could lose your metal through theft, fraud, or an act of God. Of course, you could lose silver and gold stored in your home the same way (except for fraud), so you have to weigh the risk of using third-party storage and keeping large amounts of silver and gold at home.

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