The global financial system is a complicated network of market participants that are constantly rewriting the rulebook in the wake of the recent economic crisis. However, the old wisdom that “if you don’t hold it, you don’t own it” is more evident today than ever before. This concept is not lost on the world’s second largest holder of gold reserves.
Earlier this week, Germany’s Handeslblatt newspaper claimed that the country’s Bundesbank developed a new strategy to bring home gold reserves. For various reasons such as security and international trade, some central banks around the world store their gold bullion with the Federal Reserve Bank of New York in lower Manhattan. Coming in second only behind the United States, Germany has almost 3,400 tonnes of gold, representing 74 percent of its reserves.
On Wednesday, the Bundesbank confirmed the reports and announced it will repatriate a portion of its foreign gold reserves. Over the next seven years, the central bank intends to store half of Germany’s gold reserves in its own vaults within the country, compared to only 31 percent now. The other half will remain in New York and London.
Germany does some explaining…
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