Germany Takes Back Its Gold

Jean-Claude Juncker, the prime minister of Luxembourg and longest-serving head of government in any European Union state, claimed last year that “when it becomes serious, you have to lie.” Germany might have been paying attention.

In October, the Bundesbank denied rumors it was worried about its gold reserves. In a statement, the central bank explains, “There was never any doubt about the security of Germany’s gold. In the future, we wish to continue to keep gold at international gold trading centres so that, when push comes to shove, we can have it available as a reserve asset as soon as possible. Gold stored in your home safe is not immediately available as collateral in case you need foreign currency.”

The Bundesbank even told the New York Fed shortly thereafter, “Please let me also comment on the bizarre public discussion we are currently facing in Germany on the safety of our gold deposits outside Germany – a discussion which is driven by irrational fears.” Technically, Germany will still have some gold at international trading centres, but it will be a reduced amount, safety reasons or not.

Given the current state of the financial system and the movement from one crisis to the next, it is not too surprising to see Germany call some of its gold back home. Even if they do not have trust issues, Germany can take comfort in knowing that their gold is under their own control.

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Disclosure: Long EXK, AG, HL, PHYS