Germany Worries About Its Gold Reserves

German politicians and accounting bodies want more guarantees concerning the security of Germany’s gold reserves, with Germany’s federal audit office due to report to the finance committee of the German Parliament on the matter.

Germany has the world’s second-largest gold reserves, but keeps most of them overseas, mainly at the U.S. Federal Reserve, the Bank of England and the Banque de France. The federal audit office, or Bundesrechnungshof, is disappointed that while the gold stored in Germany is regularly checked by the Bundesbank, the gold overseas is not. The foreign banks merely give the Bundesbank an annual statement detailing the amount of gold.

The security of the gold is becoming a popular concern, with the Bild tabloid claiming the Bundesbank has not checked its gold reserves for five years. Spiegel Online writes, “In times of uncertainty about the future of Europe’s common currency, gold is a hot topic, and some Germans take a dim view of the fact that much of the country’s gold—which theoretically belongs to the people—is held abroad.”

A campaign called “Gold Action,” which calls for Germany’s gold to be brought home, is supported by several economists and journalists. A member of the ruling Christian Democratic Union (cdu), Philipp Missfelder, visited the Federal Reserve in New York to see the gold, but “staff were either unable or unwilling to show him exactly which bars belonged to Germany,” as Spiegel Online put it. A member of parliament from the cdu’s sister party, the Christian Social Union, regularly tables parliamentary questions on the subject.

But the Bundesbank insists no additional checks on the gold are needed. “The scope of the checks that the Bundesrechnungshof wants does not correspond to the usual practices among central banks,” read a bank statement, according to the Frankfurter Allgemeine Zeitung. “There are no doubts about the integrity and the reputation of these foreign depositories.”

It also pointed to the cost of bringing the gold home, and the effect it would have on already skittish financial markets.

It’s no coincidence that this is an issue right now. The euro and banking crises are threatening the stability of paper money everywhere. In earlier times of monetary collapse, central banks have simply seized other people’s gold.

Germany’s gold could be a key part of its recovery from the euro crisis. For more information on why you should watch Germany’s gold reserves, see our article “Germany’s Gold Hoard.”