Like many countries, Germany stores much of its gold reserves abroad at important world gold markets like New York and London. It hasn’t reached the English language press to my knowledge yet, but in response to domestic political pressure the Bundesbank, or German central bank, is making plans to bring much of this foreign-stored gold back to native soil. Well and good, it’s certainly their right to do so, even if it seems rather impractical. For the cost of transporting it, you’d think we could all put our heads together and devise an improved auditing and control system that would make everyone happy. But it is their gold, after all. And
Their central bankers are emphasizing that it is not because of any lack of confidence in the foreign central banks in whose custody this gold currently resides, particularly the FRB of New York, where the largest share of offshore Bundesbank gold is held. Other German gold, also to be returned, is stored in London and Paris. I have little reason to doubt them.
Link (in German)
What I object to are the insulting attitudes of many of the readers who comment on the story. “Will the gold still be there?” some ask. Because, you know, we’re flat broke and on the point of appropriating foreign-owned gold at the NY Fed. One reader says–somewhat inaccurately:
From another, in response to an earlier poster who rues the fact that it’s 50 years almost to the day since the Elysee Accord between Germany and France was signed, and the hatchet, so to speak, finally buried:
Should Poland be getting nervous?
Wait, it gets better:
And this:
I’m just a bit uncomfortable with this.
Others wonder if we’ve swapped some of the gold for bricks of gold-plated lead or tungsten. Come to think of it, NYC was where the original fake goldbrick scam was invented, as well as the suggestion of selling the Brooklyn Bridge. You really have to watch us every second, lazy, fat, and dependent on imported Chinese electronics as we are.
And my favorite:
Well, at least until the world’s elite consumers can no longer afford so many German luxury goods.
In some ways many progressive Americans do envy the Germans, but if anyone thinks that’s a typical attitude I have a bridge I’d like to sell them. Or maybe a goldbrick.
Apart from the body-blow insults, none of this makes any sense, in any case. How might the Germans’ gold have been stolen in any case? How would such an international swindle be carried out? If the NYC Fed, for example, were to “steal” two tons of German gold, it would have to book the transaction somehow, because otherwise there’d be no way to exploit it. And to account for this “new” gold, wouldn’t they have to enter a corresponding reduction in another asset account, or else increase the note issue? Either way it has to be tracked and accounted for. Since the early 1970s, the amount of gold owned by the United States government has been the same, and has been carried on the books at the long-outdated price of $42/oz (this works out to about $11B). This figure is repeated in introductory textbooks on banking and is probably known to every central bank in the world. There’s no way one of the FRBs can say, “Hey look! We undercounted, and on review we find that we have $13B worth of gold at the 1972 price. Lucky us!”. But no. We cannot simply announce that we have come into the possession of an additional half-billion dollars worth of gold, any more than I could show up somewhere with a ton of gold bars and sell it to a jewelry buyer.
Germans. Early every century they start up with the attitude…
