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Gold war. The Germans urgently return wealth to the homeland
Material posted: Publication date: 29-08-2017
Germany has completed the process of partial return of its gold reserves from abroad. On return home, not all gold, but for the first time in the postwar era, more than half of the ingots is in the bins at the Bundesbank in Frankfurt am main. The reasons for years of the epic is not completely clear, which gave rise to many rumors of conspiracy content. Anyway, this is not an isolated case: more and more countries strive to keep gold reserves "closer to the body."

Suspicious the Fourth Reich

Germany's decision to relocate its gold reserves in Frankfurt from new York and Paris, first made public in early 2013, became a bolt from the blue. By the time the Germans kept only 31 percent of their own gold, and the rest were located abroad, especially in USA, UK and France.

This state of Affairs is in some measure answered the geopolitical situation of the cold war. Direct conflict between NATO and the Warsaw Pact seemed like a very real option, as the probability that the Soviet army in the event of such a war will occupy the territory of West Germany in a matter of weeks, if not days. German gold could get Advice, so it was decided to keep it in a more secure place.

But could be other considerations. The allies did not fully trust the young state of Germany — still in two wars without a trace could not pass. By and large, only the Soviet threat compelled the US, France and Britain to actively assist the West Germans in all their endeavors. However, an extra lever of control in any case would not hurt, and because storage of the gold reserves of Germany in Fort Knox and the vaults of the banks of England and France seemed a logical solution.

The fact that the lion's share of the German gold remained in the vaults abroad after the cold war, justified by the high cost of repatriation of such large volumes of precious metal. Were talking about tens and even hundreds of millions of euros that should be spent on inventory transfer. So that's that, and the money to assume the Germans know how — so that the explanation seemed quite reasonable.

Therefore, such a sudden movement on the part of the Bundesbank was perceived by many as undermining a half-century foundations. It was announced that in a very short time — within seven years — must be returned to the 674 tons of the precious metal. In reality the Germans were in such a hurry, ahead of the deadline of three years, completing the transport of gold in August 2017.

Ahead of the engine

German regulator explained its decision this way: gold is necessary in order to build trust within the country and to be able to quickly and without delay to sell it. Subsequently, however, the representatives of the Bundesbank said that change some part of gold reserves to currency does not expect. So that absolute truth was only the first part of the explanation.

Indeed, the credibility of the Bundesbank, things were not very good. In 2012 the accounting chamber of Germany demanded from the regulator to conduct an inventory and verify the total gold reserves in the first place that part of it (about two tons) that was abroad. Doubt that physical gold Germany, do exist in nature, have been expressed before, but on conspiracy blogs or at best, the press, the hype did not come on. Quite another matter with the authority of the Executive. Auditors, by the way, I was surprised that the gold reserve of Berlin has not been tested for decades.

Initially, the German Central Bank much zeal in this matter did not show: for the entire 2013 home was returned only 37 tons of the precious metal — a little more than 5 percent of the planned amount. As a result, Central bankers, for it went on the first number in the press and blogosphere. The campaign, which was to increase the confidence, had all the chances to achieve the opposite result. It was then that the Bundesbank and accelerated ahead of schedule in the years 2014-2016 in a few times.

Ground for conspiracy theories

The slowness of the regulator raised questions, but also the subsequent haste many worried. On the urgency of the repatriation of the arguments about the high cost is not extended. In General, the soil for conspiracy theories was rich.

One of the most common has become such a hypothesis: Germany is seriously thinking about giving up almost 20-year Euro experiment and return to the good old Deutschmark. In that case, if that were to happen, gold on hand would be very welcome: it would help to stabilize the exchange rate of the new currency, vulnerable to the attacks of speculators and market volatility, not to mention the fact that the precious metal in the event of a collapse of the Eurozone will inevitably rise in price.

China is among the ten countries with the largest gold reserves
Photo: David Gray / Reuters

To test this theory is impossible, but common sense in it. That the Euro and the Eurozone in big trouble, in recent years, not only spoke lazy. The German government and the Bundesbank can evaluate these prospects as anyone, but safety measures in the event of such an outcome needs to be taken. Of course, to declare aloud, "We will return the gold because you never know what will happen with the Euro" no one will, because such a statement could provoke a deadly crisis of confidence in the single currency. But to keep their reserves on its territory because of the possibility of force-majeure, citing extremely wide and wonder — quite reasonable.

It was suggested that the Germans had problems with the repatriation of gold. In particular, Russian economist Valentin Katasonov believes that the Americans returned to Germany, not the gold that she sent in his time in Fort Knox. In an interview with radio Sputnik, he said that after the Germans put forward the corresponding requirements in the United States began to hurry to buy gold on the market, as they have it is simply not there. According to him, the bars that arrived in Germany, had other stigma — that is, there was a substitution.

What was originally a stigma in German bars, hard to say, but in the beginning of 2017, the Bundesbank is in detail described each ingot of the tens of thousands. For the doubters there was a report on two and a half thousand pages.

Fear of the future

Gold has long ceased to serve as a single global measure of value, and the gold coins do not pay for transactions. And yet still the metal as a store of value is highly popular among the common people and institutional investors and States. The global crisis and the preceding years raised the value of gold in four times, which more than demonstrated the level of demand.

The vast majority of reserves in Central banks of developed countries invested in gold. The gross foreign exchange reserves, China will outpace all other States combined, but the volume of gold reserves is not included even in the top three. Although gradually (and Russia) is increasing the volume. In addition to China and Russia in the "Golden" top 10 are USA, Germany, France, Italy, Switzerland, Japan, the Netherlands and the international monetary Fund.

There were rumors that the Germans were going to abandon the Euro and return to the brand, so return the gold home
Photo: Kai Pfaffenbach / Reeuters

In the postwar years, the United States pegged the dollar to gold in order to consolidate its dominant position as the main reserve currency. However, it soon became clear that many States prefer to keep reserves of real precious metal, not paper money. French President Charles de Gaulle in 1965, has demanded to exchange dollars in the country's reserves of gold stored in the United States. So began the large-scale operation for the repatriation of gold reserves in history: for several years, the Americans lost nearly two thousand tons. France wanted to join other countries. In the end the US abolished the binding of its currency to gold, ending the Bretton woods global financial system.

Apparently, now the position of de Gaulle, too, would be understanding, because Germany is not the only country that wanted to reclaim their gold. Partial repatriation held in 2015-2016, the Netherlands, and in Switzerland, the broad support for the movement of Save Our Gold. Although only 20 percent of the Confederate gold is stored abroad (UK and Canada), the movement succeeded in holding a referendum on the return of this part of the national wealth home. However, was defeated: voters have decided that financially worth not worth it.

It all hardly any accidents. At the same time, silent or unconvincing comments of the authorities on this very sensitive subject give rise to conspiracy theories, in which the population is willing to believe. These sentiments can encourage the authorities to deal with repatriation of gold in the populist purposes, which, in turn, will only exacerbate instability in the markets and lack of confidence.

In fact, all these movements say that the building of the global economic system gives you a new crack. The sharp rise of China and East Asia in General, chronic financial and economic problems in the EU, slowing growth in world trade and a General critique of globalization, and now Brexit and Donald trump in the oval office — all this causes anxiety and a desire to insure, to refer to traditional, time-tested economic values. There is hardly something more traditional and safer gold.

Dmitry Migunov


Tags: Germany , gold

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