Germany puts gold on display as it brings reserves back home
GERMANY’S central bank, the Bundesbank, has opened an exhibition of its hefty gold reserves, after recalling half of its bullion from foreign vaults.
Worth €117billion (£103billion) and weighing in at 3,400 tons, Germany’s stockpile is the world’s second-largest after the US, and some of it is now on display at the Money Museum at the Deutsche Bundesbank in Frankfurt, the country’s financial hub.
The exhibition is the first time the public have had a chance to sneak a peek of its mighty gold stash, and features gold ingots and historical coins, including the longest-lived coin in the world – the ducat – which was introduced in 1284 and is still being minted to this day.
To keep its gold out of Soviet hands in case of a possible invasion during the Cold War, as well as for other historical reasons, bars of the precious metal were stored in the treasuries of central banks in New York, London and Paris. During that time, the West German government shipped off 98 per cent of its gold reserves.
In 2012, a secret report from the Federal Audit Office was made public, in which bank officials were criticised for not carrying out regular spot checks on the stash. A year later, the Bundesbank announced it would bring home half of its 270,000 bars, citing a shift in geopolitical context.
Some analysts argued the real reason for recalling the gold was mounting public and political pressure, particularly in the context of the Eurozone debt crisis, when gold was considered a safe haven. The gold was repatriated through a series of clandestine shipments from the US Federal Reserve, the Bank of England and the Banque de France. By the end of last year, half of the reserve had been returned.
The entire reserve in France – 90 tons – was transported to Frankfurt, while just over 1,200 tons remain in New York and around 430 in London as safeguards to buy foreign cash in case of a currency crisis.
The bullion is now kept in a secret location in the bank’s basement in Frankfurt, guarded around the clock by the German federal police.
Germany’s riches were earned after the Second World War when exports surged, resulting in large trade surpluses with other nations. These surpluses were converted into gold under the Bretton Woods system.
The German affinity for gold is in part a vestige of the hyperinflation which rocked the Weimar Republic in the Twenties. Germans are known for being conservative with money, steering clear of taking on debt and preferring to pay cash rather than using plastic.