Germany announced Wednesday it will move its gold reserves stored in New York and Paris to vaults in Frankfurt, after integrity concerns were raised.
The 700 tons of gold bars, currently valued at more than US$36 billion, will be moved over the next eight years. The German Bundesbank will not say how the precious metals will be transported, due to security reasons.
“The decision to bring some of the gold back home also follows criticism last year from Germany’s independent Federal Auditors’ Office, which concluded that the central bank failed to properly oversee its reserves,” reports the Associated Press. “The auditor suggested the bank carry out regular inspections of gold stored abroad.”
“The auditors’ report stunned Germany, where the Bundesbank routinely tops polls of the nation’s most trusted institutions, and politicians pushed for the gold to come home.”
Concerns over the integrity of America’s gold reserves have been raised in the past by former Texas congressman Ron Paul.
“Our Federal Reserve admits to nothing and they should prove all the gold is there,” Congressman Paul said in 2010. “There is a reason to be suspicious and even if you are not suspicious why wouldn’t you have an audit?”
Although American gold holdings are audited yearly by the Department of Treasury’s Office of Inspector General, a U.S. Treasury spokesman confirmed in 2008 that independent auditors overseeing the process are not given access to the vault in Fort Knox, raising the possibility that all of America’s reserves may not be accounted for.
The Bundesbank says there is “no doubt about the integrity of the foreign sites” and will keep 30-percent of its gold reserves in the Federal Reserve Bank of New York, and another 13-percent in the City of London.
Despite this, the move raises concerns over the stability of the American economy.
“The New York Fed stores the German gold without cost on the theory that the presence of foreign gold supports the dollar’s status as the global reserve currency,” reports the New York Times. “A spokesman for the New York Fed declined to comment.”
Germany began storing its gold reserves abroad during the Cold War out of concerns it could fall into Soviet hands if the the country was invaded. After switching to the euro more than a decade ago, the need to store gold in major trading markets for currency swaps is no longer necessary. The Bundesbank brought some 850 tons of gold home from London between 1998 and 2001.