15 January 2013, 15:03

Bundesbank starts repatriating its gold from the NY Fed

Bundesbank starts repatriating its gold from the NY Fed

Several German newspapers are reporting a surprising move by the Bundesbank in the aftermath of the “German gold scandal”. Handelsblatt’s sources confirm that a portion of the German gold stored with the New York Fed and the Banque de France is about to be moved back to Germany.

This move by the Bundesbank may trigger a chain reaction, prompting other countries to start repatriating the gold stored in London, New York or Paris. So far, only countries that have a strained relationship with the US have resorted to gold repatriation. Now, Bundesbank will be seen as walking in Hugo Chavez’s footsteps.

If gold repatriation becomes a worldwide trend, it will be obvious that both the US and UK have lost their credibility as gold custodians. For gold markets worldwide, this move may mark a switch from “financial gold” to “physical gold”, but the process is definitely in its early stages. The decision to repatriate the German gold is a big victory for a part of the German press that first forced Bundesbank to admit that 69% of its gold is stored outside Germany. Almost certainly both the German press and at least several German lawmakers will demand a verification procedure for the gold bars returned from New York, just to make sure that Germany doesn’t receive gold-plated tungsten instead of gold. It seems that German decision makers no longer trust their American partners.

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