Germany planning to repatriate gold from New York Fed, French central bank

The German daily Handelsblatt reported Tuesday that the Bundesbank, the nation’s central bank, will be withdrawing billions in gold held at the New York Federal Reserve, Bank of England and the Banque de France. The purpose is to deposit more of its bullion holdings at home in Frankfurt.

It is estimated that the Bundesbank holds approximately $178 billion worth of gold (270,000 bars), but roughly 70 percent of it is held in New York, London and Paris, while the remaining 30 percent is stored in Germany.

The local news outlet’s sources said Tuesday the central bank will attain a part of its 1,500 tons of gold holdings at the Fed, while taking back the remaining 450 tons of gold held in France. It is unknown how much gold will be obtained in England, which has 450 tons of Germany’s gold.

Officials haven’t commented on the reports, but the federal government and the central bank are expected to release further details of its plans on Wednesday.

Experts at the Montreal-based Centre for Research on Globalization (CRG) believe this could lead to a global chain reaction with central banks around the world following Germany’s lead and repatriating gold stored in other parts of the world. If so, many expect nations to be avoiding the U.S., France and Great Britain as gold custodians.

“So far, only countries that have a strained relationship with the U.S. have resorted to gold repatriation. Now, Bundesbank will be seen as walking in Hugo Chavez’s footsteps,” wrote CRG shortly after the news broke.

A significant portion of Germany’s gold reserves were shipped abroad over fears of a Soviet invasion. It was reported in late October that the German government ordered its central bank to perform an audit of its reserves at the Fed, which hasn’t been done in several decades.

Gold also made worldwide headlines Monday when it was reported that there was considerable support for the U.S. to sell a sum of its 261.5 million ounces of gold. As a potential sale would generate a few hundred billion dollars, it would tackle the nation’s debt, but only a very small part of it. Exiting Treasury Secretary Timothy Geithner warned against such a move in a letter sent to the Congressional leadership last month.

At the time of this writing, gold is up $11.20 at $1,680.60.

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