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German Gold Repatriation Is “Proceeding Smoothly” – Deputy Head

By Daniela Cambone of Kitco News
Tuesday March 24, 2014 4:30 PM

New York - (Kitco News) - Since Germany’s central bank announced it would be repatriating some of its gold reserves from New York and Paris, a host of theories have circulated, speculating on why the decision was made. Two years later, the Deutsche Bundesbank still remains firm that there is nothing odd about it.

Speaking at an event hosted by New York-based research firm CPM Group, Henner Asche, deputy head of markets for the German central bank said that all is proceeding smoothly.

“Overall, we are satisfied with our relocation,” said Asche to the audience assembled at a Bloomberg auditorium, Tuesday night.  Asche was a guest speaker during CPM Group’s launch of its Gold Yearbook.

According to the World Gold Council, Germany's gold reserves are the second-biggest in the world after those of the United States and totaled 3,384.2 tonnes this month.

Image courtesy of Deutsche Bundesbank

The Bundesbank's gold holdings have been spread out throughout the central banks of Paris, London and New York. Asche said that 1,447 tonnes of its gold reserves are stored at the Federal Reserve Bank in New York, 438 tons at the Bank of England in London and 307 tonnes at the Banque de France in Paris.

Asche explained that to-date 67 tonnes have been transferred to Frankfurt from Paris and 90 tons from New York - the plan being to store half of Bundesbank’s gold reserves in Frankfurt by 2020.

What prompted the decision? Past reports have indicated that the uncertainty of the euro during the European crisis incited Germany to bring its gold back home. As a response, the Bundesbank announced a new gold storage plan in 2013 which would repatriate 674 tonnes from Paris and New York.

Asche affirmed Tuesday night that the decision to repatriate the gold, was one hundred percent that of the Bundesbank and not a result of political pressure. “The German government has no claims on the reserves,” he said. He also stressed that it was not because the Bundesbank had concerns of whether the gold was still at the Federal Reserve - as some theories in the gold world suggested, “[W]e didn’t have doubts over if the gold still existed,” he said. 

When the process started with moving solely 5 tonnes of gold from New York to Frankfurt, some questioned why the lengthy process and that the German central bank wouldn’t be able to follow through, Asche said.  He explained the reasoning, “We have a very great deal of confidence in the security of our gold holdings abroad, so there’s no reason for us to rush through this relocation process.” He added, “It’s a very complicated process with many people involved in it.” Asche noted that those theories were quickly diluted when the Bundesbank moved 85 tonnes one year later in 2014.

So why not a complete relocation of all German gold held abroad? Asche said, “it isn’t desirable,”– if the Bundesbank decides to exchange gold for cash or other foreign currency, international finance centers like New York provide the best liquidity, he explained.

Asche said the Bundesbank repatriated gold bars were re-melted to ensure they met the London Good Delivery standard for bars. He added that the Bank for International Settlements (IBS) was called upon to perform spot checks and there were no irregularities

“In Germany, a lot of emotion is attached to the topic of gold reserves,” Asche concluded in his presentation.  “The German public in general appreciates the Bundesbank’s gold holdings.”

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By Daniela Cambone of Kitco News; dcambone@kitco.com
Follow me on Twitter @DanielaCambone



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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