reserves abroad
Is German gold still safe in the USA?
Germany has the second largest gold reserves in the world. Much of it is stored in the USA. Could this become a problem because of Donald Trump?
In times of crisis, many people invest in gold. Central banks and states also have gold as reserves. Germany, for example, has the second largest gold reserves in the world, a total of around 3,550 tons. These figures come from the Deutsche Bundesbank for the end of 2024.
1,710 tons of this are stored in Frankfurt. The rest is abroad. Specifically: 405 tons at the Bank of England in London and 1,236 tons at the Federal Reserve Bank (Fed) in New York. This means that more than a third of Germany’s gold reserves, namely 37 percent, are in the USA.
Trump puts pressure on the central bank
Gold was considered safe there for years. Central banks are generally independent and have a great deal of trust in each other. But US President Donald Trump is trying to change that. In recent months, he has launched increasing attacks aimed at undermining the Fed’s independence. Most recently, he threatened to sue Central Bank Chairman Jerome Powell in connection with the renovation of Fed buildings. Powell himself thinks this is just an excuse to exert pressure.
Trump previously tried to fire Fed Governor Lisa Cook. The case is currently before the Supreme Court. For months, Trump has been urging Fed Chairman Powell to make faster and more extensive interest rate cuts, often with insulting posts on his Truth Social platform.
“The more central banks come under political pressure – and we are currently experiencing this in the USA – the more difficult it will be to maintain this basis of trust,” said gold expert Wolfgang Wrzesniok-Roßbach from Fragold in Frankfurt. We have to watch closely how Trump continues to deal with the Fed and how independent it will be in the future.
“America is no longer predictable”
Storing the gold in the USA could potentially become a problem for Germany. So should we fear for the safety of this gold reserve? “The gold reserves in the USA are currently safe. But it could happen tomorrow that the American government suddenly says: ‘We are now keeping the gold reserves as a bargaining chip,'” said Wrzesniok-Roßbach. The risk factor of Donald Trump is great. “The USA is currently not a reliable partner for the EU,” said the President of the Center for European Economic Research (ZEW), Achim Wambach, to the Reuters news agency.
Under the Trump administration, German gold is no longer safe in the USA, says Stefan Riße, capital market strategist at ACATIS Investment. “Under Donald Trump, America is no longer predictable. We simply see that he has Europe and especially Germany on his toes.” There is no reliability, says Riße: “If you look at what is happening in Greenland, you have to ask yourself whether any of the old rules still apply to the Trump government.”
Should you bring the gold to Germany?
More and more experts are therefore in favor of bringing the gold from New York to Germany. This makes you more independent and flexible. “The risk-reward ratio definitely speaks in favor of relocating the gold reserves to Germany,” says Riße. If the gold were in Germany, there would actually be no risk at all. As long as it is in the USA, there is a risk. Until now, this risk was considered so small that the effort involved in bringing the gold to Germany appeared to be too high. “Under Donald Trump we have to look at things differently and reassess the risks.”
According to many experts, it is also important to wait for the right time. In the current situation, Ifo President Clemens Fuest warns against a hasty repatriation of German gold reserves from the United States. “In the current situation, that would just add fuel to the fire and we should refrain from doing that,” said Fuest. “This should be approached in a situation where there is no acute conflict.”
Why is gold abroad?
By the way, there are primarily historical reasons why the gold is located abroad. “The reserves have not been taken abroad. People often think that and then talk about them being brought back. In fact, they have never been here before,” said gold expert Wrzesniok-Roßbach.
After the Second World War, Germany quickly had large trade surpluses and thus foreign exchange, especially dollars. “These foreign currencies were exchanged for gold using the so-called Bretton Woods system,” says Wrzesniok-Roßbach. At the Bretton Woods conference in 1944, the dollar was declared the world reserve currency and its value was linked to the gold rate.
But there were also security policy reasons for this. “At that time, no one wanted to store gold in Germany. There was a risk that, in the event of a possible war, the gold would fall into the hands of an enemy.”
Over the years, some of the gold was brought back to Germany. Between 2013 and 2017, the Bundesbank reduced its foreign holdings. A total of 300 tons were relocated from New York to Germany. The 374 tons previously stored in Paris were completely transferred.
Bundesbank is not planning any relocation
The Bundesbank currently does not believe in return plans. According to their own statements, it is currently out of the question for them to relocate German gold holdings from the USA. The main decisive factors for the weighting of the gold reserves are the goals of security and tradability in order to be able to sell gold if necessary or exchange it for foreign currencies.
“The Bundesbank regularly evaluates the depositories of its gold holdings based on these criteria. In this context, the New York Fed is and remains an important depositary for our gold,” said the Deutsche Bundesbank ARD financial editorial team with. The German Bundesbank has no doubt that the gold is safe with the American Fed.
