On January 16, 2013 Germany’s central bank, the Bundesbank, said it will ship back home all 374 tonnes it had stored with the Banque de France in Paris, as well as 300 tonnes held in Manhattan by the US Federal Reserve, by 2020.
Fast forward a year and Buba, as the Federal Bank of Germany is affectionately (or maybe not) known, has only managed to bring home a paltry 37 tonnes of gold.
And a mere 5 tonnes of that came from the US, the rest from Paris. The US Fed holds 45% of the total 3,396 tonnes German gold.
Needless to say this prompted renewed questions whether Germany’s gold still exists in those Manhattan vaults or if it has been melted down, leased or even sold.
At the time of the original Bundesbank announcement, there were rumours that Germany wanted their gold back because the Fed refused German officials a viewing of the bullion a couple of months earlier.
In an extensive interview with German business publication Handelblatt, executive board member Carl-Ludwig Thiele, tries to lay to rest all the rumours about the program which was designed as a “trust-building” measure among the German people:
There are these rumours that either the gold in New York is no longer there or you do not have unrestricted access to it. Why have you not called in auditors or other externals to oversee the transfers in response to such rumours?
It astounds me that Handelsblatt pays any attention to such absurd rumours. I was in New York myself in June 2012 with the colleagues responsible for managing the gold reserves and saw for myself how our money is stored in the vault there. The Americans have never stonewalled or hindered us in any way. On the contrary, their cooperation has been most constructive in every respect. Our internal audit team was present last year during the on-site removal of gold bars and closely monitored everything. The smelting process is also being monitored by independent experts.
Does this also apply to opportunities to inspect the stocks?You said a year ago that discussions on the matter with the Federal Reserve Bank of New York were making good progress.
That is correct. We have enjoyed an excellent relationship of trust with the New York Fed for many decades. As regards the details of the contracts, however, we are bound by confidentiality which we cannot unilaterally break. From my visit to New York, I can tell you that a number of bars selected by us were removed, inspected and reweighed even while I was there. The inspections conducted by our internal audit team, during which an external auditor was also present, were also completed to our utmost satisfaction.
Was an external auditor present during your visit to the New York Fed gold storage facility in June 2012?
No, not during my visit. However, an external auditor was present for part of the time during the internal audit team’s inspection of stocks.
Did the gold from New York have to be melted down immediately?
The gold was removed from the vault in the presence of the internal audit team and transported to Europe. Only once the gold had arrived in Europe was it melted down and brought to the current bar standard. Some of the bars in our stocks in New York were produced before the Second World War. It was confirmed after the melting process, as anticipated, that these bars were absolutely fine.
If the intention was to build trust, would it not have been better to postpone the smelting process so that you would have been able to present sceptics with the original bars?
Prior to transportation, the original gold bars were handed over to us in New York. Our internal audit team checked the numbers of the bars there and then against its own lists. The very same gold arrived at the European gold smelters that we had commissioned. This ought to demonstrate to everyone that such conspiracy theories are completely unfounded.
German gold is also held at The Bank of England which stores 13% in London, while the Bank of France in Paris has 11% in total and the remainder is held at the Bundesbank’s headquarters in Frankfurt.
In November 2011, Venezuela repatriated some 180 tonnes of gold held in vaults in London and elsewhere to store it with the Caracas central bank under orders from late President Hugo Chavez.
Click here for the rest of the interview which includes questions on whether Germany plans to use gold as a monetary policy tool and why the US is willing to store and guard all that gold free of charge.