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 18 months and Buba, as the Federal Bank of Germany is often called, 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% or roughly $635 billion of the total 3,396 tonnes of gold Germany have in reserve, the world's second largest hoard.
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.
Doubts about the whereabouts of Germany's gold haven't gone away but now Chancellor Angela Merkel’s ruling coalition, has decided to put the matter to rest reports Bloomberg:
"The Americans are taking good care of our gold,” Norbert Barthle, the budget spokesman for Merkel's Christian Democratic bloc in parliament, said in an interview. "Objectively, there’s absolutely no reason for mistrust."
Ending talk of repatriating the world’s second-biggest gold reserves removes a potential irritant in U.S.-German relations. It’s also a rebuff to critics including the anti-euro Alternative for Germany party, which says all the gold should return to Frankfurt so it can’t be impounded to blackmail Germany into keeping the currency union together.
The change in policy in the Bundestag has been signposted with another prominent member of Merkel's Christian Democratic bloc, Juergen Hardt telling reporters in May: "It's my view that the gold reserves should be stored wherever they might be needed in an emergency."
When the Bundesbank first launched the repatriation program it was billed as a "trust-building" measure for the German people after rumours that the Fed refused German officials a viewing of the bullion a couple of months earlier.
Executive board member of Frankfurt-based Buba Carl-Ludwig Thiele, in February also tried to assuage German citizens about the now ex-repatriation program.
Thiele said at the time the bank has "enjoyed an excellent relationship of trust with the New York Fed for many decades":
"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."
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.
The tonnage that did arrive back in Frankfurt were never shown publicly, but were melted down immediately to bring the bullion to the "current bar standard" according to Buba's explanation.
This created further suspicions about the true origin of the bullion, but Thiele answered that prior to transportation, the original gold bars were handed over to the German bank 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."
In May Austria, perhaps unnerved by Germany's experience with their bullion and mindful of Brown's Bottom, sent a team of auditors to check on gold held by the Bank of England.
Only 17% of Austria's 280 tonnes of gold reserves are held inside the European nation with the Bank of England holding the bulk or some 150 tonnes worth more than $6.2 billion.
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.
Image by digital cat