Bundesbank to Find and Melt Down Germany’s Gold
Posted by Adam King on October 26, 2012
German Federal authorities have ordered the central bank of the country, known as the Bundesbank, to weigh the nation’s gold after constant rumors that the gold is not in the reserves.
The order began with members of the German parliament who initiated the call after concern arose that some of the gold may be missing or may have been replaced by certificates. The Bundesbank has counted and weighed some of the gold stored in Frankfurt vaults, according to a spokesperson, but it has not audited all of its gold. Reports emerged that inside the vaults are 82,857 gold bars weighing approximately 1,100 tons cumulatively. The spokesperson added that members of parliament have been invited into the vault to see the gold for themselves and the idea of allowing journalists inside the vault has been floated but so far delayed by security.
The majority of German gold is stored in vaults of the U.S. Federal Reserve, the Bank of France, and the Bank of England, valued at around $190 billion and weighing approximately 3,400 tons. Following the Second World War, Germany began storing gold abroad to safeguard against perceived threats from the Soviet Union and satellite states. The Bundesbank has said the gold has never been officially physically checked, though people at the facilities in which it is stored have audited it every year.
Last year, a criticism of these audits arose in parliament with Germany’s Federal Court of Auditors also questioning the practice, which began the discussion that eventually bloomed into the recent Federal orders. The Federal Court now demands regular physical audits of Germany’s overseas gold reserves. The Bundesbank itself, partially in response to the German Federal Court, is considering bringing back some gold from abroad and melting the bars down to test for purity.
A report from Bloomberg says the Federal Reserve Bank of New York will assist the Bundesbank in meeting audit requirements demanded by the Federal Court. In a letter to the German parliament’s budget committee, the bank said it has been in discussions with the Federal Reserve Bank of New York and that the holdings and the discussions have been fruitful. The Reserve has expressed a commitment to work with the Bundesbank to explore ways to address the audit observations.