Peter Gauweiler has a pet obsession. The conservative politician from Bavaria admits he has a bee in his bonnet about Germany’s gold reserves. In his office in the parliament in Berlin, he frets about the 1,500 tons of German gold — $80 billion worth — officially held by the New York Federal Reserve.
“The German central bank is required to count and weigh the gold it holds every year,” he says. “But our gold reserves that are kept in the U.S. have not been weighed or counted once in three decades. That is rather unsettling.”
Gauweiler wants an audit of Germany’s bullion held in the U.S. Better still, he would like it repatriated.
The fact that Germany has so much of its gold reserves in the U.S. is a legacy of the Cold War. To keep its gold well beyond the Soviet reach, Germany lodged the bullion with the U.S.
Jan Randolph of IHS Global Insight says this was also a token of trust.
“Germany felt somehow that this cemented that trust with its Western allies while Western Allied forces were on German soil warding off the Soviet threat,” Randolphs says.
But today, the Soviet threat is long gone. Now Germany faces an altogether different menace — the eurozone debt crisis has sparked angry protests in Greece, Spain and elsewhere. The pressure is on Germany to bailout its southern neighbors. And many Germans don’t like it.
“I think there certainly is a sense of being besieged that Germany is just the paymaster and gets very little in return,” says Gunnar Beck, a German-born lecturer at London University. He says in this climate, Germans feel anxious about their national wealth. They want to be sure they can count on their gold.
“I think the euro crisis forms the background to what is a slight paranoia in Germany right now,” he says.
The mood was not improved by reports that the New York Fed was refusing permission to German politicians to visit the gold, on grounds of security.
“We send independent specialists, into the vault once a year, to conduct an audit, to do a tally count, to make sure the bars are in good order and so on,” Adrian Ash of bullionvault.com, a company that holds some 30 tons of bullion in Britain for private investors, says. “There’s every reason to conduct an audit every so often.”
But the German central bank seems too embarrassed to ask the U.S. for an audit: It might imply the U.S. cannot be trusted.
A Bundesbank official says the reserve are not stored with some “dubious business partner,” but respected bankers. Some Germans, however, do not seem reassured.