As the Trump administration persists unyieldingly on its path of radical policies, the bedrock of trust across the Atlantic is crumbling. From brandishing tariff threats to openly discussing "acquiring" Greenland, a series of actions by the U.S. government have deeply unsettled European political circles and the public, placing the once-stable transatlantic alliance under severe scrutiny.
Amid this crisis of confidence, Marie-Agnes Strack-Zimmermann, Chair of the European Parliament's Subcommittee on Security and Defence and a member of Germany's Free Democratic Party (FDP), has dropped a political bombshell. Her focus is remarkably specific and immensely costly – gold.
Currently, approximately 1,236 tons of German gold, valued at over 100 billion euros, resides securely within U.S. vaults. Strack-Zimmermann has publicly asserted that, given Trump's recent unpredictable political maneuvers, it is no longer prudent to leave such a massive portion of national wealth in the United States. This statement instantly ignited a fierce debate across Europe's financial community regarding the necessity of repatriating overseas gold reserves.
This situation is not a coincidence but a historical legacy of the Bretton Woods system. Germany holds roughly 3,350 tons of gold reserves, with about 36.6% stored in the U.S.
Dr. Demary, Senior Economist for Monetary Policy and Financial Markets at the German Economic Institute (IW), explained, "After World War II, global currencies were pegged to the U.S. dollar, which was itself backed by gold. At that time, Germany held a massive trade surplus with the U.S., accumulating vast amounts of dollars. To maintain exchange rate stability, we converted these dollars into gold, thus establishing the reserves."
Furthermore, the Cold War era reinforced this arrangement. Faced with the potential threat from the Soviet Union, storing gold reserves across the ocean in the U.S. was considered the safest option. Although the Bundesbank later initiated a repatriation program—by 2017, it had brought back hundreds of tons of gold from New York, Paris, and London—a significant amount remains stored at the Federal Reserve Bank of New York.
Politicians like Strack-Zimmermann argue that Trump's capriciousness in trade and foreign policy constitutes the paramount risk of keeping assets in America.
"Of course, holding assets overseas always carries inherent risks," Dr. Demary conceded. Beyond the theoretical risk of vault theft, a deeper concern lies at the political level: "An extreme hypothetical is that if the U.S. government faced a foreign exchange reserve crisis, it might potentially block the transfer of gold."
However, that is not the full picture. Dr. Demary pointed out that keeping gold in New York holds significant strategic importance: "If a banking crisis erupted within Germany and we urgently needed access to dollar liquidity, the gold held in the U.S. would serve as an excellent collateral or exchange mechanism."
Moreover, the physical repatriation of the gold itself presents a logistical nightmare. It involves not only complex security measures like armored vehicle transport and naval escort but also confronts extreme risks such as robbery during transit, shipwreck, or even seizure.
The economics community generally views Strack-Zimmermann's appeal with skepticism.
"This appears more like a symbolic political gesture," analyzed Dr. Demary. "Perhaps it's a counter to Trump's tariff threats, with the underlying message being, 'If you are unreasonable, we will simply take our gold back.'" He also noted that politicians might be overestimating the actual bargaining power of this gold in geopolitical games.
Addressing concerns about potential "U.S. government interference with gold reserves," experts emphasize institutional safeguards. Dr. Demary clarified, "The Federal Reserve maintains independence in monetary policy; the White House cannot arbitrarily intervene unless laws are changed."
Even in a worst-case scenario—where the U.S. refused to release the gold—Germany could pursue legal avenues internationally to compel restitution or claim equivalent dollar compensation.
"Weighing the pros and cons," Dr. Demary concluded, "I believe the benefits of continuing to store this portion of gold in the United States still outweigh the risks associated with its complete repatriation."
Comments