A growing number of German officials are urging the Bundesbank to repatriate the nation's substantial gold reserves held in the United States, citing escalating geopolitical risks. Germany, possessing 3,352 tons of gold and ranking as the world's second-largest holder of gold reserves, still keeps a significant portion of its bullion stored in vaults abroad. Approximately 1,200 tons of gold (valued around €164 billion, or roughly $194 billion) are currently held at the Federal Reserve Bank of New York. This arrangement, a legacy of the Cold War era, is now facing intense scrutiny. This development is expected to persistently provide the most potent and direct arguments and catalysts for the existing gold bull market narrative amidst a turbulent environment. During European trading hours on Tuesday (January 27th), spot gold rose for the seventh consecutive trading session, currently trading near $5,085 per ounce with an intraday gain of approximately 1.5%, after hitting a record high of $5,110.86 per ounce in the previous session.
The geopolitical trigger for gold repatriation. The primary driver behind the calls for repatriation is the shift in the global landscape. Eminent German economist and former head of research at the Bundesbank, Emanuel Mönch, has labeled the current storage arrangement in the U.S. as carrying "excessive risk." Mönch stated, "Given the current geopolitical situation, storing so much gold in the U.S. appears risky. To achieve greater strategic independence from America, the Bundesbank would be well-advised to consider bringing the gold home." This sentiment stems from the U.S. increasingly wielding tariffs and the dollar as tools of foreign policy. Michael Jäger, President of the European Taxpayers Association (TAE), pointed to the unpredictability of U.S. President Trump as a major concern. Jäger warned, "Our gold is no longer safe in the Fed's vaults," suggesting that the risk of the Bundesbank potentially losing access to its reserves is rising. Echoing these concerns, Member of the European Parliament Markus Ferber has called on Bundesbank officials to conduct regular on-site audits of Germany's gold. He explained, "The Bundesbank's gold reserve policy must reflect the new geopolitical realities."
A cross-party debate is taking shape. Although calls for the return of gold have traditionally come from politically conservative figures, the idea is gaining broader support. Green Party finance spokesperson Katharina Beck expressed support, describing the country's gold reserves as a "crucial cornerstone of stability and trust," and emphasizing they "must not become a pawn in geopolitical disputes." Despite increasing pressure, the official stance remains unchanged for now. A spokesperson for the coalition government of Friedrich Merz recently stated that moving gold from the U.S. is not currently under consideration. The Bundesbank has also not issued an official statement on the matter, publicly expressing trust in the Federal Reserve.
Cautious voices advise against hasty action. Not everyone believes repatriating gold to Germany is the right decision. Clemens Fuest, President of the ifo Institute for Economic Research, advised against repatriation, warning it could have unintended consequences and would "pour oil on the fire, exacerbating the current situation." SPD financial policy spokesperson Frauke Heiligenstadt acknowledged these concerns but argued against hasty action. She noted that Germany's gold reserves are widely distributed, with about half already stored in Frankfurt, which "guarantees" the country's ability to act. Heiligenstadt added that keeping part of the gold in New York remains logically justified due to the close financial ties between Germany, Europe, and the United States.
Part of a global trend towards de-dollarization. Germany's debate is not occurring in isolation; it is part of a global trend of de-dollarization and asset repatriation, as nations seek to reduce their dependence on the U.S. financial system. This trend accelerated further after nearly half of Russia's approximately $650 billion in gold and foreign exchange reserves were frozen by the U.S. and its allies. A 2023 survey by the World Gold Council illustrated the impact of these sanctions: A significant portion of central banks expressed concerns about potential sanctions. 68% of the respondent banks indicated plans to hold their gold reserves within their own countries, an increase from 50% in 2020. One central bank official stated they had moved gold back from London "to hold as a hedge and to keep it safe."
Many countries have already taken action. India repatriated 100 tons of gold in 2024. Previously, Poland brought back 100 tons in 2019, while Hungary, Romania, Australia, the Netherlands, and Belgium have also initiated plans to repatriate gold. Germany itself completed a project in 2017 to bring about half of its gold reserves back to its domestic vaults.
Strengthening gold's monetary attributes and the narrative of declining trust in the dollar. A heated debate is underway in Germany over whether it should repatriate the 1,200 tons of gold stored at the Federal Reserve Bank of New York. This is far from a simple discussion about asset relocation; its backdrop involves profound geopolitical and financial landscape shifts. If this matter continues to develop or becomes reality, it will have profound and multi-layered impacts on the gold market, extending far beyond simple demand fluctuations. The market should view it as a public "stress test" on the current U.S. dollar-dominated international financial system. In a world rife with geopolitical confrontation, the weaponization of financial sanctions, and a deficit of trust, the value of gold as the ultimate, neutral "ballast" and "financial safe haven" is being systematically reassessed. Consequently, this event will persistently provide the most potent and direct arguments and catalysts for the existing gold bull market narrative. It elevates gold's ascent to a phenomenon at the level of geopolitical and monetary history.
(Spot Gold Daily Chart, Source: EasyForex) At Beijing Time 15:27, spot gold was quoted at $5,084.35 per ounce.
