The Bundesbank’s plan to find and melt down Germany’s gold

The Germans count their gold.
The Germans count their gold. (AP Images / Deutsche Bundesbank)

In the latest sign of rising European crisis anxieties, German federal authorities have ordered the country’s central bank, or Bundesbank, to weigh the nation’s gold following rumors that it might not all be there.

The demand originated from German members of parliament, acting on rumors that some of the nation’s gold could be missing or might have been replaced by certificates. Bundesbank authorities counted and weighed some of the gold stored in Frankfurt vaults, though not all, says a spokeswoman. Reports have emerged that inside are 82,857 gold bars weighing some 1100 tons (paywall). MPs were invited into the vault to see it for themselves, the spokeswoman confirms, and there have been thoughts of letting journalists inside as well, though so far security concerns have prevented that (German).

The trouble is that this isn’t all of the nation’s gold. Most of it—valued at roughly $190 billion and weighing some 3,400 tons—is stored in vaults of the US Federal Reserve, the Bank of France, and the Bank of England. Gold was stored abroad after the second world war to guard against perceived threats from the Soviet Union and its satellite states. The Bundesbank says the gold has never been physically checked. Instead it is audited every year by people at the facilities, conforming with common practice among central banks.

Last year parliamentarians criticized these audits. Germany’s Federal Court of Auditors also questioned the practice, and discussions began. The court is now demanding regular physical audits of Germany’s overseas gold reserves. In response, the Bundesbank is considering bringing back some gold from abroad, melting it down to test for purity, and then recasting it back into bars. About parliamentarians’ concerns, the spokeswoman said: “We want to be open to their ideas.”

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