Germany and Italy are facing calls for President Donald Trump to move their money out of New York after repeated attacks on the US Federal Reserve and increased geopolitical turbulence.
Fabio de Masi, former Dyke Linke Mape, who joined the left-wing populist BSW party, told the Financial Times there was a “strong debate” to transfer more gold to Europe and Germany “in turbulent times.”
According to data from the World Gold Council, Germany and Italy hold the second largest national gold reserves in the world after the US, with 3,352 tonnes and 2,452 tonnes respectively. Both rely heavily on Manhattan’s New York Federal Reserve as custodians, each storing more than a third of US bullion. Between them, gold stored in the US is marketable at over $245 billion, according to FT calculations.
This mainly depends on historical reasons, but along with London, it reflects New York’s position as one of the most important trading hubs in the world.
But Trump’s volatile policymaking and broader geopolitical unrest have encouraged public debate on issues in parts of Europe. The US president said earlier this month that if the US central bank does not lower its borrowing costs, it would have to “force something.”
In Germany, the idea of repatriation of gold has gained support from both ends of the political spectrum.
Peter Goweiler, a well-known former Conservative MP for the Christian Social Union in Bavaria, stressed that Bandesbank should not “take shortcuts” when it comes to protecting the country’s gold reserves.
“We need to address the question of whether storing money abroad has been safer and more stable over the past decade,” Gauweiler told FT, adding that “the answer to this is trivial,” as geopolitical risks made the world more uncertain.
The European Taxpayers Association has written letters to both German and Italian finance ministries and central banks, urging policymakers to rethink their dependence on the Fed as a custodian of money.
“We are very concerned that Trump is tampering with the independence of the Federal Reserve,” Te president Michael Jager told FT.
“Our recommendation is to bring (Germany and Italian) money into the house so that the European central bank has unlimited control over it at any time.”
Before Italian Prime Minister Giorgia Meloni traveled to Washington to meet Trump in April, economic commentator Enrico Grazzini wrote in the newspaper IL Fatto Quotidiano:
A survey of more than 70 global central banks this week showed they were considering saving gold in the country amid concerns about their ability to access bullion in the event of a crisis.
The European Central Bank’s dependence on the Fed as a gold custodian has long been a skeleton of competition. Western European countries accumulated huge gold reserves 20 years after World War II, during the economic boom that operated a massive trade surplus with the United States.
Until 1971, the dollar was converted to gold by the US Central Bank under the Bretton Woods system at fixed exchange rates. The storage of precious metals throughout the Atlantic was also seen as a hedge against a potential war with the Soviet Union.
Nevertheless, France in the mid-1960s moved most of its overseas gold reserves to Paris after President Charles de Gaulle lost faith in the Breton Woods system.
In Germany, a grassroots campaign to “repay our money” has changed its Bundesbank policy since 2010. In 2013, the German central bank kept half of the spare in its home, moving 674 tonnes of bullion from Paris and New York to Frankfurt headquarters, costing 7 million euros. Currently, 37% of Bundesbank’s gold reserves are stored in New York.
“When we started, we were accused of pitching conspiracy theory,” said Peter Boehringer, a valuable metals expert who launched the original campaign.
For Bohringer, the main argument about bringing money home is not related to the current US administration. “Gold is a last resort asset for central banks, so it must be preserved without the risk of third parties,” he said, adding that sometimes in serious distress, “it’s not just legal ownership, but a truly important physical control of gold.”
In 2019, in Italy, Meloni’s far-right brothers of Italian Party worked to repatriate the country’s gold reserves when they were still opposed. Meloni vowed to bring Italian money home if her party came to power.
However, since winning the premiership in late 2022, Meloni has been silent on the subject. She wants to maintain a friendly relationship with Trump while avoiding the threat of deepening the trade war.
Fabio Lampelli, a brother to an Italian lawmaker, said the party’s current stance was “relative importance” given that the “geographical location” of Italian gold is under the control of “historic friends and allies.”
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German investment veteran Berto Frossbach, co-founder of Frossbach von Stouch, the country’s largest independent asset manager, made a similar argument.
Bundesbank told the FT in a statement that it will “regularly evaluate the location of gold holdings” based on the 2013 guidelines.
He emphasized that the New York Fed remains a “critical storage site” for German gold, saying, “There is no doubt that the New York Fed is a reliable and reliable partner for storing gold reserves.”
The Bank of Italy, Meloni’s office and the Berlin Ministry of Finance declined to comment.
