Germany's gold at the New York Fed: is it still there?

• Author: Engelen, Klaus C.
• Position: Off the News

For a German public facing ever-larger rescue demands for the euro, the gold reserves of the Deutsche Bundesbank are touching raw nerves. Most Germans see the Bundesbank's stock of about 3,400 tons of pure gold as a national safety chest not to be touched.

Near the end of Chancellor Helmut Kohl's sixteen-year coalition government, his finance minister, Theo Waigel, tried to lower the federal budget deficit by revaluing the Bundesbank's gold reserves closer to market prices, causing a public outcry. Waigel gave up the idea. And when Paris, London, and Washington urged Berlin to permit the use of central bank reserves to bolster global rescue funds at the Cannes G-20 summit in July 2011, the Germans were clear: The Bundesbank's gold reserves were "untouchable."

In March, the German tabloid Bild let millions of German readers know how two members of the German parliament from the ruling Christian Democratic Union, Philipp Missfelder and Marco Wanderwitz, tried to view the German gold stocks stored at the New York Federal Reserve premises in downtown Manhattan, but were rebuffed. This caused another scandal. Whether the German gold that the Bundesbank hasn't checked for decades is still there is a question with far-reaching transatlantic implications.

Missfelder complained to Bild that the Bundesbank practice of not auditing its gold holdings at the New York Fed "apparently violates any applicable accounting law," and that this practice would be "a case for Parliament." When the two legislators wanted to see the German gold reserves at the Bank of England and the Banque de France, Carl-Ludwig Thiele, the Bundesbank's managing board member responsible for the gold, wrote them a letter arguing that "the central banks in London and Paris would not have suitable rooms for such visits."

So, since May of this year, under the campaign slogan "repatriate our gold," a citizens' initiative with ten thousand signatures called "Gold Action," backed by the German Association of Taxpayers, is lobbying to force the Bundesbank to prove to the German public that its gold reserves stored abroad are really still there and to bring them home as soon as possible. The initiative alleges that there is a real danger that Germany's gold could be expropriated as a result of the escalating financial and debt crisis.

Criticism from those in the Bundestag who are responsible for finance and the budget, from the accounting profession, and from Germany's federal auditors...