Why it Takes 7 Years for Germany to Repatriate its Gold

An article published by Prime Values is speculating on why Germany’s gold repatriation will last 7 years.

In late 2012, the Bundesbank has announced that they will repatriate much of their gold held at foreign vaults – in New York and Paris. The total amount of gold to return is 674 tons.

Surprisingly, the process will last 7 years! This means the entire 674 tons will have been returned to Germany only by 2020.

Why are 7 years required to physically return the gold?

PrimeValues.org explains us that transportation and security are not the issue. Not in case of a major power like Germany. The physical gold could be transported in a matter of weeks or months.

According to a Forbes article, in the early 2000’s (during 2000 and 2001), Germany has repatriated 940 tons of gold from the Bank of England, because the storage costs were too high. So the immense amount does not cause complications for Germany.

Otherwise, the Federal Reserve does not require storage costs.

Other issues are causing the “delay”. Either the Federal Reserve doesn’t have the gold or, there is an agreement with Germany for “gradual withdrawal”, in order not to cause a “gold run”.

It’s probable that the Federal Reserve is actually using (lending or re-selling) the gold it holds for other nations. In this case, the gold might be acting similarly to a bank deposit of cash. When we constitute bank deposits, we put our money into the bank and then the bank lends it out to other people. There is a phenomenon of “multiplication”, similar to leverage – when a small amount of money “acts like” a large amount.

Could this be the case of the German gold at the Federal Reserve’s vault? Is the fed using the deposited gold in trade or for other purposes?

It’s highly possible.

In fact, the Bundesbank is withdrawing their 674 tons from New York and Paris in tranches. 300 tons from New York and 374 from Paris will be withdrawn.

At the start, Germany is repatriating and auditing 150 tons of gold – to check the quality of the gold (let’s not forget the story about the tungsten-filled gold bars!).

The news about Germany repatriating their gold has hit even mainstream media and other countries followed up: Switzerland, the Netherlands and others are requesting their gold back as well.

Keep on reading: The Market Guardian