Germany and Italy are facing calls to move their gold out of New York following President Donald Trump’s repeated attacks on the US Federal Reserve and increasing geopolitical turbulence.
Fabio De Masi, a former Die Linke MEP who joined the leftwing populist BSW party, told the Financial Times that there were “strong arguments” for relocating more gold to Europe or Germany “in turbulent times”.
Germany and Italy hold the world’s second- and third-largest national gold reserves after the US, with reserves of 3,352 tonnes and 2,452 tonnes, respectively, according to World Gold Council data. Both rely heavily on the New York Federal Reserve in Manhattan as a custodian, each storing more than a third of their bullion in the US. Between them, the gold stored in the US has a market value of more than $245bn, according to FT calculations.
This is largely down to historic reasons but also reflects New York’s status as one of the world’s most important trading hubs for gold, along with London.
Yet Trump’s erratic policymaking and wider geopolitical unrest are fuelling a public debate about the issue in parts of Europe. The US president said earlier this month he may have to “force something” if the US central bank did not lower borrowing costs.
In Germany, the idea of repatriating gold is attracting support from both ends of the political spectrum.
Peter Gauweiler, a prominent former conservative MP from Bavaria’s Christian Social Union, stressed that the Bundesbank “must not take any shortcuts” when it came to safeguarding the country’s gold reserves.
“We need to address the question if storing the gold abroad has become more secure and stable over the past decade or not,” Gauweiler told the FT, adding that “the answer to this is self-evident” as geopolitical risk had made the world more insecure.
The Taxpayers Association of Europe has sent letters to the finance ministries and central banks of both Germany and Italy, urging policymakers to reconsider their reliance on the Fed as a custodian for their gold.
“We are very concerned about Trump tampering with the Federal Reserve Bank’s independence,” Michael Jäger, the TAE’s president, told the FT.
“Our recommendation is to bring the [German and Italian] gold home to ensure European central banks have unlimited control over it at any given point in time.”
Ahead of Italian Prime Minister Giorgia Meloni’s trip to Washington to meet Trump in April, economic commentator Enrico Grazzini wrote in the newspaper Il Fatto Quotidiano: “Leaving 43 per cent of Italy’s gold reserves in America under the unreliable Trump administration is very dangerous for the national interest.”
A survey of more than 70 global central banks this week showed more were thinking of storing their gold domestically amid concerns about their ability to access their bullion in the event of a crisis.
The reliance of European central banks on the Fed as a gold custodian has long been a bone of contention. Western European countries accumulated huge gold reserves during the economic boom in the two decades after the second world war, when they ran large trade surpluses with the US.
Up to 1971, the dollar was converted into gold by the US central bank under the Bretton Woods system of fixed exchange rates. Storing the precious metal across the Atlantic was also seen as a hedge against a potential war with the Soviet Union.
France in the mid-1960s nonetheless moved most of its overseas gold reserves to Paris, after President Charles De Gaulle lost faith in the Bretton Woods system.
In Germany, a grassroots campaign to “repatriate our gold” from 2010 changed Bundesbank policy. In 2013, Germany’s central bank decided to store half of its reserves at home, moving 674 tonnes of bullion from Paris and New York to its Frankfurt headquarters in a high-security operation that cost €7mn. Currently, 37 per cent of the Bundesbank’s gold reserves are stored in New York.
“When we started . . . we were accused of peddling conspiracy theories,” said Peter Boehringer, a precious metal expert who launched the original campaign and today is an MP for Germany’s far-right Alternative für Deutschland party.
For Boehringer, the principal argument to bring home the gold is not linked to the current US administration. “Gold is an asset of last resort for central banks, and hence it needs to be stored without any third-party risk,” he said, adding that at times of serious distress, “it is not just legal ownership but physical control over the gold that really matters”.
In 2019 in Italy, Meloni’s far-right Brothers of Italy party, when still in opposition, lobbied for the repatriation of the country’s gold reserves. Meloni vowed to bring Italian gold home if her party came to power.
However, since taking the premiership in late 2022, Meloni has been silent on the subject. She wants to maintain a friendly relationship with Trump while averting the threat of a deepening trade war.
Fabio Rampelli, a Brothers of Italy parliament member, said the party’s current stance was that the “geographical location” of Italy’s gold was of only “relative importance” given that it was in the custody of “a historic friend and ally”.
German investment veteran Bert Flossbach, co-founder of the country’s largest independent asset manager Flossbach von Storch, made a similar argument: “Bringing the gold back now with great fanfare would send a signal that relations with the US are deteriorating.”
The Bundesbank told the FT in a statement that it “regularly evaluates the storage locations for its gold holdings” based on its 2013 guidelines, which focus not only on security but also on liquidity to “ensure that gold can be sold or exchanged into foreign currencies if needed”.
It stressed that the New York Fed remained “an important storage site” for German gold, adding: “We have no doubt that the New York Fed is a trustworthy and reliable partner for the safekeeping of our gold reserves.”
The Bank of Italy, Meloni’s office and the finance ministry in Berlin declined to comment.
