Germany and Italy Push to Repatriate US-Held Gold Reserves

German and Italian politicians want to repatriate thousands of tons of their gold reserves from the United States, the Financial Times writes.

This is mainly due to the policies of US President Donald Trump and the increase in geopolitical turbulence. There is also a desire to avoid third-party risks.

Fabio De Masi, a member of the left-wing German party Sahra Wagenknecht Union, told the Financial Times that there are several strong arguments in favor of repatriating gold in turbulent times.

Size and Location of European Gold Reserves

Germany and Italy have the second and third largest gold reserves in the world, after the United States. Germany’s reserves amount to 3,352 tons, while Italy’s are 2,452 tons, according to the World Gold Council. Both countries hold about a third of their gold reserves in the United States, mostly at the New York Federal Reserve.

The two countries’ gold reserves in the United States are worth a combined $250 billion

Gold is held in the US primarily for historical reasons, but it also reflects New York’s status as a major gold trading location.

Read more on the topic: Top 7 countries with the most gold reserves

Reliability and Security in Doubt

Trump’s unstable policies and broader geopolitical turbulence have sparked a public debate in several European countries about gold reserves. The US president said earlier this month that if the central bank does not lower interest rates, it will have to “push” something. This has created uncertainty among countries about the US financial system.

Political Support for Repatriation in Germany

In Germany, several politicians on both the left and right support repatriating gold. Peter Gauweiler, a member of the Bavarian Christian Social Union, stressed that the Bundesbank should not make any concessions in protecting its gold reserves.

“We have to ask ourselves whether holding gold abroad has become more stable and safer over the past decade or not,” Gauweiler told the Financial Times. “The answer to that question is obvious, because geopolitical risks have made the world more unsafe.”

Concerns from Taxpayer Associations

The European Taxpayers Association (EMA) has sent a letter to the finance ministries and central banks of both Germany and Italy, recommending that they review whether it is a good idea to make the future of their gold reserves dependent on the Federal Reserve.

“We are very concerned that Trump is trying to influence the independence of the Federal Reserve,”

said EMA President Michael Jäger.

“We recommend bringing back the gold of both Germany and Italy to ensure that the European central banks have control over their gold reserves at all times.”

Italian Voices on Repatriation

Economic expert Enrico Grazzini wrote before the Italian Prime Minister’s visit to the US: “Leaving 43 percent of Italy’s gold reserves in the hands of an America led by the unreliable Trump is very dangerous for our national interests.”

Last week, a new survey of central banks by the World Gold Council found that more and more countries are considering repatriating their gold reserves, mainly due to concerns that they might not be able to access their gold during a crisis.

Historical Context of Gold Storage in the US

The fact that European central banks depend on the Federal Reserve for their gold reserves has been a topic of discussion in the past. Western European countries accumulated large gold reserves during the economic boom that followed World War II because they had a trade surplus with the United States (i.e., exports exceeded imports).

The Bretton Woods system, where exchange rates were fixed and the dollar was convertible into gold, was in place until 1971. Gold was partly held in the US because there was a fear of war with the Soviet Union, and the Atlantic Ocean helped to mitigate the risks in this regard.

Germany’s Past Repatriation Efforts

In Germany, a campaign was also launched in 2010 to bring gold home

In 2013, the Bundesbank decided to keep half of its gold reserves in Germany. To this end, 674 tons of gold were transported from the US and New York to Frankfurt. The estimated cost of this transport was 7 million euros. Germany currently holds 37 percent of its gold reserves in New York.

“When we started, we were accused of promoting conspiracy theories,” said Peter Boehringer, a precious metals expert who led the campaign and is currently a member of parliament and the right-wing Alternative for Germany (AfD) party. According to Boehringer, the main principle behind bringing back gold has nothing to do with the current US administration.

“Gold is the ultimate asset for central banks and as such should be held in a way that eliminates third-party risk,” he said. “In a stress situation, it’s not just legal rights that matter. It’s who physically holds the gold that matters.”

Italy’s Political Stance on Gold Reserves

The current Italian prime minister’s party lobbied in 2019 to repatriate Italy’s gold reserves. Meloni promised that if his party came to power, the gold would be brought back to the country.

Meloni became prime minister in 2022, but has remained silent on the issue so far

She wants to maintain friendly relations with Trump while trying to avoid escalating the trade war.

Italian MP Fabio Rampelli said that his home party’s current position is that “the geographical location of the gold reserves is of only relative importance, because the gold is in the hands of a historical friend and ally.”

Critics Warn of Diplomatic Fallout

Bert Flossbach, co-founder of Germany’s largest investment firm Flossbach von Storch, argued against bringing back the gold: “If gold is demonstratively brought home now, it sends a clear message that relations with the US are deteriorating.”

Official Statements from Central Banks

The Bundesbank told the Financial Times that the central bank is constantly evaluating the location of its gold reserves, based on principles set out in 2013. The focus is not only on security, but also on liquidity. “It must be possible to sell the gold or exchange it for foreign currency if necessary.”

The central bank stressed that the New York Federal Reserve remains an important repository for Germany’s gold reserves. “We have no doubt that the New York Federal Reserve is a reliable and solid partner in ensuring the security of our gold reserves.”

The Bank of Italy, Meloni’s office and the German Finance Ministry declined to comment to the Financial Times on the matter.