Bundesbank slashed London gold holdings in mystery move by Ambrose Evans-Pritchard,
International business editor
| 8:24PM BST 24 Oct 2012
Germany withdrew two thirds of its vast holdings of gold
from Bank of England vaults shortly after the launch of
the euro more than a decade ago, according to a confidential
report by German auditors.
The revelation came as Germany's budget watchdog
demanded an on-site probe of the country's remaining gold
reserves in London, Paris, and New York to verify whether
the metal really exists.
The country has 3,396 tons of gold worth €143bn (£116bn),
the world's second-largest holding after the US. Nearly
all of it was shifted to vaults abroad during the Cold War
in case of a Soviet attack.
Roughly 66pc is held at the New York Federal Reserve, 21pc
at the Bank of England, and 8pc at the Bank of France. The
German Court of Auditors told legislators in a redacted
report that the gold had "never been verified physically"
and ordered the Bundesbank to secure access to the storage
It called for repatriation of 150 tons over the next three
years to test the quality and weight of the gold bars. It
said Frankfurt has no register of numbered gold bars.
The report also claimed that the Bundesbank had slashed
its holdings in London from 1,440 tons to 500 tons in 2000
and 2001, allegedly because storage costs were too high.
The metal was flown to Frankfurt by air freight.
The revelation has baffled gold veterans. The shift came
as the euro was at its weakest, slumping to $0.84 against
the dollar. But it also came as the Bank of England was
selling off most of Britain's gold reserves – at market
lows – on orders from Gordon Brown.
Peter Hambro, chair of the UK-listed gold miner Petropavlovsk,
said the Bundesbank may have withdrawn its bullion in self-protection
since it did not, apparently, have its own specifically
allocated bars in London. "They may have decided that
the Bank of England had lent out too much gold, and decided
it was safer to bring theirs home. This is about the identification.
Can you identify your own allocated gold, or are you just
a general creditor with a metal account?"
The watchdog report follows claims by the German civic
campaign group "Bring Back our Gold" and its US
allies in the Gold Anti-Trust Committee that official data
cannot be trusted. They allege central banks have loaned
out or "sold short" much of their gold.
The refrain has been picked up by German legislators. "All
the gold must come home: it is precisely in this crisis
that we need certainty over our gold reserves," said
Heinz-Peter Haustein from the Free Democrats (FDP).
The Bundesbank said it had full trust in the "integrity
and independence" of its custodians, and is given detailed
accounts each year. Yet it hinted at further steps to secure
its reserves. "This could also involve relocating part
of the holdings," it said.