“With approximately 1,403 tonnes of gold, Frankfurt has been our largest storage location, ahead of New York, since the end of last year,” said Carl-Ludwig Thiele, Member of the Executive Board of the Deutsche Bundesbank. “The transfers are proceeding smoothly. We have succeeded in once again significantly increasing the transport volume compared with 2014. This means that operations are running very much according to schedule,” added Thiele last January.
As a reminder, according to its gold storage plan, unveiled in January 2013, the Bundesbank would store half of Germany’s gold reserves in its own vaults in Frankfurt am Main by 2020 which would necessitate a transfer to Frankfurt of 300 tonnes of gold from New York and all 374 tonnes of gold from Paris. It also meant that as of January, another 111 tonnes of gold from the NY Fed and 196.4 tonnes of gold from Paris remained to be transfered.
The “politically correct” motives for the transfer, as well as the logistics and the mechanics behind it were explained in a March 2015 video released by the Bundesbank…
… the real reasons, however, is that following several reports on this website which cast doubts on Germany’s gold holdings, in late 2012 the German Court of Auditors demanded that the Bundesbank undertake an audit of its gold reserves. Specifically, the court wanted to ensure that the nearly 3400 tons of gold, of which more than 2,000 tonnes held offshore, is in fact in existence – ‘because stocks have never been checked for authenticity and weight’. The move to repatriate was only accelerate following rumors that much of the offshore-held gold might have been “rehypothecated”, and not be there anymore, that it might have been melted down, leased, or sold.
Ironically, at the time, Bundesbank Board member Carl-Ludwig Thiele told the Handelsblatt that these moves were a “trust-building” measure, and he tried vigorously to put the rumors about the missing gold to rest. Of course, repatriating your gold from foreign central banks is precisely the opposite of a “demonstration of confidence.”
What made matters worse is that at the end of 2013, the Bundesbank announced it had managed to repatriate only 37 tonnes of the total 700 scheduled for redemption, further spooking the local population and suggesting that conspiracy theories that the gold was missing were in fact accurate.
As a result, following blowback from both the media and the public, the Bundesbank accelerated its activity, and repatriated 120 tonnes in 2014 and another 210 in 2015, implying that the Bundesbank’s faith in its foreign central bank peers had declined in inverse proportion to the following accelerated redemption schedule as of January 2016.
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Then, in an update last December, Germany’s Bild reported that in 2016 the Bundesbank has repatriated “more of its gold than planned”, as it moves toward relocating half of the world’s second-largest reserve at home. “We brought back significantly more gold to Germany in 2016 again than initially planned. By now, almost half of the gold reserves are in Germany,” Buba president Jens Weidmann told the German publication. According to Bild, around 1,600 tonnes of Germany’s gold reserves are now in the country, a figure set to rise to 1,700 tonnes by 2020. This, according to our recent calculations, meant that the Bundesbank repatriated roughly 200 tonnes of gold in 2016, comparable to the 210 tonnes its brought back to Frankfurt in 2015, and the total held domestically amounts to 1,600 tonnes at the end of 2016.
Fast forward to today, in a press release, the Bundesbank provided an official update of its gold holdings, and our analysis was accurate: the German central bank said it had “successfully continued its transfers of gold last year”, andin 2016, more than 216 tonnes of gold were transferred to Frankfurt am Main from storage locations abroad: 111 tonnes from New York and 105 tonnes from Paris.
This would make 2016 the year of fastest gold repatriation, with the 216 tons of gold transfered, higher than the previous record of 210 in 2015. Altogether, the Bundesbank, has now transfered a total of 583 tonnes, or 86% of the 674 tonnes planned in total.
Most importantly, as of December 31, the Bundesbank has now completed all of its scheduled gold withdrawals from the NY Fed, having repatriated a total of 300 tonnes, some 3 years ahead of schedule.
“The transfer of gold from New York was completed successfully last year,” said Carl-Ludwig Thiele, Member of the Bundesbank’s Executive Board. “The transfers were carried out without any disruptions or irregularities. The gold storage plan for New York, which envisaged the transfer of 300 tonnes of gold from New York to Frankfurt, was fully realised in 2016,” Mr Thiele stated.
The Bundesbank also said the repatriation of gold reserves back home was “considerably ahead of the origianal schedule” and as Thiele added “We will be able to complete the transfer of gold from Paris this year too.” Which considering there is only 91t of gold left in Paris, or less than Germany withdrew in 2015 and 2016, should be relatively easy.
In summary, as of the end of 2016, the Bundesbank had 47.9% of its gold in Frankfurt – just 2.1% shy of the the planned 50% – 36.6% at the Federal Reserve Bank of New York, 12.8% at the Bank of England in London, and 2.7% at the Banque de France in Paris.
Why this unexpected scramble to repatraite so much gold 3 years ahead of the 2020 stated schedule, remains a mystery.