Germany’s $599 Billion Gold Hoard Rekindles Debate Over Reserves and Risk

GFN – BERLIN:

Germany’s Bundesbank holds gold reserves valued at about $599 billion, including significant holdings stored in New York, a position that has drawn renewed political scrutiny as rising prices, geopolitical tension, and reserve concentration reshape debate over the role of gold in national balance sheets.

The Bundesbank controls roughly 3,350 metric tons of gold, the world’s second-largest national holding after the United States, with reserves valued at approximately €500 billion at current prices, equivalent to about 18% of Germany’s public debt, according to central bank data. About half of the gold is stored in Frankfurt, 12% in London, and the remainder, including roughly 1,236 tons, at the Federal Reserve Bank of New York, reflecting legacy arrangements dating back to the Bretton Woods era when New York and London functioned as primary gold trading hubs.

“I have no doubt that our gold at the New York Fed continues to be securely stored,” Bundesbank President Joachim Nagel said this week.

Calls from some opposition politicians and former Bundesbank officials to repatriate additional overseas holdings have followed concerns over geopolitical risk and institutional independence in the United States, though the central bank and Germany’s coalition government have said they see no need to alter current storage arrangements. Germany previously repatriated 300 tons of gold from New York between 2013 and 2017 after domestic pressure for greater transparency.

The sharp increase in gold prices over recent years has significantly strengthened the Bundesbank’s balance sheet, offsetting losses linked to asset purchases conducted under the European Central Bank’s quantitative easing programs. The Bundesbank has reported annual losses of around €20 billion in each of the past two years due to interest-rate mismatches, but gold revaluations lifted its net equity to more than €250 billion as of February 2025, according to its financial statements.

“Selling some of the gold gradually at high prices to reduce federal borrowing would make economic sense, but it would be politically dangerous,” Holger Schmieding, chief economist at Berenberg, said.

Germany’s gold holdings are rooted in postwar current account surpluses and have largely remained untouched apart from limited sales for coin minting. With gold now accounting for more than 80% of Germany’s official reserve assets, the debate highlights broader questions facing central banks about reserve composition, balance sheet resilience, and the role of gold in a shifting global monetary and geopolitical environment.

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