Germany and Italy Want Their Gold Stored In The USA Returned

By Rhod Mackenzie

Germany and Italy, two G7  European countries which store a significant proportion of their gold reserves in the United States, have been urged by people in the country to bring their bullion back home. But is this possible, and what would the consequences be for the US and the global economy?
The Financial Times writes that calls to retrieve the funds are becoming more frequent amid US President Donald Trump's attacks on the US Federal Reserve and increasing geopolitical turbulence. Trump has previously called Fed Chairman Jerome Powell a fool and discussed his resignation. However, if this were to happen, a change in the Fed chairman would reduce confidence in US monetary policy and have potentially negative consequences.
'The market value of the European gold stored in the United States is more than $245 billion,' the article states. The European Taxpayers Association is particularly concerned and has written to the German and Italian central banks and finance ministries, asking them to reconsider their gold storage policies.
     According to the World Gold Council, Germany and Italy hold the second- and third-largest gold reserves in the world after the United States, with 3,352 and 2,452 tonnes, respectively. In total, almost six thousand tons of gold are stored in American vaults. Both countries store more than a third of their bullion in the United States.
This order had been in place since the Second World War, when many countries sent brought their money and national artefacts to the United States for safekeeping obviously though not Germany. 

However After the war it became a habit. Germany, having lost the war, was afraid that the Soviet Union would invade and steal its gold reserves. Some countries, such as Belgium, did not have a suitable place to store their reserves. Others, such as India, which had just gained independence from British colonial rule, could not afford to build a suitable storage facility. Some countries  like Lebanon, were afraid to keep their gold at home because of political instability.
So For different reasons, each country chose the world's most secure storage facility at one time or another.
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In the United States, gold is stored in Fort Knox, a symbol of absolute security. This carefully guarded facility was built in 1936, three years after President Franklin Roosevelt issued an executive order requiring Americans to hand over their gold (in the form of bars and coins) in exchange for paper money.
According to 2023 data, the United States held approximately $429 billion in its own gold and $228 billion in gold from other countries. Americans hold more than 40% of the gold from the 25 countries with the largest reserves," said Vladimir Lyubetsky, an associate professor in the Department of National Economics at the Presidential Academy.
However, in recent decades, some European countries have begun discussing the need to repatriate their gold reserves. The last audit of Fort Knox was conducted in 1974. Since then, the doors have not been opened publicly, and doubts have arisen: is it empty behind these doors And if there are bars, are they real? These questions have gone unanswered for more than half a century, and conspiracy theorists continue to speculate.
Trump's policies have added fuel to the fire: open declarations of isolationist slogans; a refusal to support Western allies; inconsistency; and outrageous statements. Coupled with the global increase in geopolitical tension, all of this is forcing Europeans to consider whether it would be better to keep their gold reserves back in their own countries.
'In the context of trade deglobalisation and the increased risk of national assets being blocked after 2022 like what happened with Russia's assets, the desire of states to strengthen their financial sovereignty is understandable. However, desire may diverge from capabilities,' said Alexander Bakhtin, investment strategist at Garda Capital.
Firstly, transporting gold across the ocean is unsafe and expensive. It requires serious procedural approvals. 'In addition, exporting gold from New York, one of the world's largest gold trading hubs, will technically complicate potential transactions with sovereign gold assets and make them more expensive,' says Elena Voronkova, Associate Professor in the Department of Public and Municipal Finance at Plekhanov Russian University of Economics.
Secondly, we must not forget the political aspect. The Western financial system is already experiencing difficulties. The large-scale export of gold by ship or plane would suggest that the world is losing confidence in the Western economy and the values of the global financial order.
Therefore, experts doubt that Germany and Italy will be able to simply take their gold from the United States. 'Political pressure will be exerted on these countries because the Americans are clearly not interested in anybody attempting to undermine confidence in their economy however justftified.
They will do everything possible to prevent European countries from taking their reserves,' says Maxim Chirkov, Associate Professor in the Department of Economic Policy and Economic Measurements at the Institute of Economics and Finance at the State University of Management.
Moreover, Germany and Italy hold more than half of the gold reserves, enabling the countries to maintain their financial sovereignty. In other words, they will definitely not be left penniless. Despite all the twists and turns, the US remains the leading world power, and its strategic ally is the EU. No matter how far Trump goes along the rails of isolationism, Lyubetsky is sure that an irreversible political break with Europe should not be expected.
However, if this were to happen, the impact on gold prices and the global dollar itself would be limited. These are global exchange instruments, and their prices are shaped by factors such as the protective function in the context of international escalation, global inflation trends and the monetary cycles of leading central banks. Bakhtin believes that a change in the location of the precious metal itself certainly does not influence them.
Of course, the US has long been considered to be the safest place to store foreign gold if you are friendly or subservient to the USA . There are historical, geographical, political and economic reasons for this. However, the fact that gold gold from Russia and other assets have been siezed and not returned  have made investors around the world even more distrustful of investing in certain Western countries.
If the gold repartriation does happen then It will become clear to everyone that the West is not united, and that the contradictions between countries, multiplied by mutual distrust, are growing stronger. Goodbye to the image of a quiet harbour in a raging sea of political and economic passions. Where this will lead, we can only guess.