Germany's Gold Repatriation Unlikely To Assuage Public Concerns

Silver is trading at $31.53/oz, €23.68/oz and £19.75/oz. Platinum is trading at $1,687.50/oz, palladium at $725.00/oz and rhodium at $1,125/oz.

Cross Currency Table – (Bloomberg)

Gold inched up $1.00 or 0.06% in New York yesterday and closed at $1,679.90/oz. Silver rose to $31.46 in Asia before it dropped off to $31.07 in London, but it then climbed to as high as $31.551 in New York and finished with a gain of 0.25%.

Gold held firm on Thursday, as investors weighed concern about slowing global economic growth and expectations for more stimulus measures. 

Platinum supply shortages in South Africa limited its 7 day rally.

Thomson Reuters GEMS reported that gold investment favoured by negative real interest rates and debt concerns, is expected to drive prices to a record average high in 2013.

Although the U.S. Fed minutes earlier in the month stirred concerns about tightening monetary policy, the U.S. debt ceiling issue still looms and without an agreement the U.S. government will run out of money by mid February.

The Bundesbank announced yesterday that they will repatriate 674 metric tons of their total 3,391 metric ton gold reserves from vaults in Paris and New York to restore public confidence in the safety of Germany’s gold reserves.

IMF Germany Total Reserves Minus Gold in Millions of USD 

Whether the repatriation of only some 20% of Germany's gold reserves from the Federal Reserve Bank of New York and the Banque of Paris back to Frankfurt manages to allay German concerns remains in question. 

Especially given that the transfer from the Federal Reserve is set to take place slowly over a seven year period and will only be completed in 2020.

The German Precious Metals Association and Germany's ‘Repatriate Our Gold’ campaign said that the move by the Bundesbank did not negate the need for a full audit of Germany's gold. 

They want this to take place in order to protect against impairment of the gold reserves through leases and swaps. Indeed, they have called for independent, full, neutral and physical audits of the gold reserves of the world's central banks and the repatriation of all central bank gold - the physical transport of gold reserves back into the respective sovereign ownership countries.

It seems likely that we may only have seen another important milestone in the debate about German and global gold reserves.

Mohamed El_Erian of PIMCO in an op-ed piece in the Financial Times said that the German gold move should have “minimum systemic impact”. 

But he acknowledged the risk that this could be wrong and the decision could “fuel greater suspicion” which could result in a “hit to what remains in multilateral policy cooperation would be problematic for virtually everybody.”

He warned that “growing mutual mistrusts” could  “translate into larger multilateral tensions, then the world would find itself facing even greater difficulties resolving payments imbalances and resisting beggar-thy-neighbor national policies.”

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NEWSGermany creates pile of golden opportunities – The Financial Times

Germany's Bundesbank brings gold reserves home - Reuters

Bundesbank to Repatriate 674 Tons of Gold to Germany by 2020 - Bloomberg

Germany Repatriates Gold Reserves – The Wall Street Journal

Platinum up for 7th day as South Africa crisis stirs supply fears - Reuters

Concern in Dublin: Six tonnes of Irish gold in Bank of England – The Australian

COMMENTARYBundesbank Weighs Bullion Against Public Pressure – The Financial Times

The Meaning of Germany’s Gold Decision - The Financial Times

Gold Price On Rise: How To Invest In Bullion – The Telegraph

Germany Is Taking Back Its Gold – Business Insider