Gold Bullion
Gold bullion. Reuters

German gold held by the U.S. Federal Reserve in New York and in Paris is slowly but surely returning home, said a German central bank official in a Tuesday update in New York.

Germany’s gold repatriation program, whereby the nation’s central bank is recalling 674 metric tons from vaults in New York and Paris, is progressing slowly. About 69 tons have returned to Frankfurt so far.

“We have a very great deal of confidence in the security of our gold holdings abroad, so there’s no reason for us to rush through this relocation process,” said Henner Asche, the German Bundesbank’s deputy head of markets, at a New York gathering.

The German central bank is working closely with its French and U.S. counterparts and the Bank of International Settlements to transfer the gold, taking painstaking security and confidentiality measures. Citing security concerns, Asche declined to provide any details on the specifics of the shipments.

Complete relocation of all German gold held abroad isn’t desirable, said Asche, because international finance centers like New York and London provide the best liquidity, in case the Bundesbank decides to exchange gold for cash or other foreign currency.

Frankfurt’s share of Germany’s gold will rise to 50 percent by 2020, as Paris’ share is cut to zero and New York’s share falls to 37 percent. German gold held in London will remain unchanged. Germany held 3,387 tons of gold, or 67 percent of its total reserves, the second highest in the world after the U.S. by tonnage, according to World Gold Council data.

Some gold bars were melted down in Europe to meet the London Good Delivery standard for bars, said Asche.

Though the scheme was first announced in January 2013, that remelting could have contributed to delays before the first shipments started in the fall of 2013, according to George Milling-Stanley, a consultant to central banks on gold buying.

Germany requested a phased delivery over seven years, with each shipment kept small and with no more than one ton in any single delivery, he told IBTimes. “Insurers will cover only deliveries by air, and will not insure shipments of more than one ton at a time,” he said, citing publicly available sources.

A ton of gold is worth $42.2 million at Wednesday’s price of $1312 per ounce. New York’s delivered shipment alone of 37 tons is valued at about 11.9 billion euros ($16.5 billion), on the central bank’s accounting.

India and Sweden are two countries that have pledged gold abroad as collateral for urgent government loans, added Milling-Stanley. He underscored the importance of keeping some gold abroad for liquidity reasons.

About eight standard U.S. 18-wheeler trucks would be required to carry 300 metric tons of gold, the amount of gold Germany is claiming back from the Fed, estimated Anthem Blanchard, CEO of precious metals seller Anthem Vault.

The Bundesbank’s gold management received a favorable audit in 2012 by a German federal court of auditors, added Asche.

The decision to bring Germany’s gold back home wasn’t prompted by political pressure or the court’s audit, but was made independently by the central bank, said Asche.

“In Germany, a lot of emotion is attached to the topic of gold reserves,” said Asche at Bloomberg LP’s headquarters. “The German public in general appreciates the Bundesbank’s gold holdings as national wealth.”