Where Would A Country Like Germany Stock Up Its Gold

Where would a country like Germany stock up its gold? The answer would be obvious right? Of course within the geographic domains of the country! In all likelihood, the gold would be lying safely in a heavily guarded vault, somewhere in Frankfurt. This, however, is far from reality! You would be surprised to learn that the gold reserves of Germany, which is the second largest in the world, are held by Paris, New York and London. It is only now that a campaign for bringing all the reserves back to the country has been mobilized and is gathering steam with every passing day.

A phenomenon such as this speaks of three distinct facts about the world monetary system. And none of them is particularly encouraging.

To begin with, it appears that the current generation of Germans is a more aggressive lot with a strong orientation towards their national interests, quite unlike their forefathers. Over the last half a century, the Germans have been interested in establishing themselves as citizens of the world. Their war associated guilt has pushed them to sign up for almost every international body that has been formed before and since. It is only now that they have become more conscious of their identity as German citizens. And, therefore, are deriving motivation to stand up for their national rights.

Also, there is a lack of trust in financial institutions, which has been weakening over time. The central banks had developed a mechanism of ledger balances so that gold could be transferred through ledgers. Physical transfer of gold was near impossible, owing to the grave security threats. Hence, ledger transfers were preferred.

As a result, storing German gold in other countries somehow made sense. However, people are no longer willing to trust such systems. They are unhappy with assets that are simply present in the form of recordings on balance sheets. Instead, they would be more inclined on something that can be touched and felt. And, the same does not hold well for gold reserves alone, but also for all forms of physical assets.

Finally, there is a total aversion for single currency among the Germans. And the resentment continues to rise with every passing month. Basically, the vault of gold they are aspiring to bring back to their central bank would be used for none other than developing a new currency. So, this entire struggle to bring back the gold is actually for creating a bankable currency!

The popular belief is that Germany is already looking to escape the responsibilities of bailing out failed economies of the Euro Zone. And the campaign in Germany is just the beginning of the long road of struggles likely to stem from more nations in a bid to bring back national monetary reserves in physical form.