[By Observer.com Wang Yi] Can the US still be trusted to keep other countries' gold?

British Financial Times reported on June 23 that due to US President Trump's continuous attacks on the Federal Reserve and increasing geopolitical tensions, the idea of moving gold reserves back to their home countries is gaining more support among European countries such as Germany and Italy.

German left-wing politician Fabio De Masi told the newspaper that during times of turmoil, there are "sufficient reasons" to transfer more gold to Europe or Germany.

Italian economic commentator Enrico Grazzini also wrote in a local newspaper that it is very dangerous for national interests to leave 43% of Italy's gold reserves in an unreliable Trump administration.

Data from the World Gold Council shows that Germany and Italy are the second and third largest holders of gold reserves globally, with 3,352 tons and 2,452 tons of gold respectively. Both countries rely on the New York Federal Reserve Bank as a custodian, with more than one-third of their gold bars stored in the US. The Financial Times calculated that the value of gold held by Germany and Italy in the US exceeds $245 billion.

The country where Germany's gold reserves are kept The Financial Times

Gold reserves are an important part of a nation's wealth and financial security, typically considered a safe-haven asset used as a hedge against inflation and currency fluctuations. Now, with Trump repeatedly threatening the Federal Reserve publicly, saying he might have to "force certain things to happen" if it does not cut interest rates, plus his unpredictable tariffs and trade policies, politicians and analysts in some European countries and regions increasingly believe that gold reserves should remain within their own countries.

"We need to address the question of whether keeping gold abroad has become safer and more stable over the past decade," said former German Christian Social Union MP Peter Gauweiler. "The answer is obvious," because geopolitical risks are making the world more insecure, and the German central bank, the Bundesbank, must "never take shortcuts" in protecting the country's gold reserves.

The European Taxpayers' Association has written to the finance ministries and central banks of Germany and Italy, urging policymakers to reconsider their reliance on the Federal Reserve as a custodian of their gold.

The association's chairman Michael Jäger stated outright, "We are deeply concerned about Trump's interference in the independence of the Federal Reserve," and "our recommendation is to move (Germany and Italy's) gold back to Europe to ensure that the European Central Bank has absolute control at any time."

Last week, the Financial Times surveyed over 70 central banks around the world and found that more central banks are considering storing gold domestically because they are worried about being unable to access their gold reserves in times of crisis.

According to a梳理 by the US Newsweek, the US is the largest holder of gold reserves globally and also stores some of the gold reserves of countries like Italy and Lebanon. Countries such as China, France, and Russia have most of their gold reserves within their own borders.

Global central bank gold reserves The Financial Times map

The practice of the European Central Bank relying on the Federal Reserve as a gold custodian has long been a point of contention. During the two decades of post-war economic prosperity, Western European countries accumulated large amounts of gold reserves through massive trade surpluses with the US. Before 1971, under the Bretton Woods fixed exchange rate system, dollars could be exchanged for gold by the US central bank.

In the mid-1960s, when French President de Gaulle lost confidence in the Bretton Woods system, he moved most of France's gold reserves back to Paris.

In Germany, a grassroots movement that began in 2010 changed the strategy of the German central bank. In 2013, the German central bank decided to store half of its reserves domestically, and through a high-security operation costing 7 million euros, transferred 674 tons of gold bars from Paris and New York to its Frankfurt headquarters. Currently, the German central bank still keeps 37% of its gold reserves in New York.

Peter Boehringer, a precious metals expert and former member of the far-right German Alternative Party who initiated the movement initially, said, "At first, we were accused of spreading conspiracy theories," "Gold is the last resort of central banks, so it needs to be stored without third-party risks."

In 2019, Meloni's Brothers of Italy party was still the opposition in Italy and lobbied for moving gold reserves back to the country. Meloni also promised that if her party came to power, she would bring Italy's gold home. However, since becoming Prime Minister in 2022, Meloni has remained silent on this issue. The Financial Times analysis pointed out that Meloni wants to maintain friendly relations with Trump while avoiding the threat of intensified trade wars.

Bert Flossbach, an investor in Germany and co-founder of the country's largest independent asset management company, Flossbach von Storch, pointed out, "Publicly moving gold back now would send a signal that relations with the US are deteriorating."

Evidently, Germany and Italy are not yet ready to do so. The Bundesbank stated in a statement that it regularly evaluates the locations of its gold reserves to "ensure that gold can be sold or converted into foreign currency when needed." The bank emphasized that the US remains an "important storage location" for Germany's gold, "we believe the New York Federal Reserve Bank is a reliable partner for the secure storage of our gold reserves."

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