By Robert Lenzner, Forbes Staff The startling news that Germany is repatriating its gold reserves from the United States and France has got precious metals speculators worried that this is the first major sign that trust between central banks across the globe could be deteriorating. After all there is much anxiety in financial capitols about the future of the Euro as well as the feeling that the almost constant printing of new dollars to keep America running portends a terrible crisis down the road. And that crisis in the value of paper money makes physical possession of gold a no brainer. Gold, after all, has moved up every year for the last 5 years, from $900 an ounce to $1800 an ounce before slipping under $1700 an ounce. Germany has also reversed its 2011 policy of keeping gold abroad to ease the raising of foreign currency. Nativism and the uncertainty of Europe‘s monetary stability warranted getting the gold back. Still, the hobgoblins of internal finance can produce any nightmare they like. In what many may perceive as an emotional outburst, Tyler Durden, the outspoken, gutsy blogger from Zerohedge, called the German move “a momentous development, one which may signify that … the central banks don’t have faith in one another.” A rather strong statement in the light of German public opinion reckoning that the gold is much safer in the Bundesbank than at the New York Federal Reserve, where the vaults could become flooded by the next Sandy. You should know that the Germans felt their gold was safer in New York than in a place where it could be seized by the Soviet Union, if they had ever invaded. Still, it is momentous that the New York Fed has the largest known depositary of monetary gold– some 23% of the globe’s gold bars, including half the hoard of the Netherlands and considerable holdings from other nations. Germany will feel a lot more secure counting its own gold bards, rather than depending on an audit from the central banks of France and the U.S. Mark it down as the strongest European power flexing its perfect right– and setting off a wave of speculation. Are foreign gold reserves safe in New York– or could they be expropriated? Very doubtful. Could the the New York Fed be lending out gold bars as security for sovereign loans? I reckon that’s illegal. But, unless the US gets its fiscal ship in shape, there could very well be more repatriation of gold back to the homeland. Which would be at the very least another bruise for the psyche of the most powerful nation in the world. You should know that several gold hoarders I know own certificates from Swiss cantonal banks that can be converted into gold bards at any time– and any time has been the motivation for those private vaults in havens like Switzerland— just in case of a terrible emergency. “Never underestimate how far any government will go in time of crisis,” gold guru emailed me today. After all, the US outlawed ownership of gold for 40 years. Germany decided it was safer to secure its gold at home” rather than depend on unpleasant surprises down the road.
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