Repatriate the gold': German economists advise withdrawal from US vaults
Trust in US Custody
- Many argue the core issue is trust: fear that the US might freeze, refuse, or politicize access to foreign gold in its vaults, especially under an erratic administration.
- Some see this as consistent with a long pattern of the US breaking financial commitments; others stress that outright confiscation would be equivalent to default and catastrophically damage US credit and dollar hegemony.
- A minority thinks confiscation or refusal is unlikely but note that even a small probability creates dangerous bargaining leverage.
Alternatives: Where to Store or What to Do
- Suggestions include Canada, London, Switzerland, or full repatriation to Germany.
- Canada is debated: militarily vulnerable to the US and tightly linked geopolitically, but seen by some as less likely to itself weaponize custody.
- Several propose “sell and rebuy at home”: quietly sell gold in the US, buy in Europe, or just liquidate and invest in infrastructure. Others counter that dumping such volume would depress prices and hurt remaining reserves.
- Practical concerns: storage infrastructure, transport cost/risks, and the fact that past repatriations (Germany, Netherlands, others) were done slowly and discreetly.
What’s the Point of Gold Reserves?
- Explanations offered:
- Long-term store of value when financial trust breaks down.
- Collateral for loans, currency defense, and emergency use in crises or war.
- Reputation signal of solvency and creditworthiness.
- Critics highlight opportunity cost: hundreds of billions tied up in a non‑yielding asset that no longer formally backs the currency.
- Russia is cited as benefitting from gold appreciation post‑sanctions.
Historical and Systemic Context
- Intense discussion of the Nixon shock/Bretton Woods: some frame it as the US “cheating” by printing more dollar IOUs than its gold; others say the system had become unsustainable and was ended with allied involvement.
- Several see gold repatriation as part of a broader “de-risking” from US dominance and dollar “exorbitant privilege,” potentially signaling slow imperial decline.
- NATO and security dependence on the US are questioned; some Europeans conclude that relying on US defense and financial infrastructure has become strategically dangerous.