In the world of central banking, “hope for the best, prepare for the worst” is a guiding mantra. This philosophy is now driving a serious discussion in Germany about whether its gold is truly safe in the United States. Analysts are increasingly focused on “tail-risk” scenarios where political instability in the U.S. could lead to a freeze on foreign-owned assets.
The assets at risk are substantial: 1,236 tonnes of gold worth approximately €164 billion. While the U.S. has historically been a reliable partner, the current climate of political polarization has introduced new variables. This has led many to conclude that the only way to eliminate “custodian risk” is to move the gold back to Frankfurt.
Emanuel Mönch, a prominent voice in this discussion, warns that international law is only as strong as the willingness of nations to follow it. He suggests that in a true global crisis, physical possession of gold is the only guarantee of ownership. For Mönch, bringing the reserves home is a necessary step in “stress-testing” Germany’s financial resilience.
This “prepper” mentality is gaining ground in mainstream financial circles. Experts point to historical precedents where nations have had difficulty accessing assets held abroad during diplomatic disputes. They argue that Germany, with its €450 billion in gold, cannot afford to be caught off guard by a sudden shift in American foreign policy.
The German government, however, insists that its current strategy is already robust. Officials point to the fact that their gold is distributed across several global hubs, which they see as a form of diversification. They argue that putting all the “eggs in one basket” in Frankfurt could create its own set of security risks, preferring to stick with the current international model.