German gold

For decades around half of the German government's gold reserves - some $80 billion (62 billion euros) worth - has been stored in a vault deep below the US Federal Reserve building on Liberty Street in New York. Or at least that's what the US authorities have said. But those assurances aren't enough for some German politicians who are asking: how do we know our gold is really there?

Peter Gauweiler, a conservative politician from Bavaria, admitted he has a bee in his bonnet about Germany's gold reserves. In his office in the parliament in Berlin, he frets about the 1,500 tons of German gold officially held by the New York Federal Reserve.

"The German Central Bank is required to count and weigh the gold it holds every year. But our gold reserves that are kept in the US have not been weighed or counted once in three decades," Gauweiler told DW. "That is rather unsettling."

Gauweiler said he would like it repatriated and short of that, he has called for an audit of Germany's bullion held in the United States.

From the Cold War to the eurocrisis

The fact that Germany has so much of its gold reserves in the US is a legacy of the Cold War when West Germany was menaced by the Soviet Union's presence in the East of the country. To keep its gold well beyond Soviet reach, Germany lodged the bullion with the US Federal Reserve.

Jan Randolph of IHS Global Insight said this was also a token of trust, "Germany felt somehow, that this cemented that trust with its Western allies, while Western allied forces were on German soil warding off the Soviet threat."

Today, the Soviet threat is long gone. Now Germany faces an altogether different menace. The eurozone debt crisis has sparked angry protests in Greece, Spain and elsewhere. The pressure is on Germany to bail out its southern neighbors. And many Germans don't like it.

"I think there certainly is a sense of being besieged that Germany is just the paymaster and gets very little in return," said Gunnar Beck, a German-born lecturer at London University. He said, in this climate, Germans feel anxious about their national wealth. They want to be sure they can count on their gold.

"I think the euro crisis forms the background to what is a slight paranoia in Germany right now. The mood was not improved by reports that the New York Fed was refusing permission to German politicians to visit the gold, on grounds of security. But that's not the way all bullion companies work, said Adrian Ash, a gold analyst, at BullionVault.com, a company that holds some 30 tons of bullion for private investors.

"We send independent specialists, into the vault once a year, to conduct an audit, to do a tally count, to make sure the bars are in good order and so on," Ash said, adding that he thinks the New York Fed could do the same: "There's every reason to conduct an audit every so often".

A gentleman's agreement?

But the Bundesbank seems too embarrassed to request an audit; perhaps fearing that it might imply the US cannot be trusted. A Bundesbank official said, "These reserves are not stored with some 'dubious business partner' you know; but with highly respected central bankers in the United States." But Ash said perhaps the central banks should somehow adapt their old business practices to suit the modern world.

"The problem is down to the lack of transparency which the central banks being this small gentleman's club - and they are almost exclusively men - still have. They still operate under what seems a very old world, very Victorian. That was the peak of the gold standard internationally, [so they really have] a very Old World approach to things, of 'we trust each others world implacably,' and therefore nobody else's opinion or questions are of interest."

Return to Germany

Some Germans now say that given the uncertainty swirling around the euro, their gold reserves should be brought home and stored on German soil. That would be better for the nation's peace of mind. Beck added that this curious relic needs to be corrected:

"On the face of it it's a very unnatural state of affairs," he said. "If US citizens suddenly found that most of their gold was in Moscow or let's be more reasonable, in Paris, I'm not sure they'd regard that as very reassuring."

In a bid to assuage German anxieties, the Bundesbank is now reported to be considering a token repatriation of German gold. Plans are said to be afoot to bring back 150 tons of it from New York, but that's just 10 percent of the total held in New York.