Germany Moving Its Gold Back Home To Satisfy The Paranoid

In this undated file picture publicly provided by German Central Bank, gold ingots, are stored at their headquarters in Frank
In this undated file picture publicly provided by German Central Bank, gold ingots, are stored at their headquarters in Frankfurt, Germany. A German newspaper reports the country's central bank will repatriate parts of its massive gold reserves worth about US $200 billion at current market rates from storage sites in the United States and in France. Daily Handelsblatt reported Tuesday Jan 15, 2013 the Bundesbank plans to bring back to Germany some of its 1,500 tons of gold stored with the Federal Reserve in New York, and all of the 450 tons currently with the Bank of France in Paris. (AP Photo/hopd/Deutsche Bundesbank)

Germany is about to spend the next several years shipping hundreds of tons of gold from New York and Paris to Frankfurt, to satisfy the paranoid.

Germany's Bundesbank on Wednesday announced it would move 647 tons of gold back to Frankfurt from central-bank vaults in the U.S. and France by 2020. By the end of this epically prolonged dare to Danny Ocean and Simon Gruber, half of Germany's gold will be held safely at home, up from just 31 percent now.

Why the heck would Germany do such a crazy thing, taking the risk that a ship full of gold ends up at the bottom of the Atlantic or in the hands of Auric Goldfinger?

The Bundesbank admits that part of its goal is "to build trust and confidence domestically." That's because Germany recently has been gripped by the sort of gold paranoia that also affects some Americans, including former Rep. Ron Paul (R-Texas), who last year managed to convince the Federal Reserve to drill holes in its gold to make sure it wasn't just so much spray-painted styrofoam. Paul claims he doesn't really think any of the Fed's gold is missing. But many of his fans do, because the Fed has just got to be up to something, right?

Germany's paranoia is maybe a little more understandable, given its history of hyperinflation and world wars and such. Since World War II, Germany has held most of its gold overseas to keep it out of the hands of the Rooskies and to make sure the country can quickly get its hands on cash if it needs to. Some of those rationales have faded. For example, now that France is on the euro, there's really no need for Germany to keep any gold there; Germany's not going to swap gold bars for francs any more. Meanwhile, Germany's Audit Court last year accused the country of being sloppy in keeping track of its gold.

Still, Germany's gold angst is not always rational. The Financial Times quotes Germany's version of Ron Paul, a dude named Rolf Baron von Hohenhau, president of the Bavarian Taxpayers’ Association, asking "We need to know if it’s really gold or is it something covered with gold?"



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