Repatriate the gold': German economists advise withdrawal from US vaults

Posted by vinni2 12 hours ago

Comments

Comment by causalscience 12 hours ago

Wait, I've watched this episode before. The US owed France large amount of gold (the legal mechanism for this was called "the dollar"). France asked to redeem their dollars for gold, and the US said "nah, we're keeping it, enjoy your dollars".

https://en.wikipedia.org/wiki/Nixon_shock#American_policy_re...

Comment by hliyan 11 hours ago

That was the end of the US dollar convertibility to gold. This, unless I'm mistaken is actual French property held in US vaults.

Comment by dtech 11 hours ago

The fear in non-US nations is that the US will not respect the agreements and refuse to hand over the gold if requested. Given all the Trump admin is doing, I don't think it's unjustified

Comment by cap11235 10 hours ago

Or given every past refusal. Trump's a next level on top of that. A nice layer of shit icing

Comment by sph 10 hours ago

Tangentially related to the above Wikipedia article: https://wtfhappenedin1971.com/

Comment by drumhead 12 hours ago

Or move it to Canada. One of the advantages of the US was that it was far from Europe and safe in case of invasion or war. The US clearly cant be trusted anymore , but Canada can, and it also across the atlantic.

Comment by expedition32 11 hours ago

The Netherlands has spread it's gold in London, Canada and New York.

This policy came from the late 1930s when secretly the government knew that Germany was likely going to invade.

Comment by maxilevi 12 hours ago

Canada wouldn't be able to defend from an invasion

Comment by gucci-on-fleek 11 hours ago

An invasion from who? I agree with you that Canada couldn't defend against an invasion from the US, but I also don't think that any country without nuclear weapons could defend against an invasion from the US. But I think that Canada could probably defend itself from an invasion from most other countries—the Canadian military is generally competent, and NATO and NORAD would almost certainly offer assistance.

Even then, who would want to invade Canada? Despite the recent political blustering, it seems incredibly unlikely that the US would invade Canada, and the only other plausible invader that I can think of right now is Russia, but their military isn't doing very well at all right now.

Comment by toyg 11 hours ago

If the threat model is "the US goes rogue and does crazy stuff", Canada is a prime risk of suffering from such madness, so moving your resources there doesn't really change anything.

Comment by gucci-on-fleek 11 hours ago

Agreed, but I'd argue that there's a big difference between the US making it difficult to access gold reserves stored there and invading/blockading Canada to the point where gold reserves stored there are unusable. The first seems unlikely but possible, while the second seems almost unimaginable, and even if the second does happen, I'd be more concerned about access to food/medicine than access to gold reserves.

(Although I'm Canadian, so this may perhaps just be wishful thinking on my part)

Comment by Hikikomori 12 hours ago

And dont give trump any more reasons.

Comment by mariusor 8 hours ago

I can imagine the next big budget heist movie being written about this as we speak.

An armada of ships traversing the Atlantic with 1K tonnes of gold being waylaid in the middle of the ocean by a huge storm when unidentified submarines bore a hole in the cargo ship and make off with the gold: Oceans 15.

Comment by evanjrowley 11 hours ago

Comment by rwmj 11 hours ago

Is there any point to a country having gold reserves? What is it being kept for? (Genuine questions, looking for factual answers)

Comment by cdecker 11 hours ago

Stores of value are, for the most part, societal constructs. Anything has value as long as there is somebody willing to exchange something of theirs for it. That's also what makes value intangible as there is a built-in subjectivity in this.

Gold falls into the category "has always had value, so it will always have value" type of thoughts. And that's just what gives it value, out confidence that we can exchange it for something when you need it.

Comment by dtech 11 hours ago

It's almost the definition of a store of value. If it was actually useful it's called a strategic reserve, like for oil.

Comment by eesmith 10 hours ago

https://en.wikipedia.org/wiki/Strategic_reserve

> A strategic reserve can be ... A commodity, such as intervention stocks of food or petrol ...

> Examples of commodity reserves: Global strategic petroleum reserves ... Gold reserve

Comment by AnonHP 8 hours ago

Gold has a few properties: one is that it has had value through history and another is that it’s a physical asset, and because of these two properties, it’s quite liquid. It’s also a metal that doesn’t naturally corrode.

Central banks of countries hold various kinds of assets, including bonds and currencies of other countries. But bonds and currencies are just “paper”…or are more vulnerable than gold to shocks in certain conditions.

The disadvantage of physical gold is that it doesn’t generate any income by itself, as compared to bonds.

During times of higher uncertainty, people and institutions (including central banks) flock to gold.

Comment by arter45 11 hours ago

Central banks do a lot of things, including buying and selling currency with foreign partners. If you’re trading using weak or unstable currencies, gold may be a useful alternative.

Comment by evolve2k 11 hours ago

Intangible financial systems rest (simplistically speaking) on fundamental concepts of trust and reliability (aka what I expect to happen will happen).

Once these factors start to breakdown, all these intangible forms of holding wealth loose value. Gold remains as a significant reliable long term store of value.

Hence it’s worth maintaining by a nation.

Comment by toyg 11 hours ago

It can be used as a collateral for loans, last resort for currency buybacks, emergency resource in times of war... Mostly it's a reputational tool to inspire faith in the country's creditworthiness.

Comment by LunaSea 11 hours ago

Ask Russia, they are making bank on it. Especially with the rubble not being worth much.

Comment by rwmj 10 hours ago

Are they? I would have thought that Russia's oil exports to countries that are ignoring/bypassing sanctions are far more valuable to them.

Comment by LunaSea 7 hours ago

Of course, but the price increase of gold made their reserves that much more valuable. The worth of their gold reserves increased by 200B since 2022.

Comment by GuestFAUniverse 11 hours ago

Sell. It's the cheapest option vs. moving (high risk). $164 billions would make a nice investment into infrastructure without touching their "Sondervermögen".

Comment by toyg 11 hours ago

Selling that amount of gold would crash the price, devaluing their other reserves too.

What they have to do is move, but quietly, without announcing it.

Comment by GuestFAUniverse 10 hours ago

Not all at once, obviously.

Comment by youngtaff 11 hours ago

Gold is moved around the world all the time

Comment by GuestFAUniverse 10 hours ago

Yet it's costly -- albeit they might get special conditions.

I hold Xetra Gold (tax free gains after 12mon). Some argue it's safe, because it can be delivered to the relationship bank: it's not really, it's uneconomical, at least for average Joe (~3% up to ~20% of value, heavily depending on denomination).