Bundesbank to Recall 30-50 Tons of Gold From New York in ’14

Jan 20, 2014 10:16 am ET

(Updates with Bundesbank board member comment in third paragraph, bar remelting in fifth.)

Jan. 20 (Bloomberg) -- The Bundesbank plans to repatriate 30 to 50 metric tons of gold stored in New York this year under a plan to ship home half of its bullion reserves held abroad.

The central bank transferred 32 tons of gold from Paris and five tons from New York last year, according to a Bundesbank spokesman. The bank expects to repatriate the reserves at a pace of about 50 tons a year, he said.

“The organizational preparations were very time-consuming, as the necessary arrangements and contracts are substantial and detailed,” Bundesbank board member Carl-Ludwig Thiele said today in a statement.

The Bundesbank said a year ago it will repatriate 674 tons of gold from vaults in Paris and New York by 2020 to restore public confidence in the security of Germany’s reserves. The stockpile is worth $27.2 billion in current prices, from $36 billion a year ago, after gold had its worst year since 1981.

The Bundesbank said in its statement today that it remelt some gold bars after returning them to Germany to ensure they met the London good delivery standard. The remelting process was audited independently to make sure that German gold wasn’t mixed with other countries’ reserves.

“Comments made by the Bundesbank make it clear that it has a very great deal of confidence in the security of its gold holdings abroad,” said David Jollie, an analyst at Mitsui & Co. Precious Metals Inc. in London. Given this level of confidence, “there is little reason for it to rush through this process, particularly as physically shipping metal will incur some costs for the Bundesbank.”

Federal Reserve

The central bank will bring home all 374 tons of its gold held at the Banque de France and a further 300 tons from the New York Federal Reserve, with holdings at the Bank of England unchanged, it said last year. It needs to repatriate about 91 tons a year to meet its target by 2020, Bloomberg calculations show.

German gold reserves, the second-largest in the world after those of the U.S., amounted to 3,387.1 tons as of Nov. 30, according to World Gold Council data. Germany’s Audit Court sparked a debate about the country’s gold reserves in 2012 when it called on the Bundesbank to take stock of its holdings abroad, saying their existence had never been verified.

--Editors: John Deane, Claudia Carpenter