– ‘Availability of gold strengthens public confidence in the central bank’s balance sheet’ say Bundesbank

– Bundesbank has Audited Reserves amounting to almost 3,400 tonnes, around 68% of Bundesbank’s reserve assets

– Bank taken series of steps to increase transparency around Germany’s gold holdings

– Germany has second largest gold holdings in the world; U.S. believed to be largest

– Transparency important and all central banks should follow the Bundesbank lead

Editor: Mark O’Byrne

GoldCore: Bundesbank Gold Reserves

Germany’s central bank serves as an example to central banks when it comes to respecting gold reserves and the public’s knowledge of them. The Bundesbank has worked incredibly hard in recent years to be transparent in regard to its gold bullion reserves.

The latest edition of Gold Investor from the World Gold Council has a very interesting article written by  Carl-Ludwig Thiele, Member of the executive board of the Bundesbank which we bring to you below. In it Thiele outlines the reasoning of the Bundesbank to be open and transparent about the 3,373.6 tonnes of gold that represents nearly 70% of the country’s reserves.

There are two significant lessons to be learnt here – one for central banks and one for individual investors. The first is, central banks should be aware of the benefits of gold and how transparency will boost the public’s confidence. The second is investors should understand why the Bundesbank is so interested in protecting its gold bullion.

Gold cannot be devalued as the euro, dollar, sterling and all fiat currencies are being and will be. It cannot be confiscated a la deposits in bank bail-ins and it is extremely difficult to confiscate gold coins and bars if owned in allocated and segregated storage in safe vaults in the safest jurisdictions in the world. It is a borderless money that acts as the ultimate reserve and safe haven in a diversified portfolio.

From Gold Investor:

At the Bundesbank, we are tasked with ensuring price stability and have a variety of monetary policy tools to deliver it. We do, however, have another vital tool at our disposal: our word. As an independent body, free from political influence we have gained public confidence and our word is implicitly trusted.

Confidence, once gained, is priceless. Just like a currency, this confidence must be continually reinforced, and the Bundesbank has always fought for just that – through words, argument and, increasingly, transparency, particularly in relation to our gold holdings.

Germany’s gold reserves were largely accumulated between the 1950s and the early 1970s, when the country experienced rapid economic growth and developed a substantial current account surplus. Initially, the gold remained in its original locations, stored in central banks around the world.

Today, our gold reserves are held in three locations: the Deutsche Bundesbank in Frankfurt am Main, the Federal Reserve Bank in New York and the Bank of England in London. The storage facilities at these sites satisfy a number of essential criteria, including cost efficiency, the ability to liquidate the reserves at short notice and security, which is particularly high at all three locations.

Transporting several hundred tonnes of gold is a complex task and the decision to proceed took careful thought. Following the financial and euro crisis, general awareness of gold as an investment has risen considerably. As a result, interest in the Bu