And finally…Bundesbank puts gold on show to prove it’s real

Germany’s central bank has opened a new exhibition that aims to lift the veil on the nation’s massive gold reserves, partly to reassure sceptics that the prized ingots are really there.

Europe’s top economy and export powerhouse has the world’s second-largest gold reserves after the United States, but for decades almost none of the roughly 3,400 tonnes of yellow metal, worth staggering 117 billion euros today, could be found on German soil.

To keep the gold safe from a possible Soviet invasion during the Cold War, as well as for other historical reasons, the bars were instead stored in the treasuries of central banks in New York, London and Paris.

But growing public pressure spurred the Bundesbank to bring half its reserves home, a feat it completed last year through a series of cloak-and-dagger shipments from the Federal Reserve, the Bank of England and the Banque de France.

The bullions are now kept under lock and key in a secret location in the bank’s basement in Frankfurt — except for the eight bars on display at its Money Museum as part of the exhibition “Gold. Treasures at the Deutsche Bundesbank”, which runs until September.

“We’re doing this to show citizens that the gold bars are here, to show transparency,” Bundesbank board member Carl-Ludwig Thiele told reporters, standing next to the gleaming 12-kilo (26-pound) bars in glass display cases.

“We want there to be trust in the Bundesbank central bank as an institution, and in the reserves of the Bundesbank. And you can only win trust through transparency.”

The bank has attributed its gold repatriation efforts largely to a changed geopolitical context but pressure from investors looking for details of the reserves as the sought a save haven in the wake of the recent eurozone crisis has also be attributed.

To Germans, whose national consciousness is still scarred by the hyperinflation of the Weimar Republic in the 1920s, the tangibility of gold is key to its enduring appeal and in 2013, the Bundesbank unveiled a plan to bring home half its 270,000 ingots.

Today, 1,710 tonnes of gold are kept in Frankfurt, with just over 1,200 tonnes remaining in New York and around 430 in London.

The Bundesbank last year brought back the last of its stash stored in Paris, saying that since both countries share the euro currency, having gold in French vaults would be of little use to Germany in a crisis when the metal would need to be quickly converted into liquidity.

But bank officials say keeping the rest of the German treasures overseas makes sense as the Fed is home to the number one reserve currency and London is the world’s leading gold trading centre.

Germany, which had no gold at all after World War II, accumulated its riches in the post-war years known as the “economic miracle”, when its exporting prowess saw it run up large trade surpluses with other nations.

Under the Bretton Woods system, which allowed countries to convert surpluses into gold at a fixed rate of $35 per ounce, it built up huge stockpiles of gold.

While gold today is no longer as vital to the financial system as it once was, it remains “an anchor of stability”, the ultimate safe harbour in uncertain times, the Bundesbank says.

The exhibition is currently being held at the Geldmuseum der Deutschen Bundesbank, Wilhelm-Epstein-Strasse, Frankfurt am Main and runs until September 30.