Last year, Ron Paul was ridiculed for wanting the U.S. to conduct an audit of the gold reserves at Fort Knox, the New York Federal Reserve Bank, and other locations. The foregoing story related:
Paul called a congressional hearing Thursday to grill federal officials about his bill to audit and inventory all of the gold reserves at Fort Knox, Ky., West Point, N.Y., and Denver, even though Treasury officials insist that the gold is audited annually and is all there.Well, Paul isn't alone in his questioning the handling of gold at the Federal Reserve bank in New York. Spiegel Online reports:
During the hearing, Paul suggested that the Federal Reserve of New York, which has 5% of the U.S. gold reserves, has the ability to secretly sell or swap gold with other countries without anyone knowing.
"The Fed is pretty secret, you know," said Paul, who leans Libertarian. "Congress doesn't have much say on what's going on over there. They do a lot of hiding."
Germany has gold reserves of just under 3,400 tons, the second-largest reserves in the world after the United States. Much of that is in the safekeeping of central banks outside Germany, especially in the US Federal Reserve in New York. One would think that with such a valuable stash, worth around €133 billion ($170 billion), the German government would want to keep a close eye on its whereabouts. But now a bizarre dispute has broken out between different German institutions over how closely the reserves should be checked.
Germany's federal audit office, the Bundesrechnungshof, which monitors the German government's financial management, is unhappy with how Germany's central bank, the Bundesbank, keeps tabs on its gold. According to media reports, the auditors are dissatisfied with the fact that gold reserves in Frankfurt are more closely monitored than those held abroad.
In Germany, spot checks are carried out to make sure that the gold bars are in the right place. But for the German gold that is stored on the Bundesbank's behalf by the US Federal Reserve in New York, the Bank of England in London and the Banque de France in France, the German central bank relies on the assurances of its foreign counterparts that the gold is where it should be. The three foreign central banks give the Bundesbank annual statements confirming the size of the reserves, but the Germans do not usually carry out physical inspections of the bars.
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In times of uncertainty about the future of Europe's common currency, gold is a hot topic, and some Germans take a dim view of the fact that much of the country's gold -- which theoretically belongs to the people -- is held abroad. Some members of parliament have even expressed doubts as to whether the foreign gold reserves really exist. Philipp Missfelder, a member of the conservative Christian Democratic Union (CDU), wanted to see the gold for himself and traveled to New York in person to inspect the holdings, according to the newspaper Frankfurter Rundschau. His trip was apparently unsuccessful, though. When he visited the Fed's safes in New York, staff were either unable or unwilling to show him exactly which bars belonged to Germany.
Peter Gauweiler, a Bundestag member with the CDU's Bavarian sister party, the Christian Social Union (CSU), is also skeptical about the foreign gold reserves. In recent years he has attempted to gain more information about Germany's gold through parliamentary questions. Last year, he had an economics professor prepare an expert report on the subject, which concluded that the Bundesbank was not fulfilling its inventory regulations by failing to physically inspect the gold.
In July 2011, SPIEGEL reported that Bundesbank employees had physically seen the gold in New York within the previous six months. However, the last time it had been checked before that was in June 2007.
Gauweiler doubts that the Bundesbank would have immediate access to all its gold if necessary, suggesting that part of the gold may have even been lent out -- a claim that the Bundesbank rejects.