Why Are Countries Repatriating Their Gold From The US?

Many countries are asking for their gold back from the United States. Is this a symptom of a declining empire or merely a matter of convenience for those nations asking for their gold back?

The United States has held onto much of Europe’s gold since the post-World War II period due to perceived stability on the North American continent.

But in recent years some countries have asked for their gold back.

Last month, the largest monthly drawdown in 13 years in international gold reserves at the NY Fed likely meant gold was going to Germany.  Germany is receiving some of her gold back, and is expected to receive all of her gold back by 2020. On November 21 the Netherlands requested her gold back. Belgium, also, is investigating repatriating its gold reserves, as is France.

 

All of this amid attempts in Switzerland to have the central bank – the Swiss National Bank – hold gold in reserves.  According to Egon von Geyerz, founder and managing partner of GoldSwitzerland asset management company, a steady campaign went into undermining the gold referendum there.

 “What has happened in the last eight weeks, I would say is that the Swiss National Bank has conducted a very fierce anti-campaign and some members of the Swiss National Bank and the President Thomas Jordan has been in the media virtually every day in order to tell the people that this is very bad for the Swiss economy and it is bad for jobs, and therefore they should reject it.”

Why would the Swiss people, considering the gold standard of western economies in many minds, wish to hold gold in reserves? Switzerland has been one of the most vehement money printers on the planet. This graph shows the amount of printing done by the Swiss National Bank:

In 2011 the amount of Swiss francs in circulation went from around 75 billion to 250 billion. This undermines the value of the currency, causing goods and services increase in price.

As CNBC notes, the US has suffered much reputational damage after Germany, Netherlands, Belgium and potentially France have moved to repatriate their gold holdings. These moves also come as France, Russia, China, South Korea and other nations have made major moves towards a more multi-polar world not as dependent upon the US Dollar as the current world, in which basically all global trade is tied to the Dollar.

One main reason for so much skepticism in the viability of the US economy is how much debt the nation holds.

fredgraph

While much of the western world deleverages itself from the US economy, the economy in the US will likely succumb to increasing amounts of volatility. Ultimately, what the aforementioned nations are doing is insulating their economies from an impending depression in at least the US.

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