Economics Minister Philipp Rösler firmly ruled out digging into the country's reserves to help rescue the euro.
"German gold reserves must remain untouchable. I say this explicitly as Economics Minister, as representative of the Chancellor and as party chairman of the Free Democrats," he said on Monday on ARD television.
On Tuesday, the daily Financial Times Deutschland examined the speculation on where Germany's horde of gold is being kept. The country's estimated 3,401 tonnes is the second largest national reserves after that of the United States.
Much of Germany's gold would appear to be still in America, where it was held during the Cold War to ensure it never would fall prey to invading Soviet forces.
Although the Second World War had left Germany in ruins, the economic miracle of the 1950s which was largely based on exports, quickly built up enormous gold reserves. By 1968 Germany had 4,000 tonnes, the most it has ever held, the paper said.
Yet most of this was never moved to German soil – such a transport would be a logistical nightmare to organize, while insurance cover would be impossible to get. The gold changed hands on the trading floors of New York, London and Paris, while the metal bars themselves never moved.
West Germany's financial centre Frankfurt, the home of the mighty Bundesbank, was in any case not considered safe enough – it was only an hour's car drive from the Fulda Gap – the crucial weak spot in the German-German border where NATO planners feared an invasion by the Red Army could take place.
Former Bundesbank chairman Hans-Helmut Kotz told Stern magazine in 2004, “The largest share of our gold reserves are held in the Federal Reserve Bank, the Bank of England and the Banque de France. In that order.” His successors have never offered so much detail.
Even a written parliamentary question last November could not evince further information – only that the Bundesbank does have the gold in physical form, not in the form of delivery promises.
Rumours abound that the Federal Reserve lends the gold in order to earn interest, allowing banks to keep the gold price artificially low by short selling it on the market – something which the FTD said would profit many actors apart from gold owners and mine operators. Even though the central banks' own gold reserves would be worth less in such a case, they would benefit from the stability indicated by a low gold price.
But as the FTD said on Tuesday, either the Bundesbank is lying or this theory of the gold price being depressed in this way does not fly – the paper was told by the Bundesbank that, “at the moment no gold is on loan.”
Critics suggested the storage of Germany's gold in the United States was – and remains – a kind of political deposit, to ensure that West Germany remained tightly bound to the West.
This was disputed by the Bundesbank, whose spokeswoman said, “We are led by security, cost-efficiency and liquidity.”
Metals expert Thorsten Schulte told the paper that diplomatic considerations also probably played a role. “Taking the gold out of the US would be a sign of mistrust of the first order,” he said.
Karl Blessing, Bundesbank president in the 1960s is said to have written a letter to the American high commissioner in Germany promising not to convert the gold into dollars, the paper said.
Having large parts of German gold in New York, London and Paris would be useful in terms of saving on transport costs when it comes to selling. Around 60 central banks are said to have gold reserves in New York. “There are also serious sources which say the Bundesbank often brings small amounts to Germany,” said Schulte.
The reserves currently held in Mainz and Frankfurt are considered to be more than the four percent often cited – the Bundesbank told the FTD “a large share of the gold reserves” are in Germany.