A research commissioned by the German bank Reisebank showed that Germans had accumulated a record amount of gold: 2,6 times more than in the country's central bank reserve.
How much gold does the German-speaking population have?
According to the results of a large-scale survey, it turns out that German citizens own 8918 tons of gold with a total value of nearly 330 billion euros. Gold bars and coins make up 55% of the total amount —129 grams of gold per person on average.
By adding 3370 tons of gold owned by the Deutsche Bundesbank to the stocks of the population, the figure rises to 12288 tons — nearly 7% of the total amount of gold stored in world reserves.
Why do Germans rely on gold?
In the 20th century, Germany went through hell: two World Wars, postwar devastation, the division of the country. The people of Germany know for sure what constitutes a real value in tough times. History shows that currencies can’t be trusted, and Germans learned it the hard way — over the past hundred years, eight different currencies have been in circulation in the country. The hyperinflation* of 1919-1923 serves as a good reminder of how money can depreciate overnight, meanwhile gold attracts people with its reliability and stability even in times of crisis.
In the photo: children play with bundles of banknotes that have become completely useless due to inflation. Germany, 1923.
According to the survey results, the German-speaking population use gold to preserve savings and as an insurance against financial risks. 91% of respondents are satisfied with the purchase of gold, and 78% of respondents plan to buy more gold in the future.
What happens to the gold reserves of Germany?
While ordinary citizens buy the precious metal, the Deutsche Bundesbank is repatriating its gold from abroad. During the Cold War (1946-1991), fearing the USSR invasion, the government of West Germany transferred most of the gold reserves to the allied states: Great Britain, France and the United States.
As the international situation has changed, the German government started to think over the possibility of returning gold to its homeland. The global financial crisis and the ensuing economic instability convinced the state authorities to strengthen Financial Security.
In 2013, a new strategy was adopted, according to which at least half of Germany’s gold reserves had to be maintained within the country’s borders. The export of German gold from overseas vaults has finally began; it is scheduled to be completed by 2020. To date, it has been progressing ahead of schedule — more than 50% of the national reserves of the yellow metal are already stored in Germany.
In the chart: Germany ranks second in the world in terms of gold reserves.
What do German experts say?
Ronald-Peter Stoeferle, analyst at the investment company Incrementum, believes that gold is the strongest currency in the world that is not bound by any obligations to third parties. “Gold will be the perfect safe haven when everything starts to crack,” the analyst acknowledges.
Dirk Hess, director of Citigroup Global Markets Deutschland, notes that attitudes towards gold have changed in a positive way among investors. “It looks like they are expecting a dramatic change to happen in financial markets,” says Hess.
On May 20, 2019, the price of gold is $1,276 per ounce.
More and more people from all corners of the world begin to realize the importance of gold as the foundation of Financial Security. Both the heads of state and ordinary citizens become aware of it too. By investing in gold, you can protect yourself against economic risks and save money. A growing geopolitical tension and the threat of a new financial crisis will reinforce the role of gold in the global arena.
*Hyperinflation — a very high and typically accelerating inflation.