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Germany is a significant economy with official records showing it has the second largest Gold reserves in the world, but since 2000 Germany has been selling Gold. Auronum delves into the history of Germany’s Gold holdings, how much has been sold and reasons behind the selling
Data sourced directly from the Deutsche Bundesbank. Since 2000 Germany has been selling her Gold in small incremental volumes which is fascinating as this period is one in which central banks were net buyers of Gold. This raises the question, why is Germany selling off her Gold?
Here are some key points on the history of the word ‘Gold’:
The Deutsche Bundesbank holds 3,355.24 tons of Gold, making it the second-largest gold holder after the US Federal Reserve according to official data
Germany’s gold reserves began accumulating after World War II starting with 25 tons in 1951 and peaking at 4,034 tons by 1968
The Bundesbank refrained from exchanging dollars for gold during the 1960s, stabilising reserves at around 3,600 tons by 1970
Despite political pressure to sell gold for reunification and public projects, the Bundesbank resisted large-scale sales and only sold small amounts for commemorative coins
Between 2001 and 2023, 113.5 tons of gold were sold to mint commemorative coins, but no major gold sales have been made. The sales are 3.344% of Germany’s holdings
In May 1945 Nazi Germany surrendered ending the Second World War in Europe. The country, responsible for widespread devastation and countless atrocities was left in ruins. Major cities were destroyed, infrastructure crippled, and the economy was shattered. Approximately seven million people were displaced, and vast swathes of land were ceded to Poland and the Soviet Union. Amid this destruction, few could have predicted the economic revival that would soon follow. Yet, within just ten years, the western part of Germany became one of the world’s most robust economies and a major holder of gold reserves.
Germany’s post-war recovery, known as the Wirtschaftswunder (“Economic Miracle”), was driven by several key factors. First, the establishment of local central banks in the western zones by the Allies—namely the US, UK, and France—laid the foundation for monetary stability. In 1948, the Bank deutscher Länder was created as the new central bank of West Germany, modeled on the US Federal Reserve. This bank would later become the Deutsche Bundesbank in 1957.
A pivotal event in West Germany’s recovery was the 1948 currency reform, which replaced the almost worthless Reichsmark with the Deutsche Mark. This change reinvigorated the economy, filling stores and ending the pervasive black-market economy. Additionally, the country benefited from the European Recovery Plan, more commonly known as the Marshall Plan, through which $3 billion in US aid helped rebuild the economy and provide essential imports like raw materials for industrial production.
By 1951, just a few years after the war, West Germany was consistently running export surpluses, leading to a significant buildup of foreign exchange reserves. As the Cold War intensified, Germany’s role as a bulwark against Soviet expansion in Europe strengthened its economic position. Its integration into the European Payments Union (EPU) in 1950 and its participation in the Bretton Woods system, which linked currencies to the US dollar and gold, further established Germany as a key player in global finance.
Germany’s growing economic clout translated into increasing gold reserves. The structure of the European Payments Union allowed for gold to be received as part of foreign currency inflows, with Germany obtaining its first 25 tons of gold in 1951. By the end of 1952, the country’s holdings had grown to 125 tons.
The following years saw Germany’s gold reserves explode. By 1959, after the EPU was replaced by the European Monetary Agreement, Germany held 1,584 tons of gold. By the end of that same year, its reserves had reached 2,344 tons, largely due to inflows from the Bretton Woods system. The peak was reached in 1968, with Germany holding 4,034 tons (approximately 130 million ounces) of gold.
This accumulation was a reflection of the country’s rising industrial output and trade surpluses. It is notable that, despite the rapid growth in the Bundesbank’s gold reserves, German citizens were prohibited from owning gold until 1955, a restriction that had been in place in various forms since the hyperinflation of 1923.
In the 1960s, the price of gold on the free market began to rise significantly above the \$35 per ounce fixed price set by the Bretton Woods Agreement. This was largely due to rising private demand for gold, fueled by uncertainties during the Cold War. To stabilize the gold price, the London Gold Pool was established in 1961. This arrangement saw central banks intervening in the market by buying gold when prices were low and selling when prices were high, aiming to maintain the \$35/ounce target.
Initially, this intervention strategy worked, with the Bundesbank even acquiring more gold in 1963 and 1964. However, by 1966, central banks, including the Bundesbank, found themselves selling gold to defend the $35/ounce price. The London Gold Pool eventually collapsed in 1968 due to unsustainable gold outflows, and a two-tier system was established. This created a fixed official gold price alongside a free-market price, which at times rose significantly higher. The collapse of the Gold Pool marked the end of significant gold inflows for Germany, with the Bundesbank selling 183 tons of gold as part of the Pool’s interventions. Overall, participating central banks lost approximately 3,000 tons of gold during this period.
Despite the opportunity to convert its rapidly growing dollar reserves into gold during the 1960s, the Bundesbank largely refrained from doing so. This cautious approach was formalized in a 1967 agreement between Bundesbank President Karl Blessing and the US Federal Reserve, in which Germany committed to no longer exchanging dollars for gold. The rationale behind this decision was to maintain international financial stability and protect the global monetary system, which relied heavily on the US dollar as a reserve currency.
By 1970, the Bundesbank’s gold reserves stabilized at around 3,600 tons. Of this, approximately 740 tons were later transferred to the European Monetary Cooperation Fund (EMCF) in 1979, a step toward creating a European monetary reserve system. In 1999, with the establishment of the European Central Bank (ECB), 232 tons of this gold were transferred to the ECB’s reserves.
In addition to gold transfers to supranational institutions, the Bundesbank also explored gold lending activities in the 1990s. Starting in 1996, the Bundesbank lent out a small percentage of its gold reserves to commercial banks with high credit ratings. This strategy was intended to cover the storage costs of gold held in the Bank of England. However, by the mid-2000s, declining demand for gold loans, along with falling gold interest rates and rising credit risks amid the global financial crisis, led the Bundesbank to halt its gold lending operations in 2007.
Throughout the 1990s and early 2000s, the Bundesbank faced repeated political pressure to sell portions of its gold reserves. German politicians argued that selling the gold could help cover the costs of reunification, or fund various public initiatives, such as a proposed fund for economic research or disaster relief efforts following the devastating Elbe River floods of 2002. This period coincided with Great Britains famous Browns Bottom Gold sales
Despite internal demands within Germany, the Bundesbank consistently resisted large-scale sales of its gold. Notable political figures, including Finance Ministers Theo Waigel, Hans Eichel, and Peer Steinbrück, all attempted to persuade the Bundesbank to monetize its gold, but they were met with strong opposition. The Bundesbank’s stance reflected both a commitment to long-term financial stability and a recognition of the symbolic importance of gold to the German public. Calls for large-scale sales have since subsided, as the idea of selling the nation’s gold reserves remains deeply unpopular with the public.
While the Bundesbank resisted selling gold in large quantities, it has allowed for smaller, symbolic sales. Starting in 2001, the central bank provided gold for the minting of commemorative coins which led to an initial sale of 12 tonnes. The first of these coins was a tribute to the Deutsche Mark, issued to mark its replacement by the euro. Since then, between 3 and 11 tons of gold have been sold annually for various commemorative coin series, totaling 113.5 tons over the past 22 years.
Whilst the annual German Gold sales have been in small volumes, over time this is becoming a singificant volume of Gold which is leaving the German central bank’s vaults. With the German economy showing decay, the market should expect more future sales of German bullion
German Gold Marks are one of the most popular coins for European Gold collectors to invest in. The German Gold Marks have a much wider range of types to collect compared to any other European country
