Bring gold back to the country! Germany is hoarding gold on a large scale, casting a vote of no confidence in the global monetary system

With the surge in global sovereign debt and the escalation of geopolitical conflicts, central banks around the world are accelerating the accumulation and repatriation of gold reserves. This trend signifies a weakening confidence in the stability of the current fiat currency system. For both nations and private investors, increasing holdings of precious metals is no longer merely an investment behavior, but rather an "insurance strategy" to cope with future monetary turmoil.

The Deutsche Bundesbank currently holds the second-largest gold reserves among central banks globally, and its holdings, along with the recent surge in gold prices, indicate that governments are attempting to dilute debt through inflation. Meanwhile, Italian Prime Minister Giorgia Meloni is facing pressure to officially nationalize the central bank's gold reserves, a potential move interpreted by the market as a public vote of distrust against the European Central Bank, aimed at reserving a fallback in case of an extreme crisis in the Eurozone.

This "gold hoarding trend" has raised significant concerns at the European Central Bank headquarters in Frankfurt. Member states' refusal to centralize gold reserves demonstrates centrifugal tendencies within the Eurozone. The asset revaluation effect brought about by rising gold prices is repairing the balance sheets of central banks, motivating policymakers to maintain high gold prices to offset potential losses in the bond market due to credit deterioration.

Against the backdrop of debt-to-GDP ratios exceeding 100% in the U.S. and several European countries, traditional fiscal discipline constraints have become nominal. As investor confidence in cash and government bonds declines, physical gold is re-emerging as a trust anchor in the global monetary system, while also prompting governments to regulate the flow of private wealth into precious metals.

The "Trust Crisis" within the Eurozone and Reserve Repatriation

The Deutsche Bundesbank currently holds 3,350 tons of gold, valued at approximately €500 billion. About 50% of these reserves are stored in Frankfurt, 37% in the New York Federal Reserve, and another 13% in London. This decentralized storage is a legacy of the Bretton Woods system, but under the current fragile system, repatriating overseas reserves has become a precautionary measure for self-protection.

This distrust in the euro system is particularly evident in Italy. Italy holds 2,452 tons of gold, ranking third globally. The Giorgia Meloni government is pushing to transfer ownership of these reserves from the central bank to the state, which would give Italy leverage to restart its national currency in the face of a severe euro crisis.

In response, the European Central Bank feels uneasy. The European Central Bank holds only about 500 tons of gold, which is far from sufficient to provide a stable metal backing for the euro that has been issued for many years. ECB President Christine Lagarde has repeatedly expressed a desire to centralize national gold reserves in the European Central Bank's vault, but this has been met with widespread rejection from Eurozone member states, and the vision of euro system integration has encountered real-world obstacles regarding gold.

Debt Expansion and Bond Market Correction

The root cause of the turmoil facing the global monetary system lies in fiscal mismanagement. In the U.S. and many European countries, the debt-to-GDP ratio has surpassed 100%, and only through massive expansion of the money supply can the solvency of the public sector be maintained. This is effectively at the expense of cash holders' interests The bond market has made drastic corrections, with billions of dollars in losses on the books, only not written off due to special valuation rules allowed by legislators. Germany had attempted to avoid a debt spiral through the "debt brake" mechanism, but this fiscal constraint has been quickly eroded. Last year, German Chancellor Merz and his high-risk special fund plan ultimately buried fiscal discipline. With national credit expanding without limits, citizens are forced to turn to safe-haven assets like precious metals, further accelerating the decline of the fiat credit monetary system.

Global Central Bank Balance Sheet Repair

Beyond Europe, gold's status as a trust anchor has been strengthened globally. China's current gold reserves are about 2,300 tons, ranking fourth in the world. Since the 2008 financial crisis, China has become the largest buyer in the precious metals market and is attempting to establish a payment system independent of SWIFT through gold-backed transfers. Countries like Russia, Turkey, India, and Poland are also significantly increasing their gold holdings.

The rise in gold prices has had a positive side effect on central banks: balance sheet repair. For institutions like the Deutsche Bundesbank, where gold accounts for about 80% of the balance sheet, the appreciation of gold fills the deep gaps caused by the bond market crisis. This has become an "elegant way" to stabilize the monetary system, repairing the damage caused by different institutional levels in the past through simple repricing.

Tightening Regulations on Private Holdings

Governments around the world have a contradictory attitude towards gold. On one hand, gold can extend the current debt Ponzi scheme or open a new monetary system; on the other hand, citizens fleeing to precious metals for safety are seen as a challenge to state control.

As private investors accumulate wealth through precious metals, governments are beginning to strengthen regulations to capture capital gains. The Netherlands is expected to start taxing unrealized capital gains in 2028, which is a clear warning signal. Against the backdrop of uncontrolled debt, Brussels and EU governments are eyeing the paper gains of the private sector, and other European countries are expected to soon follow the Netherlands' lead. A battle over wealth sovereignty has already begun