Gold reserves, critical issues facing Germany

Rush to get more gold is a new phenomenon gripping the attention of many countries. At the same time, what to do with the gold reserves parked with the Fed is also emerging as critical issue. France escaped the Dracula Teeth. However, Germany is still within the claws. Details below:

How it began

Gold reserves has officially taken over the covetous position as top global reserves recently. At the time of writing, gold reserves as a safeguard amounts to more than USD 4 Trillion whereas US Treasury (UST) is around USD 3.9 Trillion. Out of the entire global reserves, Gold ranges between 27 to 28% while UST is dipping below 22%. During the years 2020 to 2025 raking up gold has increased phenomenally mainly due to Chinese geoeconomics strategy of creating gold backed Yuan. By the same token, demand for UST is at best static or at worst declining.

Why the gold run

Central banks around the world are hedging on gold as the single most reserve asset in comparison to UST which is being gradually phased out. Attractiveness of gold as reserve asset is anchored on the following pluses:

1. It is a physical asset and not a fiat currency

2. After convertibility of dollar to gold was terminated by President Richard Nixon on 5/8/1971, US Dollar was reduced to fiat currency

3. Incidentally, a gold run that followed after Nixon announcement prompted him to suspend the operation of gold window where foreigners could buy gold using dollars

4. Gold is minted from several mines spread across the globe whereas USD is printed by the US Treasury which also issue Treasury bills and bonds.

Risk profile

Of late, US Administration started to issue Executive Orders in seizing gold reserves either held within USA or elsewhere. Here are two instances:

1. President Joe Biden issued an Executive Order barring transactions of Russian Central Bank gold reserves held in USA amounting to USD 130 Billion in consequent to Ukraine invasion

2. Recently, in March 2026, Donald Trump issued an Executive Order seizing sizeable portion of gold reserves owned and held by Venezuela and repatriated it to USA.

Who escaped?

France was the only country that nipped this seizure in bud. During July 2025 to January 2026 she transferred more than 2,430 tonnes of gold back to France. As a simulation for this exercise France agreed to sell part of her gold reserves amounting to 129 tonnes of gold to the Fed. A successful geoeconomics tactics indeed!

Who is trapped?

Germany is one of the innocent parties in deep trouble with gold reserves held in USA. She is considered to hold second largest gold reserves after USA at 3,350 tonnes.  Deutsche Bundesbank has parked around 57% of her international gold reserves amounting to 1,236 tonnes in New York alone. This high risk position makes Germany susceptible for a gold seizure. Unpredictable nature of the current US president is the key issue in determining what to do with the German gold reserves in America. 

Solution

Germany must either decide to bring back the entire quantum of gold reserves held in New York to the home soil or park it with the Shanghai Gold Exchange where she has the freedom to buy and sell gold either in Euro or Yuan.

Navigating strategy amid geoeconomics, therefore endorses that Germany remove her gold reserves held in USA to safe haven!

 

Cheers!

 

Muthu Ashraff

Strategy Adviser

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Strategy Adviser

 

Germany ADIA partnership, business or bear embrace

Forget about the Russian Bear, Germany has got into a tight embrace with another bear this time around in West Asia. UAE sovereign wealth Fund had its noose tightened over Germany. Specific attention: Abu Dhabi Investment Authority better known by its initials ADIA. Let me assess this in terms of geoeconomics:

Here is a review of one investment by the ADIA:

Open Grid Europe GmBH (OGE)

ADIA held a major stake in OGE, a top German gas network operator around 25%, via her subsidiary Infinity Investments. As a gas grid operator, OGE is a key player in the energy transition and also one of the pioneers of green energy transformation in Germany. She achieved this by transporting green gases, such as renewable and decarbonised gases and CO2 using pipeline network stretching over 12,000 km along the line, building compressor stations for gas energy carriers.

Even though the company employs 1.450 persons most of whom being Germans  fundamental questions about the sensitivity of this project under scrutiny of a West Asian Fund  had been raised on and off to the displeasure of AFID which finally agreed, for a  divestment. But none of the efforts of divestment bore fruit. The latest being, the failure of negotiations with Italy’s Snam which at the last moment broke down in November 2025.

It is relevant to state that apart from the energy, German trade volume with UAE of non-energy trade amounts to close upon USD 13.8 Billion. The sectors include aviation, logistics and finance other than clean energy as represented by OGE.

Analysis

When setting investment plans for Germany by outside financiers, care should be taken to define the volume, the percentage and the duration of the investment and be reduced in writing. This relates specifically for investment funds. In the case of joint-ventures and/or partnerships the duration part may be dispensed with.

Moreover, priority sectors such as real-estate, housing, infra-structure, roads & railways be selected from the bank of eligible targets. Investing in these targets could be allowed for both wealth funds as well as enterprises willing to invest in Germany.

Synthesis

One good thing happened as regards to ADIA was her involvement in VTG Aktiengesellschaft a major international railcar leasing and logistics company based in Hamburg whose product portfolio include but not limited to, rail freight, wagon leasing, tank container leasing and multimodal logistics services Serving industries such as chemicals, petroleum, automotive, paper, and agriculture with a fleet of 85,000 freight wagons and about 5,000 tank containers this firm does a great job. So is ADIA.

My strategy advice

Geoeconomics matter a lot in choosing investment priorities, partners, collaborators, fund managers throughout globally without restricting to wealth fund managers located only in West Asia. Every such effort must be made with clear goals centred upon elevating the status of Germany in her Geoeconomics profile.

Hence, navigating strategy amid geoeconomics cautions Germany to choose the right partners, collaborators and fund managers. 

 

Cheers!

 

Muthu Ashraff

Strategy Adviser

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Strategy Adviser