{"id":32699,"date":"2025-06-27T04:39:05","date_gmt":"2025-06-27T04:39:05","guid":{"rendered":"https:\/\/financialrush.com\/?p=32699"},"modified":"2025-06-27T04:39:05","modified_gmt":"2025-06-27T04:39:05","slug":"gold-glitters-as-mistrust-spreads","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=32699","title":{"rendered":"Gold glitters as mistrust spreads"},"content":{"rendered":"<p> \n<\/p>\n<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description o3-type-body-base\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=6b23c2f0-13ff-4666-ad56-880bfa4428f4\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>A decade ago, I asked officials at the New York Federal Reserve if I could peek at their gold reserves. They refused point blank. <\/p>\n<p>The reason? Fed officials have long taken pride in having <a href=\"https:\/\/www.newyorkfed.org\/aboutthefed\/goldvault.html\" data-trackable=\"link\">the world\u2019s biggest gold vault, <\/a>dug 80ft down into Manhattan\u2019s bedrock. But they prefer to keep it discreet, partly because many of the vault\u2019s 507,000 bars belong to countries such as Germany and Italy. Silence was literally golden.<\/p>\n<p>Now, however, a discordant note has been sounded. In recent weeks, politicians in Germany and Italy <a href=\"https:\/\/www.ft.com\/content\/e39390cc-ea02-4197-843a-1e4c242422cc\" data-trackable=\"link\">have demanded <\/a>the repatriation of their gold bars, worth an estimated $245bn. So have others. \u201cWe are very concerned about [US President Donald] Trump tampering with the Federal Reserve Bank\u2019s independence,\u201d explains the Taxpayers Association of Europe.<\/p>\n<p>Neither the Fed nor European governments seem minded to act, and there are no signs of bullion moving east. On the contrary, gold <a href=\"https:\/\/www.marketplace.org\/story\/2025\/02\/03\/gold-is-rushing-from-london-to-new-york\" data-trackable=\"link\">has flooded into, not out of, America <\/a>since Trump\u2019s election, prompting speculation that US government agencies, like private investors, might be stockpiling it (although there is no public proof of that). <\/p>\n<p>Either way, what is indisputable is that these repatriation appeals are a sign of spreading mistrust. The reason those bars were placed in New York vaults in the first place is that America\u2019s allies have hitherto assumed that Washington was a responsible leader of the west \u2014 and the dollar-based finance system. <\/p>\n<p>Now, however, figures in the Trump team \u2014 including <a href=\"https:\/\/www.ft.com\/content\/b1bf0858-d7d5-489d-8d61-02997d2f4aec\" data-trackable=\"link\">Stephen Miran<\/a>, chair of the Council of Economic Advisers, and Scott Bessent, Treasury secretary \u2014 are chafing against the<a href=\"https:\/\/www.ft.com\/content\/fba87dd3-514a-41c2-b2b9-ea597ffbdfbf\" data-trackable=\"link\"> \u201ccost\u201d of this system.<\/a> Thus the question that investors need to ask is what other countries might do if trade wars spawn capital battles as well. <\/p>\n<p>In Asia, this debate is already under way, as investors look for diversification. One sign is surging gold purchases. Another is that <a href=\"https:\/\/www.ft.com\/content\/6393d83d-67cb-4c79-9fbb-9d30d587ee9f\" data-trackable=\"link\">recent unusual price movements<\/a> in Hong Kong markets suggest a reluctance to buy dollar assets. <\/p>\n<p>Meanwhile, Chinese officials are hailing the rising <a href=\"https:\/\/www.ft.com\/content\/ed04b26c-657d-4653-859d-c5a560c6b3e9\" data-trackable=\"link\">use of the renminbi <\/a>in trade invoicing, and developing a Cross-Border Interbank Payment System (Cips) to challenge the US-controlled Swift interbank payments system. <\/p>\n<p>Investors also need to watch the <a href=\"https:\/\/www.bis.org\/about\/bisih\/topics\/cbdc\/mcbdc_bridge.htm\" data-trackable=\"link\">so-called mBridge initiative<\/a>, a cross-border central bank digital currency project launched in 2023 by the Bank for International Settlements. Last year Washington <a href=\"https:\/\/www.ft.com\/content\/bfafb8f7-bd1c-48bb-85f4-8ba25475c0a3\" data-trackable=\"link\">forced the <\/a>BIS to withdraw from this, leaving China in control. I suspect this is an own goal by the US. <\/p>\n<p>Europe, by contrast, has been fairly passive thus far. However, figures like <a href=\"https:\/\/www.iiss.org\/online-analysis\/survival-online\/2024\/06\/planning-for-a-post-american-europe\/\" data-trackable=\"link\">Fran\u00e7ois Heisbourg, a key European adviser<\/a>, are urging preparation for a \u201cpost-American Europe\u201d.\u00a0And while this has already sparked pledges of higher military spending, the focus is now also shifting to \u201cgeoeconomics\u201d, or the idea that statecraft must drive industrial policy.<\/p>\n<p>However, analysts such as Elmar Hellendoorn, at the Atlantic Council, want to go further, with a policy of <a href=\"https:\/\/www.tandfonline.com\/doi\/full\/10.1080\/00396338.2025.2459014\" data-trackable=\"link\">\u201cgeofinance\u201d<\/a> too. After all, he argues, Europe is vulnerable since it not only relies on dollar finance, but is also buffeted by speculative capital flows, due to financialisation of its economy. <\/p>\n<p>Thus \u201clarge parts of the European economy are now under the strong influence, if not the direct control, of Wall Street firms, which are ultimately subject to US laws and Washington\u2019s financial statecraft\u201d, he frets. Indeed, Enrico Letta, the former Italian prime minister, <a href=\"https:\/\/www.euractiv.com\/section\/economy-jobs\/news\/letta-europe-is-a-financial-colony-of-the-us\/\" data-trackable=\"link\">fears that Europe<\/a> is becoming a \u201cfinancial colony\u201d of the US. <\/p>\n<p>Can this change? The European Commission is taking baby steps in that direction, by accelerating efforts to create a single <a href=\"https:\/\/www.ft.com\/content\/ae2aeb68-7d74-4803-9133-ee9a5b7686ea\" data-trackable=\"link\">European capital market<\/a>. Central banks across Europe are also developing cross-border digital currencies and the European Central Bank itself <a href=\"https:\/\/www.ft.com\/content\/40f6e292-839c-4d1f-994e-59bed627b909\" data-trackable=\"link\">is building a digital euro<\/a>. That sets up a fascinating policy contest with Washington, which is embracing dollar-based stablecoins instead \u2014 partly because Bessent <a href=\"https:\/\/x.com\/SecScottBessent\/status\/1935027160374210573\" data-trackable=\"link\">thinks this will create trillions of dollars of new <\/a>demand for Treasuries.\u00a0<\/p>\n<p>However, these efforts still seem far too timid to actually create a \u201cglobal euro moment\u201d, <a href=\"https:\/\/www.ft.com\/content\/4d5dea18-bc4b-4ccf-94d3-1973fd1467cc\" data-trackable=\"link\">to quote Christine Lagarde, ECB president<\/a>. And that seems unlikely to change unless a crisis hits, be that a loss of market confidence in the dollar (perhaps <a href=\"https:\/\/www.ft.com\/content\/75a4acf6-b3fa-4a90-8b4e-4c0724afd407\" data-trackable=\"link\">due to fiscal jitters<\/a>) or extreme aggression by the US towards Europe. <\/p>\n<p>Hence why those Manhattan gold vaults matter: if such crises do ever materialise, it is easy to imagine a scenario in which American leaders (at best) will insist on using that bullion as <a href=\"https:\/\/www.ft.com\/content\/4ae6fb0c-c4dd-4827-b85c-946fe615b43b\" data-trackable=\"link\">collateral for dollar swaps<\/a> or (at worst) as a tool for political coercion. <\/p>\n<p>Germany\u2019s Bundesbank, for its part, discounts that risk \u2014 in public at least. \u201cWe have no doubt that the New York Fed is a trustworthy and reliable partner for the safekeeping of our gold reserves,\u201d it tells the FT. Almost certainly so. But the debate shows that once unimaginable scenarios are at least being imagined. Reclaiming gold is a rational move.<\/p>\n<p><a href=\"https:\/\/www.ft.com\/content\/mailto:gillian.tett@ft.com\" data-trackable=\"link\"><em>gillian.tett@ft.com<\/em><\/a><\/p>\n<\/div>\n\n<br \/><a href=\"https:\/\/www.ft.com\/content\/6b23c2f0-13ff-4666-ad56-880bfa4428f4\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this&hellip;\n","protected":false},"author":6,"featured_media":32700,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[],"class_list":["post-32699","post","type-post","status-publish","format-standard","has-post-thumbnail","category-us","cs-entry","cs-video-wrap"],"_links":{"self":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/32699","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=32699"}],"version-history":[{"count":0,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/32699\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/media\/32700"}],"wp:attachment":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=32699"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=32699"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=32699"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}