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Gold is fast becoming a “currency” in Europe with many nations clearly aggressive about their gold holdings. The latest is Germany's rejection of using its gold to fund the bailout. Though Germany has cont..

08 Nov 2011

BERLIN (Commodity Online): Gold is fast becoming a “currency” in Europe with many nations clearly aggressive about their gold holdings. The latest is Germany's rejection of using its gold to fund the bailout. Though Germany has contributed billions of dollars in the bailout fund, the very action of rejecting to sell its gold highlights the importance nations have attributed to the yellow metal-that of safety in these turbulent times.

-Germany rejected proposals by France, Britain and the US to have German gold reserves used as collateral for the Eurozone bailout fund. German Economy Minister Philipp Roesler said on Monday that the German people's gold reserves cannot be touched and “must remain off limits."

"German gold reserves must remain untouchable" said Roesler, who is head of the Free Democrats (FDP), a partner in Chancellor Angela Merkel's coalition. Roesler added his voice to opposition to an idea proposed at the G20 summit of using reserves including gold as collateral for the euro zone bailout funds.

The Bundesbank and Mr. Seibert, spokesman for Merkel, said Sunday that they too ruled out the idea discussed at the summit of Group of 20 leading economies last week. Mr. Seibert dismissed media reports that the plan to boost bailout funds, to aid Italy or another large euro zone country, would require Germany to sell off part of its gold and foreign exchange reserves.

“Germany’s gold and foreign exchange reserves, administered by the Bundesbank, were not at any point up for discussion at the G20 summit in Cannes,” he said. Mr. Seibert was responding to proposals to sell about €15 billion of Germany’s gold reserves of over 3,000 metric tonnes, worth a reported €139 billion.

A Bundesbank spokesperson said it was aware of the plan and said the institution “rejected” plans to touch federal gold reserves.

The Sunday Frankfurter Allgemeine newspaper said the initiative marked a fresh round in an ongoing struggle between the Bundesbank and the Merkel administration over reserves the bank manages on behalf of the German people.

Italian Gold Sale Again Proposed in Germany

Senior German politician, Gunther Krichbaum, a lawmaker in German Chancellor Angela Merkel’s governing coalition and Chairman of the Committee on the Affairs of the European Union of the German Bundestag has proposed that Italy sell its sizeable gold reserves in order to lower its debt.

Krichbaum, who chairs the German parliament’s European Affairs Committee, was quoted as saying in the Rheinische Post that Italy’s gold reserves are relatively high and could be used to pay off their sizeable debt.

Using periphery nations’ gold reserves as collateral has been on the agenda in Germany for some months with many influential German politicians calling for debtor Eurozone nations to sell their gold reserves.

Angela Merkel’s budget speaker and his opposition counterpart urged Portugal to consider selling their gold in May of this year.

Senior Minister and rival to Merkel, Ursula von der Leyen, demanded that the debtor ‘PIIGS’ countries offer Germany more reliable guarantees and allow it access to their gold reserves and industrial facilities as payment for loans.

Gold’s value as money and as a strategically important monetary asset is being slowly realized again.

Source: goldcore


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