The Turkish government has made the decision to repatriate all of its gold reserves that are currently housed in the US Federal Reserve System (FRS). Overall Turkey was storing 220 tonnes, valued at $25.3 billion, in the US, which it repossessed on April 19, 2018.
Turkey’s President Recep Tayyip Erdogan has toughened his stance against the US dollar (USD), declaring that international loans should be made in gold instead of the American currency. Ankara is seeking to reduce dependence on the US financial system. The gold’s homecoming was partly prompted by the US threats to impose sanctions if Turkey goes through with the signed deal to purchase Russian S-400 missile defense systems.
This is a dramatic move reflecting an international trend. Venezuela repatriated its gold from the US in 2012. In 2014, the Netherlands also retrieved its 122.5 tonnes of gold that were stored in US vaults. Germany brought home 300 metric tonnes of gold stashed in the United States in 2017. It took Berlin four years to complete the transfers. Austria and Belgium have reviewed the possibility of taking similar measures.
Few people believe the US Treasury’s assurances that the 261 million ounces (roughly 8,100 tonnes) in official gold reserves that are stored in Fort Knox and other places are fully audited and accounted for. The Federal Reserve has never been fully and independently audited. The pressure for a full, independent audit of all US gold reserves has always been resisted by the government and in Congress. Nobody knows if the gold is really there. What if the vaults turn out to be empty? It’s wiser to bring your gold home while you can, rather than to just keep on wondering.
The gold bars that the US claims to hold are of low purity and do not conform to international industry standards. Even if the US has the amount of gold it claims to have, most of it would not be acceptable for trading on the international market. While other countries are pulling their gold out of the FRS banks, Russia and China are boosting their reserves, creating gold-backed currencies for themselves and thus moving the world away from the dominance of the USD.
The US dollar’s status as the global reserve currency has been called into question. It faces some tough competition. The tariffs introduced by the US administration as an instrument of coercion against other countries are failing to bolster the greenback, which may soon face headwinds. An international currency war looms as a possibility. This makes investors look for other options. Indeed, why should other countries rely on a US dollar that is not backed by gold or anything but “the good faith and credit of the American worker,” when America itself is not trusted internationally?
Read the rest of the article at Strategic Culture Foundation: Gold Leaving US Vaults: Signs of Upcoming Currency War and Armed Conflict | Strategic Culture Foundation